Monday, 7 November 2016

What would the electoral college have looked like in 2012 if illegal immigrants could vote?

According to Pew Research, the states with the largest illegal immigrant populations are as follows:


Of these states, Romney won Texas, Georgia, Arizona and North Carolina in the 2012 election––garnering him 103 electoral college votes. Would he have still won them if illegal immigrants could vote? 

Almost all illegal immigrants are Hispanics. 71% of Hispanics voted for Obama in 2012, while 27% voted for Romney. The Hispanic turnout rate was 48%. Therefore, the results in Texas, Georgia, Arizona and North Carolina would have been as follows if illegal immigrants could vote:


Romney would probably still have won all four of these states. However, his margins of victory would have been quite substantially reduced. 

Tuesday, 4 October 2016

How much does the pill increase the risk of depression?

A recent article in The Guardian claims that "The pill is linked to depression – and doctors can no longer ignore it". It does so on the basis of a new study published in JAMA Psychiatry, which tracked all women aged 15-34 in Denmark over a number of years, and measured (among other things) their use of oral contraceptives, and their use of anti-depressants. The study's headline results were that: 
a) women who used oral contraceptives had a 23% higher risk of using anti-depressants for the first time 
b) adolescent females who used oral contraceptives had an 80% higher risk of using anti-depressants for the first time 
The author of the Guardian article seems to regard these results as highly alarming. Yet there are several reasons not to be too consternated. 

First, from what I can tell, the JAMA Psych study was largely correlational, rather than causal: only age and year were controlled for in the main analyses. Second, the authors also measured women's diagnoses of depression, and––for that outcome––the increase in risk associated with oral contraceptive use was only ~10% for women overall (but it was still around 70% for adolescents). Third, and most importantly, the effect sizes do not appear to be very large. 

The crude incidence rate for women overall was ~1.7 per 100 person years. In other words, if 100 women who were not using oral contraceptives lived for 1 year, 1.7 of them would be expected to use anti-depressants for the first time during that year. The results above imply that this figure rises to 2.1 for women using oral contraceptives. The crude incidence rate for adolescents was ~0.9 per 100 person years. So if 100 adolescents who were not using oral contraceptives lived for 1 year, 0.9 of them would be expected to use anti-depressants for the first time during that year. The results above imply that this figure rises to 1.7 for adolescents using oral contraceptives. (The crude incidence rates for diagnoses of depression were much lower.) 

Sunday, 10 July 2016

Is county-level racial bias in police shootings unrelated to race-specific crime rates?

Yesterday, I suggested that the overrepresentation of blacks among the victims of police shootings may not be primarily attributable to racial animus on the parts of police officers. In response, a paper by Ross (2015; PLOS ONE), which claims the following, was brought to my attention:
There is no relationship between county-level racial bias in police shootings and crime rates (even race-specific crime rates), meaning that the racial bias observed in police shootings in this data set is not explainable as a response to local-level crime rates.
To his credit, Ross made his dataset publicly available (see S1_File.zip in the Supporting Information), so I carried out a few analyses on it myself. 

The total number of victims in the dataset with known race is 647. There are 260 counties with at least one police shooting of a victim with known race (8% of total counties). 23% of counties have 100% black victims, 55% of counties have 100% white victims, and the remaining 23% have some mix of black and white victims. The mean percentage of victims who are black is 33%. Furthermore, 90% of counties have five or fewer victims, 80% have three or fewer, and 57% have exactly one victim; the mean number of victims per county is 2.5. 

The low number of victims per county seems to me to be a serious limitation of Ross's analysis. How can one reliably model an aggregate-level variable (such as the ratio of black to white victims, or the proportion of victims who are black) that, for most counties, is based on only one or two observations? 

I calculated the 95% confidence interval for the proportion of victims who are black in all 260 counties. (Thanks to Emil Kirkegaard for calculating confidence intervals for cases where p = 1 using the prop.test in R.) This confidence interval overlapped with p = .13 (the percentage of blacks in the general population) in 87% of counties. And when restricting the analysis to unarmed victims, the confidence interval for the proportion of victims who are black overlapped with p = .13 in 89% of counties. In other words, for >85% of counties, one cannot rule out that the true proportion of victims who are black is equal to the proportion of blacks in the general population.

The limitation of low numbers of cases per county was not lost on Ross. In the Methods section he notes that:
County-level police shooting rates are estimated using binomial probabilities, and a prior, estimated from the data, under hierarchical partial pooling. Hierarchical pooling allows information collected in other counties within the United States to partially inform the parameter estimates in a focal county, which improves out-of-sample predictive inference globally... Prior to the introduction of multi-level modeling methods, relative risk ratios at local levels were very hard to infer... The multi-level Bayesian methods used here, partially (rather than fully) pool information across counties, allowing for more stable estimates in relative risk ratios
Not being familiar with these methods myself, I am not in a particularly strong position to judge their efficacy. But it seems to me that Ross's dependent variable will have been subject to considerable measurement error. Therefore, I'm not sure he can really be confident that there is no relationship between racial bias in police shootings and race-specific crime rates at the county level. This is not to say that there is a relationship, but simply that the evidence Ross presents for there not being one may not be very compelling. I would interested to hear others' perspectives. (Stata .do file available upon request.)

