Many great economists of the past didn’t limit their contributions to just economics. Instead, they often made advances in mathematics, physics, philosophy, or other fields too. Frank Plumpton Ramsey is one such brilliant mind. Equal parts mathematician, philosopher, and economist, he developed a cornerstone model of macroeconomics – the Ramsey model – among a number of other contributions. Ramsey’s life in brief The economist Frank Ramsey was born in 1903 in Cambridge, England. He was considered a genius, and was selected to translate a famous German philosophy text (Ludwig Wittgenstein’s Tractatus) into English at the age of 18. Famously an atheist, he was nevertheless fond of his brother Michael Ramsey, who was the Archbishop of Canterbury. Ramsey attended Winchester College in 1915, and soon went on to Trinity College, Cambridge in 1920. He graduated with high academic achievement in mathematics, got married in 1925, and was appointed as a university lecturer in mathematics in 1926 at King’s College. His friends described him as not only smart, but congenial and humble. During his professorship, Ramsey wrote and published several of his own, now-famous works. These included non-economics works such as The Foundations of Mathematics, Truth and Probability (which remained unpublished until after his death, but formed the foundation of modern decision theory), Facts and Propositions, and Universals. From these works and more, Ramsey is credited with major contributions in the fields of mathematics (leading to the development of Ramsey theory, now named after him, which also contributes to theoretical computer science), logic, philosophy, and of course economics. In fact, Ramsey met John Maynard Keynes himself and wrote a critique of Keynes’ Treatise on Probability, which appeared in the 1922 edition of The Cambridge Magazine. Not one to take it personally, Keynes later recommended Ramsey be inducted as a Fellow of Mathematics at King’s College (Keynes was a Fellow as well). Keynes’ praise of Ramsey did not stop there. Ramsey’s first major paper on economics was A contribution to the theory of taxation. Shortly after, Ramsey published his Mathematical Theory of Saving. These works made major contributions to economic theory, along with his Truth and Probability – which was not explicitly about economics, but nevertheless helped economists learn how to handle subjective expected utility. Keynes had the following to say about Ramsey’s Mathematical Theory of Saving, in an article simply titled “F. P. Ramsey” for the 1930 edition of the Economic Journal: [it is] one of the most remarkable contributions to mathematical economics ever made, both in respect of the intrinsic importance and difficulty of its subject, the power and elegance of the technical methods employed, and the clear purity of illumination with which the writer’s mind is felt by the reader to play about its subject. The Ramsey model Arguably the biggest contribution Ramsey made to economics was the development of the Ramsey model, also called the Ramsey-Cass-Koopmans model (as the latter economists extended Ramsey’s work to develop the model). This was one of the first economics models to heavily employ calculus in its derivation, which also helped to popularize including more mathematical logic into the field. The Ramsey model is an important neoclassical growth model, one of the cornerstone models of macroeconomics. It helps economists derive the relationship between the growth of the factors capital, labor, and output, capital intensity, population growth, and the optimal savings rate in a theoretical setting with an infinite time horizon. The model considers households as sorts of dynastic families, so that they form a single “agent” that then lives throughout many generations. This implies that each generation has a certain level of altruism about the well-being of the next generation. It also endogenizes the savings rate, which is an important improvement over earlier models that took the savings rate to be an exogenous, given fact. After all, individuals are the ones doing the saving, and they make these decisions based on their economic circumstances. This forms a powerful framework to examine how changing parameters – like the amount of altruism or patience each generation has – will affect the optimal savings (and thereby investment) rate for social welfare. A higher savings rate means future generations have more as the economy grows faster, but the current generations cannot consume as much. The model does have limitations, however. It’s built on some fairly idealized assumptions that may not hold true in reality. These include the fact that each generation is altruistic towards the next, the assumption that all households are representative of each other (and so do not conflict with one another), and the assumption that households have perfect foresight into the economy’s future and so can accurately choose the optimal level of savings. <11an>limit:3;categories:Master's Programs;disciplines:Economics</11an> Nevertheless, it remains a foundational model that helps economists study the behavior of different variables in a theoretical “vacuum”, and can be easily modified to include more realistic assumptions. The model is often compared to the Overlapping Generations (OLG) model, which features a finite time horizon and an infinite number of agents, as opposed to the Ramsey model’s finite agents and infinite time. Together, these two models have formed a strong foundation upon which macroeconomists can test theories and build new models. Conclusion Unfortunately for economics and the world, after his return to Cambridge Frank Ramsey died in January 1930 at the age of 26, most likely due to liver problems. His mathematical brilliance and enjoyment of economics could have developed economic theory faster than we were able to without him. With just a handful of years of scholarship, Ramsey left a lasting legacy that economists are still making use of today. His contemporary, the philosopher Richard B. Braithwaite, wrote the following for an obituary: His intellectual subtlety was combined with the most delightful simplicity and candour. Intolerant of fools, he inspired others by his mental fertility and integrity. To one at least of his friends his death is as if a lighthouse were extinguished and we were left to grope our way in the dark. References https://plato.stanford.edu/entries/ramsey/ https://mathshistory.st-andrews.ac.uk/Biographies/Ramsey/ https://www.hetwebsite.net/het/profiles/ramsey.htm Header image credit: public domain. Volsav, CC BY-SA 4.0, via Wikimedia Commons
Students often learn about important figures in economics only briefly and in passing, yet the content taught in economics courses often comes from brilliant economists such as these.
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AI supports the case to introduce a Universal Basic Income (UBI)
This economic growth is seen as a good thing by economists, because it theoretically empowers us to satisfy our needs with less effort, and frees us up to enjoy our lives more. As our economies have become increasingly efficient over the past several decades, some have increasingly called for shorter work weeks to take advantage of this increased productivity. The advent of new and useful AI tools only strengthens this call. The link between economic growth and leisure time Typically, two main factors contribute to economic growth; increasing population and improving technology. Both of these factors are represented by inputs in the standard Cobb-Douglas model of the economy (population is represented by labor, L, which will tend to increase as the population grows). But it’s the latter factor, technological progress, that ties AI to the idea of a universal basic income (UBI). Technological progress – represented by the multiplicative factor A in basic Cobb-Douglas models – allows society to produce more with the exact same levels of employment and capital stock. John Maynard Keynes, one of the great historical figures in economics, predicted that by 2030 people would work for only 15 hours a week. He believed this because he expected that the increase in economic productivity, largely in part due to improving technology, would allow people to produce more in less time. This would then allow for workers to have much more leisure time, which would increase overall welfare and happiness. Thinkers and philosophers in history have often viewed leisure time as the ultimate goal of increasing productivity. For example, Aristotle, in his work titled Nicomachean Ethics, once said that “the end of labor is to gain leisure” (though he also advised that we use our leisure time wisely, stating “...the objective of leisure can and should be to sustain other aspects of our lives which make us uniquely human: our souls, our minds, our personal and civic relationships”). This view makes sense. What is the point of toil if not to provide for ourselves? And if we are sufficiently provided for, why should we continue to toil needlessly? As technology advances to the point where we can produce enough goods and services for everyone in record time, it seems only fair that everyone should have their basic needs met. This would then allow people the freedom to pursue their own passions and interests – seemingly a great human achievement. UBI and AI This sort of vision of a human-centric utopia begins to point to the need for a systematic way to ensure everyone is provided for fairly. One idea that may accomplish this is, of course, implementing a universal basic income (or UBI). The development of (potentially) transformative AI tools lends much weight to the theoretical arguments around implementing a UBI – and thus increases the need to seriously discuss the merits and drawbacks of such a system. The basic idea of a UBI is that the government would pay everyone a basic stipend to live on. Then, generally, people would be free to continue pursuing business enterprises or working careers as they saw fit to earn extra money or work on a passion project. Notably, this situation differs from communism in that public ownership of everything is not implied or even desirable in such a situation. Certainly, a society with a UBI could be considered some flavor of socialist, but it’s not necessarily anti-capitalist. UBI itself would not change the normal functioning of capitalistic markets. Therefore, capitalist structures and the rewards it gives to innovators and efficient business leaders could remain, yet the UBI would grant individuals a greater degree of personal freedom. How AI can lessen some arguments against a UBI One common argument against a UBI is the idea that having a UBI will make people not want to work. If everyone made enough money to live comfortably without doing anything, lots of people would possibly choose to stop contributing to society. Further, if a UBI is substantial enough, it might crowd out certain lower-income professions entirely. If people could make as much money as a fast food worker, librarian, or computer repair technician (for example) without doing any work, it’s very likely that nobody would choose to work in those roles. This could either inflate the pay for these roles to unsustainable levels (as demand outstripped the supply of labor), or it could cause these services to disappear entirely. The solution to this problem is not a lower UBI. If the payments weren’t substantial enough to provide for the basic needs of the recipients, they would not achieve the intended goal of a UBI, which is to do just that. Proponents of a UBI wouldn’t be satisfied with only a small income that left people still unable to provide for themselves. However, advanced AI might provide a solution to this potential labor supply problem, at least in some industries. If AI advances enough to allow machines to replace humans in these roles, suddenly the idea of a UBI seems quite desirable. Humans wouldn’t have to work these types of jobs at all, but society could still benefit from them. In fact, AI is already starting to transform some of these roles. The first level of customer or IT support in many industries often takes the form of an AI chatbot to diagnose the issue, provide an appropriate answer, and escalate to a human professional if help is still needed. What’s more, a recent Wall Street Journal article revealed that several fast food chains are already replacing humans with AI that will take your order in the drive-thru. Wendy’s announced in mid-2023 that they would be partnering with Google Cloud to do the same. Meanwhile, news about AI replacing librarians has yet to come – but certainly many functions of a librarian could be automated by generative AI, including searching for books, directing people to specific amenities, reserving rooms, checking out books, and more. In the perhaps not-so-distant future, then, people who would formerly have worked in these roles could instead pursue their own passions – like producing music, writing, furthering their education, or simply spending time with their families. It’s not hard to imagine society becoming more fulfilled, happy, and even more healthy in this case. Indeed, one common argument in favor of a UBI is that it would free up citizens to pursue their passions and enjoy life rather than being slaves to their desk jobs. Since the COVID-19 pandemic, trends like quiet quitting have shown that modern workers are attempting to rebalance the scales in their favor, and would like to enjoy the benefits of economic growth a bit more in their own personal lives. Advanced AI tools could help make this a reality without reducing economic output. How much productivity is enough? While our current slate of AI tools cannot do everything, and certainly