The Unassuming Economist

Matthew A. Killingsworth, Daniel Kahneman, and Barbara Mellers explore the relationship between income and emotional well-being.

“Using dichotomous questions about the preceding day, [Kahneman and Deaton, Proc. Natl. Acad. Sci. U.S.A. 107, 16489–16493 (2010)] reported a flattening pattern: happiness increased steadily with log(income) up to a threshold and then plateaued. Using experience sampling with a continuous scale, [Killingsworth, Proc. Natl. Acad. Sci. U.S.A. 118, e2016976118 (2021)] reported a linear-log pattern in which average happiness rose consistently with log(income).”

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From Conversable Economist:

“The pandemic recession from March to April 2020 was a different creature from the previous post World-War II recessions: different in cause, length, depth, and the kinds of social and economic changes that happened. The appropriate economic policy response was also different. Instead of the standard anti-recession policy of stimulating the entire economy, it is more useful to think of pandemic recession policy as a form of social insurance. One key question is whether this social insurance should operated primarily by supporting the unemployed or by supporting jobs.

Lest this distinction sound like a word game, consider this real world difference. In the pandemic, most European countries responded with programs of “short-time work.” The idea the employer doesn’t need to fire or lay-off workers. Instead, it cuts their hours substantially, and the government makes up the difference. It’s a kind of partial unemployment, except that when the worst of short, sharp pandemic hit to the economy passed by, the workers were still employed at their previous jobs and employers could ramp up their hours again. In contrast, the US approach emphasized larger and longer unemployment payment aimed at those who were without jobs. US employers (with the exception of some small state-level programs) did not have option of switching to short-time work.

Giulia Giupponi, Camille Landais, and Alice Lapeyre discuss the tradeoffs between tehse two approaches in “Should We Insure Workers or Jobs during Recessions?” (Spring 2022, Journal of Economic Perspectives, 36:2, 29-54). Here’s one of their figures. The solid lines show the share of population receiving unemployment insurance, with the blue line showing the US and the red line showing a weighted average for Germany, France, Italy, and the United Kingdom. Notice that the share of workers getting unemployment insurance in the pandemic spikes up in the US (solid blue line) but barely budges in the European countries (solid red line). Conversely, the share of workers on short-time work spikes up in the European countries (dashed red line) but barely budgets in the US (dashed blue line).”

Source: World Bank Blogs

A recent blog by the World Bank discusses the pertinent issue of effectively measuring primarily female-run enterprises in developing and developed nations across the world. Through a compilation of resources such as the report, Women, Business and the Law, 2022 and endeavors in the We-Data project which collects data on women’s access to various business-related resources, the blog attempts to provide a broad picture of the status quo. It explores some regulatory barriers (e.g., laws prohibiting married women from being signatories to commercial contracts or accessing capital independently), operational hurdles, and data-related challenges that countries face while capturing this segment of businesses.

Read on to know more.

Watch: World Bank’s 9th South Asia Economic Policy Network conference on Social Norms and Gender Equality (May 11th and 12th, 2022)

Source: Project Syndicate

“The explosive growth of Bitcoin and other cryptocurrencies has opened up a new front in the broader climate crisis by threatening to offset the progress made in recent years toward decarbonization. For the technology to gain wider adoption over the long term, its proponents will have to get serious about reducing its energy usage“, writes Marion Laboure of Harvard University.

The extensive power requirements in the cryptocurrency mining process, especially of those currencies limited in supply like Bitcoin, have generated a global debate on the sustainability of the process. While China banned the mining of cryptocurrency in September 2021 amidst an already debilitating energy crisis, other countries like El Salvador have adopted other methods like establishing a crypto mining city near a volcano to power the process using geothermal energy. Clearly, the world is divided on the matter. This article explores the issue in greater detail, charts out the environment-revenue trade-off before economies, and explores potential solutions.

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Source: Peterson Institute of International Economics

While a lot of research conducted from 2021 until March of 2022 suggests that labor markets in the US reached record high levels of tightness as job openings and quits rose, recent evidence collected by the Peterson Institute indicates the possibility of a potential cool down. The underlying argument driving this idea is that the sharp spike in nominal wages in 2021 could have been a result of some post-pandemic factors that shaped expectations of longer-run inflation which ultimately got dragged until 2022. So even though labor force participation rates in the US in April 2022 remained at 3.6%, 0.1% higher than the corresponding pre-pandemic level, the authors argue that this shortfall in employment is driven by a labor supply shortage as demand is robust.

The article also touches upon related issues like rising nominal wages that are beginning to plateau now and a somewhat alarming drop in real wages.

Read the full article to know more.