Saturday, 9 July 2016

Does racial animus explain killings of black civilians by US police?

This post examines the distribution of victims of police shootings by race, and by sex. Data on individuals killed by police were taken from the Washington Post database for 2015 and 2016. According to these data, over the last two years, 27% of those killed by police were black, and 39% of those killed by police while unarmed were black. Insofar as blacks represent only 13% of the US population, this implies that blacks are overrepresented among the victims of police shootings.

However, blacks are––for whatever reason––also overrepresented among the perpetrators of violent crime. It is possible that blacks are more likely to be killed by police because they are more likely to get into violent confrontations with police, or because police officers practice statistical discrimination. The chart below shows, from left to right, the racial distribution of: the US population (taken from the US Census Bureau); those killed by police; those killed by police while unarmed; murder offenders (taken from the FBI); and alleged police killers (taken from the FBI––averaging over the last five years of available data was done to obviate sampling error). 


Blacks represent 13% of the US population, 27% of those killed by police, 39% of those killed by police while unarmed, 53% of murder offenders, and 39% of alleged police killers. These figures suggest that blacks may not be overrepresented among the victims of police shootings once involvement in murder or police killings is adjusted for. By way of comparison, consider the corresponding distributions by sex, which are shown in the chart below. Men are much more likely to be killed by police than women. But they are about as likely to be killed by police as one would expect on the basis of their involvement in murder or police killings. 


Given the highly sensitive nature of the subject matter, some caveats are in order. First, I am not arguing that blacks deserve to be killed more by police than members of other races. Rather, I am simply pointing out that the overrepresentation of blacks among the victims of police shootings may not be primarily attributable to racial animus on the parts of police officers. Second, I am not denying that there are cases of racially motivated violence against blacks by police officers. Such cases are of course deplorable. Third, I am not denying that there is a problem with police violence in the United States. The rate of police shootings in the US seems disproportionate even to the US's comparatively high homicide rate.

Finally, I am happy to send the dataset I have assembled to anyone who wants it. 

Sunday, 26 June 2016

Did more old people than young people vote Remain?

According to a YouGov poll on the day of the referendum, 75% of people in the 18-24 age group voted for Remain, compared to 39% in the 65+ age group. I was able to locate two different sources of estimated turnout by age group: a Sky Data poll, and an analysis of data from a Lord Ashcroft poll by Future Canon

According to the Sky Data poll, turnout in the 18-24 age group was 36%, whereas turnout in the 65+ age group was 83%. This implies that 0.75*0.36 = 27% of young people voted Remain, and that 0.39*0.83 = 32% of old people voted Remain. 

According to the analysis by Future Canon, turnout in the 18-24 age group was 32%, whereas turnout in the 65+ age group was 78%. This implies that 0.75*0.32 = 24% of young people voted Remain, and that 0.39*0.78 = 30% of old people voted Remain. 

Having said that, these turnout figures do seem a little implausible. Is it really true that only 32-36% of young people voted? If one instead relies on Ipsos MORI's figures for the last general election, then turnout in the 18-24 age group was 43%, while turnout in the 65+ age group was 78%. This implies that 0.75*0.43 = 32% of young people voted Remain, and that 0.39*0.78 = 30% of old people voted Remain.

Overall, it is not implausible that the proportion of old people who voted Remain is similar to (or even greater than) the proportion of young people who voted Remain. Of course, many more old people than young people voted Leave.

Tuesday, 21 June 2016

My email exchange with Michael Dougan

Dear Professor Dougan,

As someone leaning toward voting Leave in the upcoming referendum, I found the following lecture you gave on the EU quite compelling: 


The reason for my email is that I would like to ask you about an issue not dealt with in the video––which I personally see as the most important one in the debate––namely that we do not appear to face a choice between leaving and staying in the EU as it currently exists, but between leaving and staying in an EU which is moving toward further political integration. I am quite happy to acknowledge that our current membership of the EU is a net positive for the economy, or at the very least not a net negative. However, the real issue to me is not whether our current membership is a net positive for our economy, but whether our future membership will be a net positive for our society.

Is your view that a) the EU will not move toward further political integration in the future, or b) it will move toward further political integration in the future, and this will be good for the British people?

In this regard, I have written a blog post about why I believe a European federal state is not feasible in the near term, even though much deeper fiscal integration is required to make the Eurozone work:


Kind regards,

Noah Carl

––––––––––

Dear Noah

Thanks for your email. Without meaning any offence, the only people I ever hear talking about the EU becoming a federal (super)state are the people who hate the idea. No-one I know working in the field of the EU – and that is a very large number of people in all walks of life – ever thinks about it! And there are two reasons. First, Treaty changes – including of the sort that would be needed to “further integrate” the EU – require unanimous agreement by the 28 Member States followed by 28 national ratification processes. In the UK, that would almost certainly mean… another national referendum on the EU! After all, the European Union Act 2011 requires a national referendum in the UK for any future EU reform which would involve even the slightest increase in the competences of the EU at the expense of the UK. Secondly, the peoples of Europe clearly don’t want a federal superstate: can Leave name a single country that would support this (as opposed to some 1950s statements from a dead politician or the weird musings of some minor living one)?