haven’t displaced most workers, they have the potential to massively increase human productivity. Especially as these tools become more sophisticated, specialized, and powerful (perhaps culminating in the development of more advanced and human-like AI), larger segments of the economy may become dominated by them – potentially costing people jobs as well as creating new ones via the process of creative destruction. And many jobs, even if they’re not fully automated, will experience a potentially huge increase in efficiency as specialized AI tools are developed for their fields. Which begs the question: at what point has society achieved enough productivity? The idea that profits and output will grow forever, infinitely, is ludicrous when considered for any length of time. Yet capitalism has no built-in ceiling, or “off” switch, and continues to prioritize growth of the bottom line. Therefore, a purely capitalist society where growth and returns are valued above all else may not be the best system forever. Indeed, it may have already worn out its welcome. Many would argue that rising wealth inequality and global issues like climate change are fairly direct results of the unsustainable pursuit of profit margins that capitalism has championed. What, then, should take its place? One possible answer could be a society with a somewhat capitalist structure, where sustainable provision is provided by a UBI. One where people are more free to develop their careers, forge new businesses as entrepreneurs, and make extra money how they see fit, but where society no longer deifies the paradigm of infinite, quarter-over-quarter growth. In such a system, the basic gears of the economy would continue to turn as AI-assisted or even entirely automated occupations produce as much as we do now with far fewer labor hours. This would free up people to live more fulfilling lives. This includes people whose fulfillment comes from work: a UBI would give people the flexibility to pursue job training and advanced education for the jobs they want to try, or give them a great safety net as they try to develop their entrepreneurial ideas. Advanced AI capabilities lend a lot of weight and potential realism to these ideals, and the straightforward idea that everyone should have a basic income to take care of these needs. If it becomes possible in the coming decades, why shouldn’t we give it a shot? AI does not automatically solve the challenges of fairly distributing economic gains As aforementioned, AI signifies yet another massive leap forward in potential productivity since Keynes made his original “15-hour work week by 2030” prediction in 1930. In that regard, how have we been doing over the past century? A graph put together by the site Our World in Data – using data from the World Bank and Maddison (2017) – shows the incredible exponential increase in world GDP, especially since 1900. Yet, working hours in developed countries have remained at roughly 40 hours per week for decades. In several developed nations, work weeks of more than 40 hours per week have even become more common than they were in the 1990s, according to the London School of Economics’ blog. Clearly, the massive increases in productivity haven’t exactly freed up the average working person as Keynes predicted. This is because increased growth doesn’t automatically distribute itself fairly. As productivity has increased over the past century, there have been modest gains in leisure time. But, wealth inequality has risen dramatically. Increased productivity will change the economy, and a UBI is just one possible way that productivity can trickle throughout the economy. But there are other ways productivity could contribute: wealth inequality is the natural result if nothing is done to ensure that increased prosperity is distributed throughout society. The reason for this is that the existing structures of power in the capitalist system are bent towards infinite growth. Those at the top are benefitted when productivity increases, and have no proper incentives to share the wealth. Instead, like metaphorical dragons, they’re able to hoard their wealth to ludicrous levels. Again, there is no productivity target or goal in our current economic system; if we become more productive, the economic engine we’ve created is designed to continue shooting for the moon, not help us all live happier lives. It’s up to us to reassess our goals, take stock of the world around us, and pivot. If AI creates enough production to keep society running without most of us needing to work so much, or even at all, then there’s a much stronger case to be made that people should be given a basic living stipend and allowed to pursue their own lives with a greater degree of freedom. Louis O. Kelso once said in his co-authored book Two-Factor Theory: the Economics of Reality, “The sooner the world solves its economic problems, the sooner its inhabitants can afford leisure and peace and get on with the non-material things that are inherently important: the work of mind and spirit that is gloriously and uniquely human, the work that no machine can ever do”. Perhaps it’s nearly time to let those machines do the material work for us; after all, we’ve got to live our lives to the fullest. Header image credit: Pixabay.
One of the key features of the global economy is that it tends to grow over time. In fact, that growth has become something of an expectation in the modern capitalist system, where the success of corporations is often judged by their growth, even over relatively short time horizons.
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The INOMICS Questionnaire: Fratzscher vs Gómez Pineda
The interview with Dr. Gómez Pineda offers an interesting look into the thoughts of an accomplished central banker. For early-career economists in particular, it is not only enlightening but full of essential advice, not least of which is the importance of continuous learning and reading. Our advice – start your reading here! Javier G. Gómez Pineda is Senior Economist (Investigador Principal) at Banco de la República (the central bank of Colombia). He also teaches Monetary Economics at Universidad del Rosario in Bogotá. His research interests are in Monetary Economics and International Economics; he is author of the textbook Dinero, banca y mercados emergentes, los países emergentes en la economía global, 2010, Ed. Alfaomega; and he holds a PhD in Economics from the University of Chicago. His interview responses to Dr. Fratzscher’s queries are below. Marcel Fratscher: What is your favorite place on earth? Javier Gómez Pineda: To start with, I would like to express my gratitude for this interview and having the opportunity to share my thoughts. My favorite place on earth is where you can share with your loved ones. To me, it is home. As for places you get to be around as an economist, I would say my favorite place would be the macro seminar at the University of Chicago. As a student at Chicago, I had the chance to see several papers being greatly improved by comments from the audience. I recall once or twice Gary Becker gave incredible micro feedback to two macro papers. MF: Outside of economics, what occupation would you choose if you could be absolutely anything? JGP: I think I would be a civil engineer to help improve infrastructure in Colombia. As an economist, in a way I happened to be sort of a civil engineer when I got involved in the implementation of the inflation targeting framework in Colombia back in 2000. However, I would choose in the first, second and third place to be an economist. MF: What is the virtue you appreciate the most? JGP: An important virtue is that of studiousness. At whatever level you consider, studiousness enables you to better understand and help improve the world you live in. Working in research and teaching is a privilege and a continuous opportunity to exercise this virtue. Students should keep in mind that knowledge is not something that ends at graduation, you always have to keep learning and maintain yourself actively, even if you are not in a research or teaching job. MF: Your all-time favorite figure in economics? JGP: Robert Lucas. Thanks to the Lucas critique, we no longer rely on those unsafe reduced-form econometric equations. It is also thanks to the rational expectations revolution that we now routinely use rational expectations DSGE monetary policy models, although we have had to amend them with frictions so that they are not too forward-looking. Finally, I think the methodological approach of welfare evaluation is one that continues to bear fruit as progress continues in macroeconomics. MF: Your #1 economics blog? JGP: I read VoxEU CEPR to learn about the work of several macroeconomists who share their views there. Also, as I drive to teach my course on Monetary Theory, I listen to the Macro Musings podcasts of the Mercatus Center of George Mason University. MF: Your ideal student? JGP: Every student is special and different in his or her own way and worth the best teaching effort. That said, in my opinion, the ideal student is the one that later becomes your co-author. That turn of the matters means that the student had been motivated enough to learn the material and develop his or her vocation, hopefully becoming a better version of him or herself. MF: What should be done to address gender bias in research in economics? JGP: Although I am not very knowledgeable about this topic, in my humble opinion I understand that the gender bias in research in economics could be expected to improve as a consequence of the influence of current female role models on school enrollment. There are currently outstanding role models in academia, such as Esther Duflo, as well as in policy institutions such as the IMF, the Fed and the ECB, such as Kristalina Georgieva, Gita Gopinath, Janet Yellen, and even cases of lawyers working on economic issues, such as Christine Lagarde. MF: What is the most misguided research agenda in economics? JGP: Misguided literally means with the wrong guide. When we listen to the weather forecast in the morning, we do not get yesterday’s weather, but a forecast for the future of the day or the week. Yet our models and analysis have too often been retrospective, backward looking. Thanks to the rational expectations revolution and the view of economics as something you can put in a computer and run, as Robert Lucas has said, we have come to routinely run prospective, forward-looking models that enable us to situate ourselves in what matters. At the other extreme, we have also had to amend overly forward-looking models because they lose touch with reality, with the data. In that sense, a well-guided research agenda means a fair amount of forward-looking weight in our models and analyses. MF: What is the most promising current research field or issue in economics? JGP: Macrofinancial policy and its effect on financial deepening would be an area with high potential, particularly in emerging markets and developing economies. We saw the cost of loose macroprudential standards on financial crises in emerging and developing economies in the 1997-1999 financial crisis and in advanced economies in the 2008-2009 financial crisis. Since then, several macroprudential instruments have been put in place and the amplitude of the financial cycle has been tamed. Although good in themselves, these policies could have subdued financial deepening and hence growth. Then, the challenge is two-fold: a stable financial system and progress in financial deepening. MF: Where does economic research have the most influence on policy-making? JGP: The most influence has definitely been in monetary policy. The controversy between monetarists and Keynesians that lasted for about the complete second half of the past century led to a fruitful synthesis, the New Neoclassical Synthesis (NNS). It is a practical theory for monetary policy making, a language for communication between monetary policymakers and the core of the forward looking operative procedure of central banks. As someone [ed: the psychologist Kurt Lewin in 1952] once said, there is nothing more practical than a good theory; this point of view I think applies very well to the NNS and its practical use in monetary policy. MF: On what issues should policy listen more to economists? JGP: Economics has much to contribute to any field that involves incentives. Rational choice is our grand piece of theory that we can export to contribute to other disciplines. The homo economicus behaves rationally and can also respond to changes in incentives, as dictated by policy. One policy field where incentives can induce change in behavior is in climate policy. Incentives should be paramount in articulating and implementing tax and subsidy climate policies and in inducing change in behavior. Another area where incentives can be put to work at great benefit is road traffic. Congestion taxes can contribute to a more efficient use of roads as a public good that is in short supply. I am sensitive to this issue given my long commuting times in Bogotá. Finally, market competition can help improve living standards in all markets that are not natural monopolies. Examples are the educational and health systems. MF: What is your career advice to a young economics researcher? JGP: My advice would be to always read with a humble attitude rather than being too critical. Read, always aiming to learn from your colleagues. Read and read a lot. Then you will find where you would like to put your effort. Then think, think about your arguments and theses, and then, only then, be critical - of your own work. To improve your thinking, engage with others and work in groups. The above article first appeared in the INOMICS Handbook 2023, which you can download on our site.