Best wishes

Michael 

––––––––––

Dear Michael,

Many thanks for getting back to me so quickly. No offence taken. However, I would make three points in response. 

First, many senior politicians in Europe seem to be in favour of a federal state, as evidenced by statements they have made (I have sources for all these quotes):

"We decided to arrive at a political union via an economic and currency union. We had the hope––and we still have it today––that the Euro will gradually bring about political union... Most member states are not yet fully prepared to accept the necessary constraints on national sovereignty. But trust me, the problem can be solved."
––Wolfgang Schäuble

"The internal market and the common currency demand joint co-ordinating action. This will require us to finally bury some erroneous ideas of national sovereignty... National sovereignty in foreign and security policy will soon prove itself to be a product of the imagination."
––Gerhard Schröder

"The Constitution is the capstone of a European Federal State."
––Guy Verhofstadt

"The EU Constitution is the birth certificate of the United States of Europe. The Constitution is not the end point of integration, but the framework for––as it says in the preamble––an ever closer union."
––Hans Martin Bury

"Of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?"
––Jean-Claude Juncker

"We need a political union, which means we must gradually cede powers to Europe and give Europe control... We cannot just stop because one or other doesn’t want to join in yet."
––Angela Merkel

Second, if a European federal state were not the ultimate end point, why does the EU have a motto, an anthem, a flag, an annual holiday, a mascot, and even a personification (the mythological figure Europa)?

Third, as I noted in the blog post I linked you to in my first email, much deeper fiscal integration is arguably needed to make the Eurozone work.

Kind regards,

Noah

Tuesday, 14 June 2016

Can the Eurozone survive?

The Eurozone faces a crisis of epic proportions. Unemployment in Spain stands at over 20%. Youth unemployment in Greece exceeds 50%. GDP per capita in Italy is back to where it was in 1996. This crisis––the crisis of the single currency––was not without forewarning. A number of prominent commentators predicted it some years in advance. One such commentator was the economist Martin Feldstein, who in a 1997 Journal of Economic Perspectives article noted:
My own judgement is that the net economic effect of a European Monetary Union would be negative. The standard of living of the typical European would be lower in the medium term and long term if EMU goes ahead than if Europe continues with its current economic policies…
Another such commentator was Baroness Thatcher, who in a 1992 interview with Forbes remarked:
Every single fixed exchange rate has cracked in the end. We’re all at different levels of development of our economies. Some countries simply couldn’t live up to a single currency. It would mean massive extra subsidies from the rest of us for them or massive movements of immigration from their countries into ours. Both would cause resentment and not produce harmonious development.
Arguably most prescient of all, however, was the Nobel Prize-winning economist Milton Friedman, who in a 1997 article for Project Syndicate wrote:
Europe’s common market exemplifies a situation that is unfavourable to a common currency. It is composed of separate nations, whose residents speak different languages, have different customs, and have far greater loyalty and attachment to their own country than to the common market or to the idea of “Europe”. Despite being a free trade area, goods move less freely than in the United States, and so does capital. 
The European Commission based in Brussels, indeed, spends a small fraction of the total spent by governments in the member countries. They, not the European Union’s bureaucracies, are the important political entities. Moreover, regulation of industrial and employment practices is more extensive than in the United States, and differs far more from country to country than from American state to American state. As a result, wages and prices in Europe are more rigid, and labour less mobile. In those circumstances, flexible exchange rates provide an extremely useful adjustment mechanism… 
The drive for the Euro has been motivated by politics not economics. The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues.
As the quotations above imply, in order to make the Eurozone work, much greater fiscal integration of Eurozone economies is required. Employment and industrial law will need to be harmonised still further; various tax and spending powers will need to be transferred to Brussels; and far higher levels of inter-state migration will need to be encouraged. For illustration, compare the EU to the United States––a rather more successful monetary union. Whereas the EU (of which the Eurozone comprises the larger part) accounts for only ~3% of spending in Europe, the US federal government accounts for ~60% of spending in America. Whereas rich EU countries such as the Netherlands make net contributions on the order of 0.4% of GDP, rich US states such as Connecticut run net fiscal balances (federal taxes paid minus federal spending received) on the order of 5% of GDP. And whereas just ~4% of people who were born and still reside in the EU live outside their country of birth, ~31% of people who were born and still reside in the US live outside their state of birth. 

Is wholesale fiscal integration of Eurozone economies achievable? Evidence from surveys and opinion polls suggest that it is very likely not.