The following article first appeared in the INOMICS Handbook 2023. Download the INOMICS Handbook President of the DIW Berlin and well-known macroeconomist, Prof. Dr. Marcel Fratzscher poses the questions for accomplished central banker and author Dr. Javier G. Gómez Pineda in this latest INOMICS interview, where we ask economists for their thoughts about life and economics. Dr. Gómez Pineda graciously took to the spotlight in this latest round. The interview, dubbed Fratzscher vs. Gómez Pineda, dives into the importance of the Lucas critique, role models for women in economics, the challenges with maintaining global financial market stability (while still allowing for growth for emerging economies), how economics can contribute to climate policy, and more.
Silent Success: How Quiet Quitting Can Boost the Economy
Rather than pushing ourselves to the brink of exhaustion, quiet quitting involves recognizing when something is not productive and making the decision to step back and reassess. This can lead to greater productivity, increased creativity, and ultimately, a stronger economy. In this article, I'll explore how quiet quitting can affect the economy. I'll delve into the benefits of taking a step back, the impact it can have on our mental health, and the potential economic benefits of a more balanced approach to work. So sit back, take a deep breath, and let's explore the power of quiet quitting. Understanding quiet quitting Quiet quitting involves a strategic and intentional decision to let go of unnecessary tasks, projects, or overtime work in order to redirect time and energy towards more fulfilling or productive endeavors. At its core, the concept refers to withdrawing from tasks beyond one’s assigned duties and becoming less personally invested in work. Quiet quitters continue to fulfill their main job responsibilities, but they turn down activities that involve going above and beyond. No more working late, showing up early, or participating in non-mandatory tasks. Simply no extras. It’s worth mentioning that there's an irony in calling it "quitting" when employees are still showing up for their jobs and doing their work. It seems unreasonable that current society glorifies constant work and a hustle culture mentality, to the extent that performing the tasks expected of you within your designated work hours and then leaving is now being referred to as "quitting". The quiet quitting trend did not appear by accident; its emergence is linked to the COVID-19 pandemic. Due to the pandemic, many individuals lost their jobs, resulting in a smaller workforce than before the outbreak. Although some people have secured new employment or been rehired, existing workers have been experiencing more pressure as some have been tasked with additional responsibilities that laid off workers used to fulfill. In other words, the concept of quiet quitting seems to be an extension of the Great Resignation, where people are standing up (and walking out) against the expectation of working longer hours without any extra pay. In contrast to the short-lived phenomenon of the Great Resignation, it remains to be seen whether the quiet quitting trend will become a more permanent movement that will bring about changes in the way people perceive work and labor practices. The eventual impact of quiet quitting may depend on whether workers can hold leverage over employers for long enough to embed some of these practices into the workplace. The economic benefits of quiet quitting The traditional view of quiet quitting states that it is bad for the economy, which makes sense on a surface level. When people become disengaged from their jobs, it can lead to decreased productivity and therefore lower economic growth. However, this view ignores the potential benefits of quiet quitting. When individuals withdraw from unnecessary tasks or projects that are not aligned with their job description or goals, they are able to redirect their energy and skills. This can lead to increased mastery over their role, heightened creativity, and more opportunity for innovation, which can ultimately benefit their organization and by extension the economy, even leading to the creation of new businesses or industries. When individuals quit tasks or unnecessary work projects, this gives them more space and time to develop their skills and pursue their passions. In other words, when individuals allocate their time and effort towards more significant endeavors, it can potentially result in the creation of fresh business ventures and inventive personal projects. This shift in focus has the potential to cultivate a thriving entrepreneurial culture, which can lead to increased national productivity, creativity, and innovation on the macro-level. Furthermore, quiet quitting can lead to increased happiness and well-being for workers, which can have positive economic effects. When individuals are happier and more fulfilled, they are more productive and perform better in their jobs. By letting go of unnecessary tasks and being more psychologically invested in their core responsibilities, employees could experience an improvement in performance. Balancing work and life improves mental health and wellbeing The World Health Organization acknowledges burnout as a work-related condition that manifests as feelings of depletion, exhaustion, cynicism, mental detachment from work, and reduced productivity. Burnout is a severe consequence of excessive work and can cause lasting physical, emotional, and mental health problems. Of course, overworking will lead to increased production levels which can be observed immediately in the short-run. However, in the long-run when employees suffer burnout, the impact of such a mental state is likely to cancel out any positive outcomes reaped in the short-run. Therefore, we can safely say that overworking is likely to cause a long-term decline in performance due to eventual burnout. Preventing employee burnout is extremely important for all organizations, because its repercussions can be destructive. Establishing a healthy working environment where both employers and employees embrace the concept of “quiet quitting” – or stated another way, where the work relationship is clearly defined and where overwork is discouraged – could cause major improvements in the workplace as well as our personal lives. With a mindset that is not driven by stress, work pressure, and unhealthy levels of overworking, employees would find themselves performing better and less likely to burn out. This would lead to increased innovation, economic growth, and better mental health and wellbeing. The benefits of improved work-life balance Quiet quitting aims to provide healthy boundaries between work and personal life, so that there is clearly delimited time for both. Studies have found that work-life balance is linked to better mental health overall. Some of the most prominent studies showing this relationship include the following: A study published in the International Journal of Environmental Research and Public Health in 2020 found that employees with better work-life balance reported lower levels of psychological distress and higher levels of life satisfaction (Shimazu, Schaufeli, Kamiyama, & Kawakami, 2020). A research paper published in the Journal of Applied Psychology in 2017 found that employees who had greater control over their work schedules and who were able to take time off when needed experienced less psychological strain and burnout (Hill, Hawkins, Ferris, & Weitzman, 2017). A study published in the Journal of Occupational Health Psychology in 2008 found that employees who perceived their work as interfering with their personal and family life experienced higher levels of emotional exhaustion and lower levels of job satisfaction (Greenhaus & Powell, 2006). Better work-life balance also involves disconnecting your self-worth from your job. This can be difficult because when work is your primary focus, it’s hard not to associate your value as a person with it. Yet, it’s important to realize that work failures or achievements do not necessarily define you. Identifying yourself so closely with work achievements or promotions can lead to increased levels of stress. People who rely on work for self-worth or fulfillment can often react to work stresses by anxiously overworking themselves into a burnout. But, when employees work less and engage in mandatory tasks only, work becomes much less pressuring and stress levels decline. As a result they will be able to think clearer, be more creative, be less distracted and perform better at work. When they go home, they will show up the next day well-rested and ready to put in more effort for better outcomes. Increased well-being is a worthy goal that also has economic benefits Employees who are happy tend to display higher levels of productivity and commitment in their work. Such positive emotions can also help reduce instances of distraction or disengagement. Additionally, when individuals experience happiness, they tend to exhibit greater sociability and willingness to build relationships with colleagues, which can contribute to their overall job satisfaction. By prioritizing their main task at hand, employees can avoid the negative effects of feeling like they are constantly competing with their peers, instead building these relationships. In fact, the desire for workplace friendships is ingrained in our basic human desire for a sense of belonging. This in turn can enhance loyalty towards the workplace and improve job performance, leading to greater productivity and higher profits. As a response to the "great resignation," quiet quitting has become a liberating choice for people who prioritize balance instead of overwork and burnout. By setting boundaries and not tying their self-worth to work productivity, workers are taking care of their well-being. Employers should see this as an opportunity to support their staff's overall well-being by encouraging a better work-life balance. This will communicate to employees that they are valued, leading to greater employee engagement, productivity, and loyalty – a win-win situation for everyone involved. New employer practices that embrace the concept of quiet quitting or other methods of healthy focus in the workplace could include anything from adopting a 4-day work week to incorporating mental and physical well-being practices, allowing flexibility in schedules, supporting remote work, agreeing to reasonable workloads, or supporting frequent breaks during the work day. The Bigger Picture: how quiet quitting can promote the UN’s SDGs Encouraging the notion of quiet quitting as a normalized, standard mentality in the workplace has the potential to boost national progress towards the achievement of the UN Sustainable Development Goals (SDGs). SDG 3: Good Health and Wellbeing Adopting the concept of quiet quitting empowers individuals to devote more attention and effort towards their dietary habits, fitness regime, relationships, hobbies, and interests, which collectively contribute to enhancing their overall wellness and leading a healthier lifestyle. SDG 5: Gender Equality Embracing quiet quitting could facilitate the achievement of goal five, which is gender equality. With the provision of reasonable workloads and flexible schedules, women can adjust their work hours according to their convenience and can balance their professional and personal lives more efficiently, resulting in better job performance. This is especially necessary for working mothers. Such flexibility prevents the forced choice between work and home, for both men and women. SDG 8: Decent Work and Economic Growth Quiet quitting has the potential to encourage more innovation in society, as discussed above. It is important to advocate for policies that prioritize the growth of productive activities, promote job creation, and foster innovation and entrepreneurship. These policies should also address labor market challenges and ensure development-oriented policies. References Greenhaus, J. H., & Powell, G. N. (2006). When work and family are allies: A theory of work-family enrichment. Academy of Management Review, 31(1), 72–92. https://doi.org/10.5465/amr.2006.19379625 Hill, E. J., Hawkins, A. J., Ferris, M., & Weitzman, M. (2017). Finding an extra day a week: The positive influence of perceived job flexibility on work and family life balance. Journal of Applied Psychology, 102(8), 1346–1364. https://doi.org/10.1037/apl0000225 Shimazu, A., Schaufeli, W. B., Kamiyama, K., & Kawakami, N. (2020). Work–life balance as a predictor of recovery experiences and well-being: A cross-sectional study. International Journal of Environmental Research and Public Health, 17(4), 1282. https://doi.org/10.3390/ijerph17041282 Header image credit: Racool_studio on Freepik.com.