First, despite the EU’s extensive efforts to cultivate a Pan-European identity, Europeans continue to identify more with their nation than with Europe as a whole. There is no European demos. In the 2014 wave of the Eurobarometer survey, respondents were asked to say whether they identified: with their country only; with their country first, then Europe; with Europe first, then their country; or with Europe only. The average proportion identifying with their country only or with their country first was >90%; in no country did less than 75% of people identify as such. And if we again turn our attention to the United States, we see a starkly different picture. Only a tiny fraction of Americans––around 7%––identify more with their state than with the United States itself. 

Second, when questioned specifically about taxation, social spending and employment law, most Europeans are decidedly sceptical about further centralisation. In the 2005 wave of the Eurobarometer survey (administered before the financial crisis), respondents were asked to state, for each of a number of policy areas, whether they believed decisions should be taken separately at the national level or jointly at the EU level. Only 39% supported joint decision-making on fighting unemployment; only 29% supported joint decision-making on health and social welfare; and only 25% supported joint decision-making for taxation. 

Third, there appears to be little appetite for softening the terms of the Greek bailout deal among citizens of the rich, creditor nations in Northern Europe. A YouGov poll conducted in July of 2015 found that 53% of Swedes, 61% of Germans, 64% of Danes and 74% of Finns were opposed to any renegotiation of Greece’s debt repayments. Moreover, sizable majorities in each of these countries––65% in Sweden, 59% in Germany, 70% in Denmark and 73% in Finland––blamed the Greek crisis squarely on successive Greek governments, rather than on either the troika (the EU, the IMF and the ECB) or on both Greek governments and the troika. The same poll found that 47% of Germans expressed a preference for Greece to leave the Eurozone. This percentage had risen to 59% in another YouGov poll carried out one month later. 

In conclusion: the Eurozone is currently embroiled in a crisis, a crisis which can only be overcome through much greater fiscal integration of Eurozone economies. Yet wholesale fiscal integration is not achievable in the near term. Europeans identify much more strongly with their nation than with Europe as a whole; they are largely opposed to the centralisation of taxation and social spending; and those living in the rich, creditor nations of Northern Europe show little appetite for fiscal transfers to their crisis-stricken counterparts in Greece. As Larry Elliot comments in The Guardian:
Brexit will remain a live issue unless the eurozone can sort itself out. That means either admitting that the euro has been a terrible mistake, or going the whole hog and integrating further, with a single banking system, a Europe-wide treasury, and a democratically elected finance minister with the power to raise money in Germany and spend it in Greece. This is not going to happen any time soon, and perhaps never.

Friday, 10 June 2016

Groups that the public believe benefit more from the EU are more pro-Remain

Recently, YouGov asked the British public which groups benefit or lose out most from the European Union. Specifically, they asked respondents to select up to 3 groups from a list of 12 which they believed benefit most from the EU, and 3 groups which they believed lose out most from the EU. I calculated the balance of opinion on each group as the percentage of respondents who identified it as benefiting from the EU minus the percentage who identified it as losing out from the EU. 

For each group, I then obtained an estimate of the percentage of group members who want the UK to remain in the EU, as well as the percentage who want the UK to leave the EU. The estimates for big business were obtained by averaging across the percentages reported by the CBI for the ADS, the BCC, the CIA, the CECA, the CBI, the FDF, the SMMT and TechUK. The estimates for the finance industry were obtained by averaging across the percentages reported for the BBA, Deloitte and Goldman Sachs. The estimates for small business were obtained by averaging across the percentages reported for the FSB and the percentages reported in a recent YouGov poll. The estimates for farmers were obtained from a recent poll by Farmers Weekly. The estimates for politicians were obtained from the list of MPs compiled by Euro Guido. Estimates for the well-off, students, the unemployed, the employed, the poor, and pensioners were obtained from the 2015 wave of the British Election Study (BES) panel. (Because the overall sample in the BES was skewed toward Remain (relative to now, 47–34), I subtracted 2 percentage points from each Remain percentage, and added 8 percentage points to each Leave percentage.) I could not find estimates for trade unions.

I calculated the balance of opinion on whether the UK should leave the EU within each group as the the Remain percentage minus the Leave percentage. The chart below plots this balance of opinion against the balance of opinion on whether each group benefits from the EU.


There is a remarkably strong association between the two variables (r = .93, p < 0.001). Groups that the public believes benefit more from the EU tend to be more pro-Remain. This is perhaps not surprising, however. It could simply be that members of the public evaluate how much each group benefits from the EU by reviewing instances they can recall of each group arguing for or against the EU. In other words, they assume that groups (e.g., big business) who tend to write letters to newspapers or appear on television arguing in favour of the EU must benefit more from the EU.

Wednesday, 8 June 2016

Comparison between Chile and Venezuela

The chart below, based on data from the IMF, shows change in real GDP per capita in Chile and Venezuela since 1980. GDP per capita has increased by 177% in Chile, but has fallen by 22% in Venezuela. According to the CIA World Factbook, 14% of Chileans live in poverty, compared to 32% of Venezuelans (the latter figure, from 2013, is almost certainly an underestimate). 

Friday, 6 May 2016

Identity at different levels in Europe and the United States

A pre-requisite for the establishment of a European superstate is a sense of Pan-European identity among the people of Europe. That is to say, Europeans will be unlikely to accept substantial transfers of sovereignty from their national parliaments to Brussels until enough of them identify more with Europe than with their own country. As I have noted before, this sense of Pan-European identity is not particularly widespread in Europe at the present time.

An interesting comparison is between the European Union on the one hand and the United States on the other (especially given Churchill's famous declaration in 1946 that "we must build a kind of United States of Europe"). The EU and the US are similar to one another in that each constitutes a federation of partially sovereign states. The key differences between them are: political structure (e.g., the US president is directly elected, whereas the president of the European Commission is appointed), and the amount of power wielded by central government (e.g., the US federal government accounts for ~60% of spending in the US, whereas the EU accounts for ~3% of spending in Europe).

In order to compare the relative importance of identity at different levels within Europe and the United States, I analysed data from the Eurobarometer survey and the US General Social Survey (GSS). Various waves of the Eurobarometer ask respondents to say how attached they feel to a) their country and b) Europe, on a scale from "very attached" to "not at all attached". Similarly, several waves of the GSS ask respondents to say how close they feel to a) their state and b) the USA, on a scale from "very close" to "not close at all".

I utilised the 2006 wave of the Eurobarometer (unweighted n > 13,000 after excluding Turkey), and averaged across the 1994, 2004 and 2014 waves of the GSS (unweighted n > 3000). The 2006 wave of the Eurobarometer was used for the sake of comparison with corresponding waves of the GSS (mean wave = 2004), and because it was the latest wave in which the relevant question was available prior to the Eurozone debt crisis. In both datasets, I created a variable measuring the extent to which a respondent identifies more with the higher-level unit (Europe/USA) than with the lower-level unit (country/state). This was done by simply subtracting a respondent's answer to the question about the lower level unit (e.g., 1, "not close at all") from her answer to the question about the higher level unit (e.g., 4, "very close"). Results are given in the chart below:


Only 5% of Europeans identify more with Europe than with their own country, whereas 40% of Americans identify more with the USA than with their own state. And only 7% of Americans identify more with their own state than with the USA, whereas 51% of Europeans identify more with their own country than with Europe.

Note that the relatively high proportion of respondents identifying equally with both is likely due to the limited number of response categories available. By way of example, if there had been only two response categories available (e.g., 1, "identify"; and 0, "do not identify"), since most respondents identify at least a little bit with both levels, almost everyone would be assigned a zero on the variable measuring the extent to which he identifies more with the higher-level unit. Thus, the foregoing results almost certainly constitute a conservative assessment of the difference between Europeans and Americans. 

Monday, 11 April 2016

How much revenue is hidden away in tax havens?

In light of the recent Panama Papers scandal, it is worth considering how much revenue is actually hidden away in tax havens. The most widely cited estimates seem to be from a paper by Zucman (2014; Journal of Economic Perspectives, Table 1). These estimates are cited in a recent report by Oxfam (p. 12), entitled 'Ending the Era of Tax Havens: Why the UK Government Must Lead the Way'. And very similar figures are offered in a recent report by the Tax Justice Network (p. 42), entitled 'The Price of Offshore Revisited'. 

Zucman reports revenue losses from offshore wealth of: $75 billion for Europe; $36 billion for the United States; and $190 billion for the world. Using GDP data from the World Bank, and tax revenues as a percentage of GDP from the Heritage Foundation, I calculated that these estimates represent losses of: 1% of revenues for Europe (0.4% of GDP); 0.8% of revenues for the United States (0.2% of GDP); and 1% of revenues for the world (0.2% of GDP). (Tim Worstall obtains similar figures here.)

It should be noted that these estimates are most likely conservative. As Zucman writes:
My method probably delivers a lower bound, in part because it only captures financial wealth and disregards real assets. After all, high-net-worth individuals can stash works of art, jewelry, and gold in “freeports,” warehouses that serve as repositories for valuables—Geneva, Luxembourg, and Singapore all have them. High-net-worth individuals also own real estate in foreign countries.
For comparison, tax revenues in the UK decreased by 4.5% between 2007 and 2009, over the course of the financial crisis. 

Monday, 28 March 2016

EU contributions have not wiped out austerity savings twice over

The Daily Express claims that "Britain has paid more to Europe than it has saved in ENTIRE austerity drive". In particular, it asserts:
The austerity measures to reduce spiralling national debt clawed back £44 billion in the last Parliament, which critics say has come at the expense of vital public services. Being in Europe has cost the UK £87 billion over the same five years, almost double the austerity savings.
By my calculation, this is not quite correct. According to the OBR, real government spending decreased from £765 billion in 2009-10 to £747 billion in 2014-15. Cumulative savings (from spending cuts) over this period (using 2009-10 as the reference year) amount to £53.6 billion. And, according to the House of Commons Library, total net EU contributions over the same period equal £44.3 billion. EU contributions therefore equate to 83% of austerity savings––not insubstantial, but nowhere near double. 