In a world where we are constantly told to hustle, grind, and push ourselves to the limit, the idea of taking it easy can seem counterintuitive. However, there is a growing movement suggesting that doing only what’s necessary at work is the best thing we can do for ourselves and for the economy. This is known as the concept of "quiet quitting".
How will the development of AI affect the labor market?
It’s expected that AI will change the economy and the world, though few have answers as to how. News stories continue to be written as companies, governments, researchers, and students grapple with AI and learn how to adopt it or respond to it. In this article, we’ll explore this question from an economic standpoint, focusing on the human side of the economy: the labor market. How will AI affect people’s jobs and the future of work? How disruptive technologies generally affect the economy AI in this massively available and accessible form seems truly new and unique. But economically speaking, it could just be considered another advancement in technology that can improve our productivity. This scenario has been happening in our economies since the dawn of civilization. So, what economic impact do these advancements tend to have? Consider the classic Cobb-Douglas production function, shown below: \begin{equation*} \mathit{Y} = \mathit{A}\mathit{L}^{\alpha}\mathit{K}^{\beta} \end{equation*} In this equation, K stands for capital, L stands for labor, and A stands for “technological progress”. A is often glossed over in introductory courses, but is generally described as a “good thing”. When this factor increases, it means that even with the exact same inputs, the economy can produce more. In other words, technological advancement leaves room for Pareto improvements. The development of AI can be thought of as an increase in A. Everyone is theoretically made better off due to this increase in A; this is why economists typically consider technological progress to be a good thing. To see why, consider previous inventions that have changed our daily lives and made certain careers obsolete. One such example is the invention of the printing press. Before it was available, books had to be copied by hand, which professional scribes were hired to do. As books were hand-copied, they were quite scarce, and the cost of books was much higher (relatively speaking) than they are today. Undoubtedly, the invention of the printing press was a boon for society. It allowed a greater quantity and wider range of books to be printed, which enabled more people to become literate, and for those who were literate to make use of their literacy more often. It also caused scribe careers to become obsolete. But nobody would argue that we should re-introduce those jobs, and stop typing or printing. AI tools could have similarly beneficial effects as other disruptive technologies like the printing press did in the past. It can potentially help us create things much faster and more cheaply, resulting in a productivity boom. The hidden cost of progress But, innovation has a cost that the simple Cobb-Douglas model of the economy does not capture. As mentioned, professional scribes barely exist today due to technological progress. But, once books were easier to produce and literacy was more widespread, becoming an author became accessible and doable. This process of new technology creating new opportunities while making old jobs obsolete is known as “creative destruction” in economics. This is one of the main reasons why people may be hesitant about a new technology’s impact on the economy. Nobody wants to become unemployed and (temporarily) lose their source of income, even if it means that society overall is becoming more efficient and productive. Another valid concern is the ability of workers to find new employment. This is especially concerning for people who were working in a now-obsolete job. Finding new work takes time and might require retraining, which can be costly. Workers also may have liked their now-obsolete jobs, and might not enjoy being forced to find a new career. Some workers close to retirement age might struggle to find new employment at all. <11an>limit:3;categories:Jobs</11an> The impact of artificial intelligence on the labor market Some fears of losing jobs to AI have already proved valid. In the first half of 2023, AI quickly started to impact the labor market as businesses looked to it as a revolutionary cost-cutting tool. For example, IBM announced that up to 7,800 jobs could be replaced by AI, and instituted a hiring freeze on those positions, presumably until AI is advanced enough to eliminate those jobs entirely. Other companies, including DropBox and Buzzfeed, announced job cuts. DropBox alluded to AI, citing “developing technology” as one reason for its job cuts, while Buzzfeed explicitly cited AI as one of the reasons they were letting workers go. In a similar vein, Wendy’s announced a partnership with Google to replace human employees with an AI chatbot for its drive-through ordering system. The system is expected to begin launching in the summer of 2023 after being trained sufficiently. In response to situations like these, some workers are fighting to gain assurances that their jobs won’t be replaced by AI. A major writer’s strike enacted by the Writers Guild of America, the union that oversees writers across most of Hollywood, began in early May 2023. Interestingly, the writers did not demand for AI to be banned completely. Rather, they began to strike for better working conditions in general, including the promise that humans would be prioritized in the creative process. The Guild made it clear that AI can be a useful aid in the writer’s room, but should not be seen as a replacement for human professionals. As of this writing, negotiations are ongoing. Some firms have banned the use of AI, for marketing or for safety It’s clear that some firms aim to use AI to cut costs, increase productivity, and even replace workers. At the same time, some companies see value in promoting their lack of AI usage – or are holding off for safety reasons. For example, the tabletop game company Paizo made waves when it announced a ban on the usage of AI-generated content in all of its products. Paizo employs many writers and artists – which fulfill two functions that AI is able to replicate. Paizo’s announcement was seen as a good thing by fans and hobbyists, and has helped to drive record interest in their products in early 2023. Typically, the adoption of new technology is needed to remain competitive. It’s possible that Paizo’s competitors end up utilizing AI to produce quality content much faster and cheaper than Paizo can, eventually forcing them to adopt AI or driving them out of business. But, if having 100% human-made content becomes important for product differentiation, or as a signal of the company's values – similar to the fair trade label in chocolate – then companies like Paizo could carve a niche for themselves and remain competitive even without utilizing AI. Other firms have moved to ban the usage of AI for data privacy or security concerns. Because these tools are hosted by other companies and connected to the Internet, sharing sensitive information with them could pose a security risk. Samsung is an example of this, as the firm banned AI on its company devices after employees leaked sensitive information to an AI tool. In the future, firms like Samsung could opt to develop their own internal AI tool for their employees to use. This would allow employees the benefits of an AI tool without running the risk of sensitive company information leaking. But developing and training a useful AI takes time, development expertise, and training data, which can be expensive. And, inference costs mean that using an AI tool can be expensive, too – one estimate puts the daily cost of running ChatGPT at about $700,000. The creative side of creative destruction: new income streams from Internet text AI must be trained on data. For these large language models (LLMs) specifically, this usually involves massive volumes of text taken from the Internet. Normally this text doesn’t belong to the companies developing these AI tools. Consequently, some large websites like StackOverflow and Reddit have made plans to start charging AI developers for using their data, which so far they’ve been doing without paying for it. These types of sites are also beginning to charge for access to their data for future developers, which could become a new income stream for these companies. The CEO of Stack Overflow, Prashanth Chandrasekar, said it well himself: “Community platforms that fuel LLMs absolutely should be compensated for their contributions so that companies like us can reinvest back into our communities to continue to make them thrive”1. Indeed, this new paradigm of charging for text data could even create jobs to carefully build and maintain forums (or other content databases) that would be sold to developers as training data. In this way, human-only online spaces could become an important and lucrative new aspect of the digital economy. Certainly, other new services and careers will appear due to the widespread usage of AI – such as possible AI detection tools and “prompt engineer” job positions. There is already some disruption in the labor market due to AI, and there’s likely to be more coming. As with every instance of creative destruction, there will be some growing pains while society and the economy is restructured to take advantage of the new technology. But, it’s also highly likely that new careers will emerge as the dust settles. On the way, people will claim that artificial intelligence is going to impact the economy in transformative ways, while others will view it as a threat to their livelihoods. The true answer likely lies somewhere in the middle, though only time will tell. Notes 1: https://gizmodo.com/stack-overflow-charging-ai-companies-for-training-data-1850362500
Artificial intelligence appears to be the next truly disruptive technology poised to rock our global economy. In December 2022, ChatGPT-3 made headlines. It represented a leap forward in the capabilities of generative AI technology, pushing conversations about this new tool into the mainstream as people began to question how ChatGPT will affect the economy.