The Daily Express obtained the figure of £87 billion by summing up gross EU contributions, rather than net ones. Our gross EU contribution encompass not only a seizable rebate but also the money we get back in the form of farm subsidies and regional development funds etc. Arguably then, net contributions are the appropriate figures, which means that 83% and not ~200% represents the proportion of austerity savings negated by our payments to the EU. 

However, it could be argued that using 2009-10 as the reference year is not the correct way to estimate austerity savings. After all, if government spending remained at 2009-10 levels, and the economy continued to grow, it would come to represent an ever smaller share of GDP. Yet government spending in 2014-15 amounted to 40.8% of GDP, which happens to be almost identical to the long-run average (the average from 1948 to 2014 being 40.7%). It therefore seems defensible to use 2009-10 as the reference year for the time period in question. 

Nonetheless, if instead of assuming that government spending would have stabilised at 2009-10 levels in the absence of austerity, one assumes that it would have stabilised at 43% of GDP after 2012-13, then cumulative savings from 2009-10 to 2014-15 actually amount to £78.7 billion. Under this assumption, EU contributions equate to only 56% of austerity savings. 

Wednesday, 23 March 2016

Why Cameron appears to want Turkey in the EU

A possible explanation, in the form of a letter to The Spectator (which they did not print):
Sir: Douglas Murray cannot seem to fathom why David Cameron supports Turkey’s membership of the EU (‘Cameron’s support for Turkey’s EU membership should worry us all’, 15 March). 
The Prime Minister has long been an advocate of free trade across the EU, but I don’t put him down as a committed Eurofederalist. My guess is that Mr Cameron favours Turkish entry into the EU for precisely the same reason that many Tories favoured EU enlargement during the 1990s, namely that it would serve as a bulwark against further political integration. 
Mr Murray frets over the possibility that 75 million Turks could soon enjoy visa-free access to the Schengen Area. Perhaps Mr Cameron is betting that mass immigration of Turks would prove so disagreeable that Turkish accession, were it to be achieved, would undermine not only Schengen but also the principle of free movement itself.
Noah Carl,
Nuffield College, Oxford
I'd be interested to know if anyone else has an alternative explanation.

Saturday, 5 March 2016

US farm lobby calls for higher immigration to reduce wages

Jason Richwine has an interesting article in National Review about a recent report put out by Partnership for a New American Economy, a coalition of business leaders (including arch evil-doer Rupert Murdoch) that lobbies for higher immigration. In short, the report calls for an increase in immigration of low-skilled farm workers to drive down wages in the agricultural sector. 

Richwine doesn't quote directly from the report in his piece, so I thought I'd so here, to illustrate just how blunt and indelicate the language is. In Part V, 'Evidence that the decline in workers led to a labour shortage', the report notes:
One consequence of the reduced supply of available farm labor is that it has become much more expensive for farms to hire seasonal farmworkers, a development that has placed a strain on many U.S. farms.
It then notes:
It should be little surprise then that in recent years––as immigration has slowed––wages for seasonal positions have increased. What is surprising, however, is by how much such wages have grown.
The report proceeds to show (by means of accompanying charts) that wages have risen much more in the agricultural sector than in other low-skilled sectors, due to the relative scarcity of low-skilled farm workers. It notes:
As the economy has improved and employment has increased, employers in non-agricultural industries have been able to find enough workers to fill job vacancies without upward pressure on wages. Farmers, on the other hand, faced a hard time finding sufficient numbers of laborers and have had to bid up wages to attract and retain workers. 
The report even calculates precisely how much wages were boosted by the reduction in labour supply:
Put simply, this elasticity means that each 1.3 percent drop in the available supply of labor results in a one percent increase in the wages paid to field and crop workers.

Friday, 4 March 2016

Lord Rose concedes that ending free movement could increase British wages

During a recent meeting of the Treasury Select Committee, Lord Stuart Rose––chairman of the Britain Stronger in Europe campaign––was asked by Labour MP Wes Streeting: 
If free movement were to end following Brexit, is it not reasonable to suppose that we could see increases in wages for low skilled workers in the UK just off the back of the economic impact of free movement on wages?
His reply was: 
Well, if you're short of labour the price will frankly go up. So yes, but that's not necessarily a good thing.
A clip of the exchange is available via the Daily Express

Tuesday, 23 February 2016

Social desirability bias for survey questions on race

Social desirability bias is the tendency for individuals to avoid answering survey questions in a way that might be looked upon unfavourably by others. It often impacts questions on issues such as race, religion and immigration. Looking at data from the CBS/NYT poll that I mentioned in my last post, I discovered quite an interesting example of social desirability bias. The poll included the following question on race relations in the US:
In recent years, do you think too much has been made of the problems facing black people, too little has been made, or is it about right?
I recoded the variable so that respondents answering "too much" were distinguished from those answering either "about right" or "too little". Crucially, the poll also included the race of the interviewer for each individual respondent. Thus, I investigated social desirability bias by examining the effect of having a black interviewer on white respondents' answers to the above question on race relations. 