Econometrics is the application of statistical rigor to economics that allows economists to test economic theory. It is the backbone of modern economic research; any empirical paper that lacked solid econometric reasoning (and preferably repeatable, data-based analysis) would probably not be taken seriously. While it’s possible to theorize and contribute to economics through the development of new theoretical models (especially by introducing science from related fields, like psychology), most serious economists must be comfortable with basic econometrics. Enter Dr. Wooldridge’s research and his seminal text, Introductory Econometrics: A Modern Approach, first published in 1999 and now with over 6 editions, still widely used around the world. Dr. Wooldridge is a prolific researcher who has published more than forty articles in top economics journals and has helped advance econometric theory significantly. Chances are, if you’re a serious student of economics, you’ll end up using his material in some of your courses. Dr. Wooldridge’s contributions to advancing econometric rigor Dr. Wooldridge’s main research focus is in microeconometrics, a sub-field of econometrics that works with individual-level data. He specializes in the study of panel and cross-sectional data, researching and promoting the best econometric methods for researchers to use with these types of datasets. This work is important. One of the cornerstones of the scientific method is the use of repeatable experiments that can be measured. Unfortunately, in economics, it’s very difficult to conduct a repeatable experiment. After all, we study the decisions that people make with limited resources, and it would be impossible to dictate people’s lives just to study their outcomes. Therefore, in economics, historical data is used quite often (though randomized controlled trials have become increasingly common, thanks to the work of certain economists). Because of this, economists often do not have control over how the data was collected, or what specific measurements were used to record it. This makes measurement, and statistical testing, a complicated and precarious process for many researchers. For these reasons, it is often misleading or impossible to use the most straightforward methods of statistical analysis when studying economic data. Further, due to the types of analyses economists like to conduct, there are frequently situations where economists must employ models that violate some of the classic linear regression model assumptions. Therefore, it’s important to have pioneers in the econometric space who can devise methods for properly studying atypical datasets, and techniques for accurately conducting statistical tests in these atypical settings. Further, these pioneers must be adept at teaching others to do the same. This empowers other economics researchers to focus on their actual specialties and research questions, while enabling them to produce the most accurate results possible from their work. This is exactly what Dr. Wooldridge has been able to do over the course of his career. His work has been cited over 130,000 times1 because it has helped form the empirical backbone for many other studies. Without someone to break new ground and pioneer a new, useful econometric approach, some types of analyses are just not possible. Dr. Wooldridge’s research has been distilled into actionable findings that other economists can make use of in their research. Its importance cannot be overstated. Dr. Wooldridge’s professional achievements Jeffrey M. Wooldridge is University Distinguished Professor of Economics at Michigan State University, where he has been teaching since 1991. He is a fellow of multiple prestigious societies, including the Econometric Society and the Journal of Econometrics. He is additionally a research fellow at IZA. Besides his most famous work, (Introductory Econometrics: A Modern Approach), he has also authored another important text for economists, titled Econometric Analysis of Cross Section and Panel Data. Dr. Wooldridge has served on the editorial boards of several journals, including the Journal of Economic Literature, the Journal of Business and Economic Statistics, the Review of Economics and Statistics, and the Journal of Econometrics. He is currently an editor for the Stata Journal. He has also been co-editor of Econometric Theory, an econometrics co-editor of Economics Letters. He previously served as an editor for the Journal of Business and Economic Statistics. In addition to more than forty articles published in internationally recognized journals, he has written several book chapters. These include articles in the Handbook of Econometrics and the Handbook of Applied Econometrics. Dr. Wooldridge received his Ph.D. in economics in 1986 from the University of California, San Diego. Notes 1: Dr. Wooldridge’s work has been cited 138,755 times according to Google Scholar as of May 10, 2023. Header image credit: Global Labor Organization https://glabor.org/glo-recommends-take-a-microeconometrics-class-with-professor-jeffrey-m-wooldridge-at-kent-university-deadline-is-end-of-april/. References http://econ.msu.edu/faculty/wooldridge/jmwvita.pdf https://www.iza.org/de/person/4582/jeffrey-m-wooldridge
The INOMICS Questionnaire: Fratzscher vs. Ditzen
Jan Ditzen is an Assistant Professor (RTD-A) in Econometrics at the Free University of Bozen-Bolzano, in Bolzano, Italy, where he was previously a postdoc. Since 2021 he is serving as Co-Editor/Digital editor of the economics journal Spatial Economic Analysis, responsible for the Replication Studies Section among other responsibilities. From 2017 to 2020 he was a Research Associate at the Centre for Energy Economics Research and Policy (CEERP) at Heriot-Watt University, where he was internally responsible for assisting BP plc with the BP Energy Outlook, and one of the fuel leads for the BP Statistical Review of World Energy. He obtained a PhD from Heriot-Watt University, a Master in Economics from Hamburg University and a Bachelor in Economics from Mannheim University. Dr. Ditzen’s research interests are in the field of Applied Econometrics with a focus on Panel-Time Series, Cross-Sectional Dependence, Spatial Econometrics, and Growth Empirics. He has also an interest in Simulation Studies and the implementation of econometric methods into statistical software. Marcel Fratzscher: What is your favourite place on earth? Jan Ditzen: Definitely a place out in the hills or mountains. My favourite two would be Grimentz in the Swiss mountains. It is a beautiful place with amazing views and has many good and happy memories. The second one is a remote cabin in the Norwegian mountains. It is a very peaceful and quiet place. MF: Outside of economics, what occupation would you choose if you could be absolutely anything? JD: That's a hard question, there are so many exciting and interesting occupations. An alternative would have been engineering; it must be great to see one’s projects in real life. I usually joke that if I have enough of academia, I plan to become a shepherd in the Alps or a mountain guide. MF: What is the virtue you appreciate the most? JD: Honesty and being straight forward without too many words. MF: Your all-time favourite figure in economics? JD: As an econometrician I (have to) name one as well: Hashem Pesaran. His work on panel data and time series econometrics is unprecedented. Additionally he has some important work on empirical finance and macro models. Beyond that his influence on the profession, for example in the form of his involvement in the International Association for Applied Econometrics, will be lasting. MF: Your #1 economics blog? JD: Surprisingly, I am not following many blogs, but I enjoy reading Daniel L. Millimet's blog "How the (Econometrics) Sausage is Made". Daniel offers easy to read articles on econometrics and related current topics. What I enjoy is that his blog connects well to recent contributions or debates in the literature and outside of it. MF: Your ideal student? JD: A student who asks the "right" questions. The "right" questions are those which make you rethink the material you teach, or even give you ideas for new research. MF: What should be done to address a gender bias in research in economics? JD: I am a fairly junior researcher, so my influence in hiring and strategic decisions is relatively minor. However I think as a profession we need to be more inclusive. In particular we need to motivate female students to pursue PhDs in areas which are male dominated. Too often I end up in conference sessions which consist almost exclusively of male presenters. MF: What is the most misguided research agenda in economics? JD: It is not really a research agenda, but we need to improve on our empirical work. At the end of the day economics is a social science and empirics is the vehicle to validate economic theories. Therefore we have to take it very seriously. From my perspective there are currently two weaknesses. The first one is a technology gap between empirics and econometric theory. Academic papers should try to use the latest econometric methods because those are either solving issues or shortcomings in existing methods, or are a better fit for a specific problem. On the other hand, there are many elegant and beautiful econometric methods which will hardly be used in applied work. The reason for this gap is that many methods don't find their way into statistical software, which manifests a disconnect between the two sides. For econometric theorists, it is often not interesting to follow up on the implementation of their methods into mainstream software. Practitioners often do not cite software or packages, which removes incentives for the original authors of the methods or 3rd parties to invest time into transforming econometric methods into statistical software- from my own experience I know how long developing a well working package takes. This leads to the next weakness: reproducibility of existing studies. The data collection and processing, and production of results are too intransparent in too many papers. If results cannot be validated and reproduced, how can we be sure that their conclusions are sound? Luckily journals have started putting more effort into this. The Journal of Applied Econometrics or the American Economic Association are pioneers, and the Royal Economic Society is currently looking for a data manager. MF: What is the most promising current research field or issue in economics? JD: There is the saying that "Data is the new oil" and we economists know how to handle data and draw conclusions from it. Thus I think there is a lot to learn from the combination of machine learning, big data and economics. There are still a lot of gaps in the theoretical literature and the topics only slowly find their way into more general questions and journals. Using data in the right way can improve the lives of many humans and our planet. Related to this, the use of data itself for a society or economy is also an under-researched topic in economics. MF: Where does economic research have the most influence on policy-making? JD: Certainly monetary economics and central banking. There is also a large influence of development economics and of course competition economics. MF: On what issues should policy listen more to economists? JD: To be honest, this is a hard question. Out of my head, there are a lot of issues from different fields. In general I believe policy should listen more to science. With respect to economics, outcomes in economics can be driven by the author's perception, or even ideology. This can be a problem when it comes to funded research activities, especially done by some research institutes. I think a big issue is that policy makers need to understand better from whom the research comes, and what are the background and limitations of the research. Science is complicated and there is no simple answer. As an econometrician, I would hope for better openness and quality of data. Data can inform in so many ways, but before that, it needs to be collected, processed and analyzed. A slightly German-centric view: There was a recent initiative by German economists for an improvement on data quality and accessibility in Germany which I hope policy makers will follow. MF: What is your career advice to a young economics researcher? JD: Be curious and don't be shy to ask questions, no matter about what or to whom. Follow your own interest and instincts, even if it might not produce the greatest outcome. Finally, don't forget your private life, the persons and activities you love and enjoy.
In the INOMICS interview series, Prof. Dr. Marcel Fratzscher asks economists questions about their field, their opinions on economics, some of their favorite things, and more. Today we took the chance to interview Dr. Jan Ditzen, an econometrician with a robust research presence. The interview, named Fratzscher vs. Ditzen (as is tradition), enlightens us on the contributions of Hashem Pesaran, the beauty of mountain scenery, details about econometrics and why its rigor is important for economics, and more.
Publication behavior in economics – Reputation, visibility, and the gender gap
There exists a body of research that shows how women in economics face more obstacles than men when trying to make their way: Papers are less cited if the corresponding author is female (Maddi & Gingras, 2021). Further, women are confronted with higher standards in publishing compared to men (Hengel, 2022), a more hostile environment (Dupas et al., 2021; Wu, 2018), and they are less well-connected in their discipline, according to the count of women compared to men in the acknowledgments of published papers (Rose & Georg, 2021). Publication differences by gender in economics To further understand the gender gap in the discipline, it is also important to look at publication behavior, acknowledging, of course, that this can only be another puzzle piece in understanding the gap as a whole. This holds especially true for economics, as it is a discipline heavily driven by journal publications and the relative ranking of outlets in which a researcher’s papers appear. In our recent working paper, Justus Haucap, Leon Knoke, and I use the negotiations for large-scale open access agreements between German research institutions and the leading academic publishers to study two unique natural experiments that answer the question: How do changes in the attractiveness of publishers and their journals affect the publication behavior of researchers in economics and adjacent fields? Wiley and Springer Nature closed DEAL agreements that came into practice in 2019 and 2020, respectively. Under the conditions of these contracts, all submissions from authors affiliated with a German research institution are immediately published as open-access without further costs or paperwork for the researchers. In contrast to the former two academic publishers, the negotiations with Elsevier were suspended in the autumn of 2016. As a consequence, 74 institutions canceled their Elsevier journal subscriptions. After a short break, Elsevier decided to continue granting access to institutions without contracts. At the end of 2017, a further 110 institutions terminated their contracts. Again, Elsevier continued to provide access to its outlets. The conflict ended with the German research alliance announcing its withdrawal from the negotiations in July 2018. Elsevier then cut off all institutions without a contract from access to its journals. If you want to access a publication now, you see something similar to the screenshot below that highlights that your institution does not subscribe to the content, and adds a prominent “purchase PDF” button. Results of our study: women react differently than men to open access changes In our working paper, we estimate a difference-in-differences model that looks at the effect of the varying publication incentives on the publication behavior of affected economists. While the two natural experiments (enacting DEAL and the end of negotiations with Elsevier) solely affected Germany, all other countries serve as a reliable control group. We decompose our effects by gender and the presence of co-authors and look at the effect across the quality scale. To do that, we rely on a dataset of scientific publications in economics ranging from 2015 to 2022 that contains some 240,000 observations. For both events, we find significant baseline reactions. While the DEAL caused an increase in publications from authors based in Germany by +4.67%, the cut-off from Elsevier together with the negative press for the publisher reduced publications by -3.91% (both significant at the 5% level). Looking closer at the gender differences, we find for the DEAL a larger effect for women than for men (at least significant at the 10% level) as the upper panel shows. In contrast, the lower panel for the Elsevier cut-off highlights that males do not significantly react (at the 5% level), but females do. Comparing the estimates also shows that they significantly differ for the comparison between male and mixed teams as well as male and female teams. Here, we can already see that different gender compositions affect publication behavior in economics. Further decomposing the mixed-gender group, we are able to identify an almost steadily decreasing pattern in the point estimates for the Elsevier effect. While fully male authorships only show a decrease in Elsevier publications by some 2%, mostly and fully female research groups have an effect size approximately three times the size of their male colleagues, showing that they have reacted to the changes by publishing less in Elsevier. When comparing behavior across the reputation or impact scale – using the Scimago Journal Rank criterion as a measure, we find important differences between men and women. We separate our data into four quartiles. The first quartile includes the journals with the lowest impact, and the fourth quartile, in turn, includes those with the highest. While researchers of both genders drop out of lower-tier Elsevier journals, men actually opt in to those Elsevier journals with the strongest impact, as the panels below show. Based on these findings and further ones presented in our working paper, we conclude that women have a higher interest in the visibility of their research. As such, they contribute to the public good of open science freely accessible to all. In contrast, men seem to value reputation (of the higher-ranked Elsevier journals) more, which is clearly a private good. The implications for gender differences in economics The implications of these behavioral differences are twofold and, especially in academia, potentially severe. First, if the objective is to transform the market for academic publications, the `Elsevier experiment' raises doubts about the extent to which male researchers – who are predominant in most academic disciplines – contribute to this goal. Second, even though we observe a tendency toward open access in the lower ranks of the quality distribution, the behavior at the top appears to perpetuate not only the role of Elsevier, but the position of incumbent journals and publication patterns more generally. Sticking to the status quo bears important advantages: Shifting away from well-off outlets may (negatively) affect the comparative career opportunities of women. In economics, publishing in the highest-ranked journal possible is of high importance. Excluding a publisher that hosts many influential journals may ultimately backfire on an individual’s career. It is even more severe for women who do this as publications have a larger impact on the careers of women than men (Lutter et al, 2022) and because women publish less than men (Xie & Shauman, 1998, Prpic, 2002). To read more about the topic and view additional analysis, see the working paper: Schmal, W. B., Haucap, J., Knoke, L. (2023). "The role of gender and coauthors in academic publication behavior". DICE Discussion Paper No. 397. https://www.econstor.eu/handle/10419/270608/ References: Dupas, P., A. Sasser Modestino, M. Niederle, J. Wolfers, and T. S. D. Collective (2021). “Gender and the Dynamics of Economics Seminars”. NBER Working Paper 28494. Hengel, E. (2022). “Publishing While Female: are Women Held to Higher Standards? Evidence from Peer Review”. The Economic Journal 132.648, 2951-2991 Lutter, M., I. M. Habicht, and M. Schröder (2022). “Gender differences in the determinants of becoming a professor in Germany. An event history analysis of academic psychologists from 1980 to 2019”. Research Policy 51.6. 104506 Maddi, A. and Y. Gingras (2021). “Gender diversity in research teams and citation impact in Economics and Management”. Journal of Economic Surveys 35.5, 1381–1404 Prpic, K. (2002). “Gender and productivity differentials in science”. Scientometrics 55, 27–58 Rose, M. E. and C.-P. Georg (2021). “What 5,000 acknowledgments tell us about informal collaboration in financial economics”. Research Policy 50.6, 104236 Wu, A. H. (2018). “Gendered language on the economics job market rumors forum”. AEA Papers and Proceedings 108, 175–179 Xie, Y. and K. A. Shauman (1998). “Sex Differences in Research Productivity: New Evidence about an Old Puzzle”. American Sociological Review 63.6, 847-870 Header image picture credit: Viarami on Pixabay.com (free for use under the Pixabay Content License)
In recent times, debates on gender inequality among researchers at universities have emerged, in particular in economics. Even though leading academic societies have addressed these issues already for many years – for example, the American Economic Association has run the “Committee on the Status of Women in the Economics Profession” (CSWEP) since 1971, and the European Economic Association established its “Standing Committee on Women in Economics” (WinE) in 2003 – they appear to be persistent.
The INOMICS Questionnaire: Fratzscher vs. Tol
Dr. Richard S.J. Tol MAE is a Professor at the Department of Economics at the University of Sussex, the Professor of the Economics of Climate Change at the Institute for Environmental Studies and Department of Spatial Economics at Vrije Universiteit in Amsterdam, the Netherlands, and a Research Fellow of the Tinbergen Institute, CESifo, and the Payne Institute for Public Policy. He is an elected Member of the European Academy. Formerly, he was a Research Professor at the Economic and Social Research Institute in Dublin, the Michael Otto Professor of Sustainability and Global Change at Hamburg University, and an Adjunct Professor at the Department of Engineering and Public Policy at Carnegie Mellon University in Pittsburgh, PA, USA. He has had visiting appointments at the Canadian Centre for Climate Research, the University of Victoria in British Colombia, at the Centre for Social and Economic Research on the Global Environment at University College London, and at the Princeton Environmental Institute and the Department of Economics at Princeton University. He received an M.Sc. in econometrics (1992) and a Ph.D. in economics (1997) from the Vrije Universiteit Amsterdam. He is among the top 100 most-cited climate scholars. He has 299 publications in learned journals (with 100+ co-authors). He specializes in the economics of energy, environment, and climate, and is interested in integrated assessment modeling. He is the editor-in-chief for Energy Economics, a top field journal. He is, to date, the author of the only major English-language textbook on the economics of climate change. He was an author of Working Groups I, II and III of the Intergovernmental Panel on Climate Change (IPCC), and by extension a member of the winning institution of the Nobel Peace Prize in 2007. Marcel Fratzscher: What is your favourite place on earth? Richard Tol: Wherever the wife and kids are, but I would like them to be in County Clare, Ireland. MF: Outside of economics, what occupation would you choose if you could be absolutely anything? RT: I'd grow fruit. MF: What is the virtue you appreciate the most? RT: Intelligence (it's not a virtue, I know) MF: Your all-time favourite figure in economics? RT: Tom Schelling MF: Your #1 economics blog? RT: What's a blog? MF: Your ideal student? RT: The ideal student is the one who teaches me. MF: What should be done to address gender bias in research in economics? RT: That is a hard one. We're only just beginning to understand the extent of sexism in economics. As a start, we all need to examine our own biases. It would help if some people would retire. Some argue for role models, but I think that poses an unfair burden on the few candidates. It will take a while, but we should remove all that holds women back, from aggression in seminars and harassment at conferences, to delays in review and different treatment in hiring and promotion. MF: What is the most misguided research agenda in economics? RT: I really do not understand macroeconomics. All they seem to do is construct models that have a superficial resemblance to some observations. They seem to have forgotten that John von Neumann could make an elephant wriggle its trunk with five parameters. MF: What is the most promising current research field or issue in economics? RT: I am most impressed with the rapidly expanding availability of historical and pre-historical data. This is not just interesting in its own right, but it also exposes blind spots in our understanding of the institutional and technical context in which economics happens. MF: Where does economic research have the most influence on policy-making? RT: Monetary policy is by and large outsourced to economists. MF: On what issues should policy listen more to economists? RT: Climate policy is at odds with economic research in almost every respect, from target setting to instrument choice. Anne Krueger should have shared Bill Nordhaus' Nobel. Climate policy is first and foremost about snouts at the trough. MF: What is your career advice to a young economics researcher? RT: Be yourself. There are more than enough plastic phonies already.