The table below shows coefficients from linear probability (i.e., OLS) models of believing that too much has been made of the problems facing black people. The sample is restricted to whites (who in any case comprised the vast majority of respondents). The value in the left-hand column indicates that whites with a black interviewer were 15 percentage points less likely to answer "too much" than whites with a white interviewer. And the values in the other columns indicate that this effect remains unchanged when controlling for a range of socio-demographic characteristics. 


15 percentage points is arguably a fairly large difference. Indeed, 38% of whites with a white interviewer answered "too much", whereas only 23% of whites with a black interviewer did so.

Thursday, 18 February 2016

Americans who can correctly define 'socialism' view it less positively

A couple of days ago, The Federalist published a long article entitled 'Why So Many Millenials are Socialists', the main explanation being that relatively few millenials seem to understand what socialism is. To investigate whether, in general, Americans with a better understanding of socialism view it more or less positively, I examined data from a poll conducted by CBS News and The New York Times in April of 2010. 

Respondents were asked the question, "When someone says the country is moving toward socialism, what does that mean to you?" The correct (and modal) answer, given by 37% of respondents, was "government ownership of the means of production". The most-frequently given wrong answers were: "redistribution of wealth" (9%), "taking rights away from people" (9%), and "a bad thing" (4%). Unfortunately, the CBS/NYT poll did not ask respondents for their view on socialism. 

Happily, however, a Reason/Rupe poll from August 2014 did ask respondents for their view on socialism. (Since the two polls surveyed completely different individuals, it is only possible to conduct an analysis at the aggregate level.) Percentages with a positive and negative view of socialism were reported for various different socio-demographic groups: whites, blacks, Republicans, Democrats, etc. Accordingly, I calculated the percentage giving the correct definition of 'socialism' for each of those same socio-demographic groups, using the CBS/NYT poll (sampling weights were applied in order to attain representativeness).

For example, 29% of whites in the Reason/Rupe poll had a positive view of socialism, and 43% of whites in the CBS/NYT poll gave the correct definition of 'socialism'; 55% of blacks in the Reason/Rupe poll had a positive view of socialism, and 15% of blacks in the CBS/NYT poll gave the correct definition of 'socialism'. The two charts below plot percentage giving the correct definition of 'socialism' against: respectively, percentage with a positive view of socialism, and percentage with a negative view of socialism.



In both cases, there is a very strong relationship. Socio-demographic groups who are better at defining 'socialism' are less likely to view it positively, and are more likely to view it negatively. The correlations (controlling for group fixed-effects) are: r = –.85 and r = .86, respectively. Of course, since the various groups overlap with one another, and are therefore not at all independent, these figures should be interpreted with considerable caution. 

Sunday, 7 February 2016

Big business is overwhelmingly pro-EU

YouGov recently ran a poll of business leaders' stance on the European Union. Interestingly, and consistent with previous findings, there was a huge gap between small business and big business. Among, SMEs, 42% answered "leave" and 47% answered "remain". By contrast, among FTSE companies, only 7% answered "leave" while 93% answered "remain". 

One interpretation of these results is that leaving the EU would be bad for Britain's largest businesses, and would therefore be deleterious to the economy as a whole––large businesses, though small in number, account for a disproportionate share of both output and employment. Another interpretation, however, is that large businesses tend to support the EU because they can use it to gain special privileges at the expense of their competition. 

Friday, 5 February 2016

Left-wing euroscepticism: Tony Benn's 1974 letter to his constituents

Euroscepticism is widely regarded as a conservative position. Indeed, in the most recent YouGov poll, only 30% of Conservatives and only 2% of UKIP supporters said the UK should remain in the European Union, compared to 60% of Labour supporters, 63% of Lib Dems, and 69% of other voters (mostly Greens and SNP supporters). Nonetheless, as I have noted before, there are and have been many prominent left-wing eurosceptics. One such eurosceptic was the late Tony Benn. 

I just came across a letter that Benn sent out to his constituents in December of 1974, prior to the upcoming 1975 referendum on Britain's membership of the common market. One particular quote caught my eye (emphasis in original):
But we must recognise that the European Community has now set itself the objectives of developing a common foreign policy, a form of common nationality expressed through a common passport, a directly elected assembly, and an economic and monetary union which, taken together, would in effect make the United Kingdom into one province of a Western European State. The communiqué issued after the recent Paris summit makes these objectives clear.  
Britain's continuing membership of the Community would mean the end of Britain as a completely self-governing nation and the end of our democratically elected Parliament as the supreme law-making body in the United Kingdom.
Benn reiterated his euroscepticism at the Oxford Union in 2013: "They're building an empire there, and they want us to be a part of that empire, and I don't want that". 