In this article, INOMICS interviews Dr. Richard S.J. Tol, member of the Intergovernmental Panel on Climate Change (IPCC) when it was awarded the 2007 Nobel Peace Prize and a researcher at the forefront of economics and climate policy. Dubbed Fratzscher vs. Tol as Prof. Dr. Marcel Fratzscher resumed his role as interviewer, the conversation touches on gender discrimination in economics, the increasing availability of historical data, and how climate policy can clash with economic research.
Agricultural and Environmental Economics (JEL Q)
This article will dive into the economics of the Star Wars galaxy implied by the franchise, mainly from the movies and some of the TV series. As such, fairly mild spoilers abound; beware if you intend to watch some Star Wars movies or shows, but haven’t yet. Money in the Galaxy Far, Far Away In Star Wars, people typically conduct transactions using “credits”, which amount to some futuristic-looking cash. This currency is used almost everywhere in the galaxy, to the point that most citizens only comment on it when certain transactions don’t accept credits. For example, in The Force Awakens, Daisy Ridley’s Rey is paid in food on a bartering basis rather than being paid with money, which tells us how much of a backwater she lives in. Similarly, after an emergency landing on a different backwater planet in The Phantom Menace, Liam Neeson’s Qui-Gon Jinn is forced to engage in some good old sports betting to muster up needed cash. Other than scenes such as these, which serve to highlight certain dire economic situations, credits are used and talked about by almost everyone. This widespread credit usage immediately raises two major questions. First, how did the galaxy unify its form of currency across planets, cultures and languages, and how is that currency controlled? Second, why are electronic payment methods seemingly unused? We can look to one real-life example of currency consolidation – the European Union – to perhaps answer the first question. Upon induction, member states in the EU must transition to using euros rather than their original sovereign currencies. While this prevents each individual nation from having complete control over their monetary policy, becoming part of the EU trading bloc opens up a host of other opportunities for the country and its citizens. It is entirely possible in Star Wars that the many planets making up the Galactic Republic agreed to create an economic bloc like the EU, giving up their original currencies and adopting galactic credits instead. These are presumably controlled by the galaxy’s central bank on the capital planet Coruscant, where the Senate, with representatives from every planet, governs. Of course, when the Empire took over in Revenge of the Sith, it seemingly just changed the name from galactic to imperial credits and the payment infrastructure probably remained the same. It is also possible, though unlikely, that currencies were consolidated because of financial instability. When a country experiences hyperinflation, one solution to break the doom spiral of runaway inflation is to simply stop using the local currency and adopt a foreign one. This has happened before in our history, for example when Ecuador adopted the US Dollar as its official currency in the year 2000 (this process is known as “full dollarization”). If multiple Star Wars planets underwent “full creditization”, it may have started a gradual process of galactic transition to credit usage for ease of transactions. So, where are all the electronic payments? Electronic payments seem to be very seldom used in Star Wars, and almost never on-screen. One of the few times we know for certain that electronic payments did occur are during Senator Mon Mothma’s scenes in the acclaimed series Andor. In several of her scenes, she must support the nascent Rebellion with electronic transfers without being traced by Imperial intelligence. Despite the rarity of references to electronic transfers on-screen, it’s possible that electronic payments are widespread, and viewers are simply not exposed to them very often due to the nature of the typical Star Wars protagonist. Many of the characters we see are either poor, Jedi, government agents, or people conducting illegal activity. For some, like perhaps Luke Skywalker and his Uncle Owen and Aunt Beru, electronic payments may be unaffordable or impractical (maybe they can’t afford or don’t need to transfer funds as moisture farmers in the desert). For other characters, like most of the Jedi, payment is often an unnecessary affair; Jedi’s living expenses are presumably sponsored by the government or the Jedi Council. Moreover, Jedi had to renounce all attachments as part of their training, so it’s unlikely that any of them would be seen paying for an elaborate meal or other luxuries. For other characters, electronic payments might even be dangerous. Members of the Rebellion in the Empire era – as well as The Mandalorian’s title character – would probably want to avoid using traceable payment methods so they can avoid being tracked down by their enemies. An example supporting this theory is the aforementioned Mon Mothma scenes in Andor. So, it seems that electronic payment methods do exist in Star Wars. But, much like Germany in our world, for various reasons cash payments continue to thrive. Regardless of the payment method, the galaxy’s economy appears to be quite a hospitable place for conducting business… Corporations in Star Wars Capitalism is an oft-praised, oft-derided economic system that is currently the most common form of economic organization around the world. One of the key complaints that people may have about capitalism is that it can sometimes put profit and the rights of corporations above other things, including the environment. It can lead to seeming excess in certain areas, like inflated executive pay and increasing wealth inequality, as well. In Star Wars, corporations wield immense power in a seemingly capitalist system that features very little regulation. This is shown even at the very start of the saga, in Star Wars Episode I: The Phantom Menace, where a corporation (the Trade Federation) blockades an entire planet (Naboo) with its own private military force, and even begins to arrest the citizens and send them to labor camps. Meanwhile, this same corporation has a seat in the Galactic Senate on Coruscant, where Trade Federation representatives are apparently treated just the same as any other senator – including the senator from Naboo, the not-yet-Emperor Palpatine. Other corporations have a large impact on the saga as well. The Trade Federation is one of several corporations that form the economic backbone of the separatist movement in the Clone Wars. The Galactic Republic itself, fighting against the separatists in the war, accepted the help of a large corporate enterprise to do so; the Republic’s army of clone soldiers was built at the request of a Jedi Master by Kaminoan cloning services. Although a formal company name is never given in the movies, it’s clear that the Kaminoans are cloners for profit – they produced the units for the Republic and did it for money. But, unlike the separatists, the society on Kamino appears to have no political motives, only profit. Certainly, the activity of corporations on such a scale is something that has become normal to the galactic population. One reason that corporations have probably been able to grow so large and powerful is the lack of trade barriers or serious roadblocks to growing business across the galaxy. This is due to a few factors that will be discussed further below… Trade Barriers in the Galaxy In economic theory, trade barriers increase transaction costs and lower overall economic welfare by lowering economic surplus. So, when transaction costs are lower, ceteris paribus, the economy is much more efficient because comparative advantage is made easier to benefit from. Nations can trade much more freely, which increases everyone’s utility since goods are being made relatively cheaper than they would in the presence of higher transaction costs. So, how do the people of the Star Wars galaxy experience trade barriers and transaction costs? Language & Communication Economies, at their core, consist of people conducting transactions. Common language allows these transactions to grow beyond two people grunting at one another and handing over a few chickens for some beans. Moreover, a lack of common language or the need for translation services increases transaction costs and can inefficiently reduce trade. Therefore, lack of common language is a good example of a naturally-occurring trade barrier. In Star Wars, almost everyone speaks the same language. The few major exceptions to this rule include the well-known Wookiee race, who speak in growls and whimpers (like Chewbacca), some forms of droid (like R2-D2), and a few cultures or species like the Tusken Raiders or the Hutts that seem to have their own entrenched culture. But even in these cases where someone isn’t speaking the common language, either everyone else in civilized society understands them just fine, or translators are able to pick up the slack quite easily (we see C-3PO translating for Jabba the Hutt in Return of the Jedi even though he wasn’t built to be a Hutt translator, for example). This suggests that in Star Wars, language barriers are functionally extinct. This common language across species and planets clearly serves to unify society and massively reduce transaction costs across the galaxy, greatly encouraging prosperity. The lack of conflict we see along ethnic or species lines in Star Wars reinforces the idea that the galaxy has been generally unified through common language and economic activity. Distances & Transportation Transportation cost is another major barrier to trade. It’s difficult to transport goods across long distances and keep them in good enough condition to sell, especially for perishables like food. Historically, trade routes across mountains and deserts are perilous and more rare than routes across easily navigable terrain. And, until the proliferation of better sailing technology, the western and eastern hemispheres were largely cut off from one another. For a galaxy with entire planets separated by the vacuum of space, one would expect transportation costs to be very high. But in Star Wars, travel between planets is easy, fast, and cheap, thanks to hyperdrive technology that even single-person spaceships often have access to. Hyperdrive enables faster-than-light (FTL) travel, which allows ships to travel across the galaxy in a matter of…hours? It’s never made perfectly clear to viewers, though certainly travelers can get to almost any planet in under a day with this technology, with no obvious downside. However, hyperdrive isn’t free - certain spaceships, like the Empire’s TIE fighters, don’t have it. Moreover, the galactic poor are seldom seen leaving their home regions, and local starports like Mos Eisley on Tatooine allow average people to book offworld transportation for a price – which is exactly how Luke Skywalker and Ben Kenobi meet Han Solo and Chewbacca. If hyperdrive technology were free, Han and Chewie would certainly not be able to charge Luke and Ben a high price for transport. Still, the availability of cheap and widely available FTL technology that can be utilized via small spacecraft has clearly done wonders for the galactic economy. Planets, rather than being separated by millions of years of slow travel or prohibitively expensive technology, can be reached in hours or days at most. Combined with the aforementioned fact that language barriers