Wednesday, 27 January 2016

Bernie Sanders on the effects of low-skilled immigration

Bernie Sanders, one of the contenders for the Democratic nomination in the US presidential race, has a mixed record on the issue of immigration. He voted against the 2007 Comprehensive Immigration Reform Act, and has voted against guest worker schemes, yet he voted for the 2013 Border Security, Economic Opportunity, and Immigration Modernization Act, and claims to support a path to citizenship for illegal immigrants. In fact, the anti-immigration organisation NumbersUSA gives him an F– grade.

Nevertheless, some of his rhetoric on the subject of immigration is more reminiscent of a conservative Republican than a progressive Democrat. And indeed, it has earned him praise from no less an anti-immigration activist than Roy Beck––the founder of NumbersUSA––who said, "I think in his gut he believes his obligation as president would be to the workers of America, not to the workers of the world". Below are a selection of Bernie's statements on the effects of low-skilled immigration. (All quotes are taken from the linked articles.)  
My concern about the bill that I voted against was that there was too much emphasis on bringing low-wage workers into this country. 
There is a reason that Wall Street likes immigration reform. What I think they’re interested in is seeing a process by which we can bring low-wage labor into this county. 
What they are talking about is completely opening up the border. That was the question, should we have a completely open border, so that anybody can come into the United States of America. If that were to happen, which I strongly disagree with, there is no question in my mind that that was substantially lower wages in this country. 
When you have 36 percent of Hispanic kids in this country who can’t find jobs, and you bring a lot of unskilled workers into this country, what do you think happens to that 36 percent of kids who are today unemployed? Fifty-one percent of African-American kids? I don’t think there’s any presidential candidate, none, who thinks we should open up the borders. 
If poverty is increasing and if wages are going down, I don’t know why we need millions of people to be coming into this country as guest workers who will work for lower wages than American workers and drive waged down even lower than they are now. 
It does not make a lot of sense to me to bring hundreds of thousands of those workers into this country to work for minimum wage and compete with Americans kids. 
Open borders? No, that’s a Koch brothers proposal. That’s a right-wing proposal that essentially says there is no United States. 
It would make everybody in America poorer––you're doing away with the concept of a nation state, and I don't think there's any country in the world that believes in that. If you believe in a nation state or in a country called the United States or UK or Denmark or any other country, you have an obligation in my view to do everything we can to help poor people. 
What right-wing people in this country would love is an open-border policy. Bring in all kinds of people, work for $2 or $3 an hour, that would be great for them. I don't believe in that. I think we have to raise wages in this country, I think we have to do everything we can to create millions of jobs. 
You know what youth unemployment is in the United States of America today? If you're a white high school graduate, it's 33 percent, Hispanic 36 percent, African American 51 percent. You think we should open the borders and bring in a lot of low-wage workers, or do you think maybe we should try to get jobs for those kids?

Tuesday, 12 January 2016

Progressive cities are more segregated

The Brookings Institution just published a report on black-white segregation in major US cities. The chart below plots a segregation index, taken from the Brookings report, against a conservatism index, taken from the paper by Tausanovitch and Warshaw (2014). The value of the segregation index is equal to the fraction of blacks that would have to move neighbourhoods in order to match the distribution of whites. The conservatism index is based on aggregation of opinion poll data from different US cities. 


The Pearson correlation is r = –.46 (p = 0.002). This remains unchanged when controlling for the fraction black: β = –.46 (p = 0.001). Regular readers may recall a previous post reporting that the black/white incarceration rate ratio tends to be higher in Northern states. Other evidence indicates that progressive cities tend to be less affordable, exhibit higher income inequality, and have greater black-white inequality. In all these cases, of course, it is not precisely obvious which way causality is running. More restrictive planning regulations in progressive cities might be one culprit

Sunday, 10 January 2016

Survey of economists on the minimum wage

In November of 2015, the University of New Hampshire Survey Centre conducted a survey of economists on the minimum wage. The survey was conducted on behalf of the Employment Policies Institute––a right-wing think tank. However, 59% of those who responded identified as Democrat, with 34% identifying as Independent and only 7% identifying as Republican. 166 economists answered the survey in total, corresponding to a response rate of 30%.

The first major finding was that 60% of economists in the sample favoured some increase to the federal minimum wage. The chart below plots the distribution of responses to the question, "Currently the federal minimum wage is $7.25 per hour, do you support or oppose raising the federal minimum wage at all?"


The second major finding was that nearly 75% of economists in the sample opposed raising the federal minimum wage to $15/hour, as advocated by politicians such as Bernie Sanders. The chart below plots the distribution of responses to the question, "Currently the federal minimum wage is $7.25 per hour, do you support or oppose raising the federal minimum wage to $15 per hour?"


In fact, the average minimum wage preferred by economists in the sample was $9.59/hour. Respondents were about evenly divided over whether a $15/hour minimum wage would increase or decrease the poverty rate. But the vast majority agreed that it would have a negative effect on employment, and that it would make it harder for small firms to stay in business.