don’t really exist, transaction costs appear to be very low in Star Wars. The galaxy thus appears to be a beacon of economic productivity. It may come as no surprise, then, that the Empire was able to produce not one, but two moon-sized Death Stars in the span of only a few years. That’s certainly a feat that would require a high level of productivity! The Shadow Economy in Star Wars However, the ease of cheap faster-than-light travel and lack of barriers to communication have clearly allowed criminal elements to flourish in the galaxy. The aforementioned Jabba the Hutt is a member of the Hutt family, who are depicted as cartel-like. But their family isn’t the only criminal enterprise shown. In Star Wars: The Clone Wars and Disney’s The Book of Boba Fett, viewers are introduced to the Pyke Syndicate, who threaten to fill the power vacuum on Tatooine after Jabba’s death (not to mention that Fett tries to launch a criminal empire in the latter series). Several other powerful criminal organizations are seen across Star Wars properties, such as the Crimson Dawn syndicate that features prominently in the movie Solo: A Star Wars story. Bounty hunters also feature often in Star Wars, starting with the motley assortment of hunters hired by Darth Vader in The Empire Strikes Back and recently portrayed by Disney’s popular The Mandalorian. By definition, these bounty hunters operate mostly outside of the law, taking jobs to assassinate, smuggle, escort, hunt, or otherwise accomplish things by force – for a price. Moreover, forced labor and slavery form the backbone of the immoral Empire’s economic machine in some areas. The TV series Andor showcases how the Empire rounded up civilians on trumped-up false charges and kept them in a rotating prison labor system. This is one of the ways that the Empire was seemingly able to churn out the massively expensive Death Star project, as parts for the machine were made in forced labor systems such as these. Not paying for labor (one of the major factors of production) of course lowers the cost of output quite a lot! We don’t have access to reliable measures of the Star Wars galaxy’s total economic output, which may be measurable by GDP as it is in real life. However, it’s likely that just as in our world, the galaxy’s total GDP is probably underreported because of these illegal activities. This is because illegal activities, while they do produce economic value, are not represented in official counts of GDP. In both our world and in Star Wars, illegal products and services create consumer and producer surplus. But, because the good (or service) is illegal, the market occurs in secret and thus the economic value it produces is not reported. These unreported transactions are known as the “shadow economy” in economics, and it is clear that the shadow economy in Star Wars is quite large. Whether legal or not, economic activity around the galaxy is depicted in many ways in Star Wars. Are there other examples we haven’t touched on? What implications do they have for the galactic population? Feel free to introduce your own examples in the comments below! Header image picture credit: gromit15 from Pixabay
Star Wars probably needs no introduction here. One of the largest entertainment properties of all time, it has grown far beyond its (humble?) beginnings on the movie screen. Now, we can learn about “a galaxy far, far away” through books, comics, TV series, video games, and more.
For the first article in the series, in recognition of International Women's Day, we have decided to feature one of the most prominent contemporary female economists, Dr. Esther Duflo. She has become famous among economists for her studies on global poverty alleviation, and she has pioneered the practice of using randomized control trials in development economics. Her studies and experiments have studied health, education, microfinance, and more in the context of global poverty. Dr. Duflo won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 alongside colleagues Abhijit Banerjee and Michael Kremer “for their experimental approach to alleviating global poverty”1, becoming not only the second woman in history, but also the youngest person ever to win the Nobel Prize in economics. The key word in that explanation is “experimental”. Her approach with using experiments to help us understand global poverty has paved the way for more effective policy design. With these experiments, economists have been able to learn more of what truly works to help alleviate poverty, rather than relying on theory. Indeed, the Nobel Prize’s original press release had this to say about Dr. Duflo and her colleagues: “In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research”2. The difficulty with experiments in economics Economists are similar to scientists in that we attempt to use empirical rigor while learning about the world around us. But, unfortunately, it is often extremely difficult or immoral to conduct experiments about economics. People must have the freedom to live their lives without having their economic situation in life dictated by a curious economist. As an example illustrating why this is difficult, imagine if an economist was interested in the effects of early childhood education (such as preschool) on development, and designed an experiment where certain children were placed in preschool, while others were left at home and did not receive the same educational opportunities. When controlling for other factors, this would help the economist learn about the effectiveness of early childhood education, and could help us design better policies to aid families with accessing the right type of services for their children. But what parent would willingly force a potentially huge disadvantage upon their child (being behind in early learning)? Making an experiment that studied real people and dictated this course of action would be immoral. Thus, experiments in economics are often very difficult to design or conduct, and can be overlooked as it’s often easier to rely on theory. Dr. Esther Duflo’s contributions Despite those typical challenges, Dr. Duflo won her Nobel Prize because she was able to design and implement experiments that teach us more about how poverty works, how people respond to it, and how it can be overcome. She helped pave the way for economists to be bolder with designing field experiments that both aid people and help advance our knowledge, while avoiding moral quandaries; many of these experiments involve providing an economic benefit to a group of people that otherwise wouldn’t have had it. To preserve experimental purity, often the choice of recipient for the intervention is randomly chosen. To aid in systematically conducting such experiments, Dr. Duflo co-founded the Abdul Latif Jameel Poverty Action Lab (or J-PAL for short) with Dr. Abhijit Banerjee and Dr. Sendhil Mullainathan. The Lab’s purpose is to break down the problem of global poverty into smaller, more manageable pieces that can be studied and used to build policy. It does so by conducting randomized control experiments with the global poor in various developing countries and studying the results, much like a natural scientist might do. An example of a study conducted by J-PAL involved building rainwater cisterns to study how having additional resources reduced individuals’ motivations to conduct political clientelism. The experiment randomly chose communities to receive the cisterns, and studied the effect on the democratic process. You can read more about this particular study at J-PAL’s website. Experiments such as these allow economists to learn how to design more effective policies, in this case, how to avoid future clientelism in a developing economy’s democracy3. Read More from Dr. Esther Duflo Besides contributing to developmental economics with these experiments, Dr. Duflo has also published a number of books and contributed to a number of economics texts. One well-known book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty (published in 2011) is an excellent read for students of economics. It also exemplifies the reason why Dr. Duflo won her Nobel Prize. The book raises questions about the behavior of the global poor, such as: Why do these people make decisions that seem wrong to many of us in developed countries (such as having so many children)? Why don’t they save more? Then, the book explains how these behaviors are often rational from the perspective of someone who is living in poverty and dealing with challenges many of us are unaware of. For instance, children can be viewed as a vehicle for financial security, especially in areas where child mortality is higher and children are expected to care for their parents as they age. In some parts of the world, children – not a 401(k) – are the default retirement plan. This stands in stark contrast to many developed nations, where children are often viewed as a financial burden due to the cost of childcare. The book additionally examines other questions and concepts (such as if nutritional poverty traps exist) that students of microeconomics may be familiar with. It’s an excellent read that we can heartily recommend. Other books Dr. Duflo has written and contributed to include Good Economics for Hard Times, Elsevier’s Handbook of Field Experiments, Vol. 1 and Vol. 2, and several books in French including two volumes of Lutter contre la pauvrete, Le Développment Humain and La polique de l'autonomie. She has contributed to chapters in books such as the World Bank’s The Influence of Randomized Controlled Trials on Development Economics Research and on Development Policy, Aging and Death Under a Dollar a Day, Field Experiments in Development Economics, and more. Dr. Duflo is currently the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology. She received her PhD in economics from MIT in 1999. She has also received a number of other awards, including a "MacArthur Foundation fellowship (2009), the John Bates Clark Medal from the American Economic Association (2010), and…the BBVA Foundation Frontiers of Knowledge Award for Development Cooperation”4 in 2009. To read more about Dr. Duflo, you can visit the National Women’s History Museum article about her, or read the 2019 Nobel Prize in economics press release. References 1: Esther Duflo – Facts – 2019. NobelPrize.org. Nobel Prize Outreach AB 2023. Tue. 7 Mar 2023. <https://www.nobelprize.org/prizes/economic-sciences/2019/duflo/facts/> 2: Press release. NobelPrize.org. Nobel Prize Outreach AB 2023. Tue. 7 Mar 2023. <https://www.nobelprize.org/prizes/economic-sciences/2019/press-release/> 3: Harvesting rainfall: Experimental evidence from Cistern deployment in Northeast Brazil: The abdul latif jameel poverty action lab. The Abdul Latif Jameel Poverty Action Lab (J-PAL). (n.d.). Retrieved March 7, 2023, from https://www.povertyactionlab.org/evaluation/harvesting-rainfall-experimental-evidence-cistern-deployment-northeast-brazil 4: Dizikes, P. (2019, October 14). MIT economists Esther Duflo and Abhijit Banerjee win Nobel prize. MIT News | Massachusetts Institute of Technology. Retrieved March 7, 2023, from https://news.mit.edu/2019/esther-duflo-abhijit-banerjee-win-2019-nobel-prize-economics-1014 Header image attribution: Kris Krüg via Wikimedia Commons, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>
In this series of articles, INOMICS will highlight the accomplishments of particular economists who have contributed greatly to the field. Students often learn about the great figures in economics only briefly and in passing, but the content taught in economics courses comes from brilliant economists such as these.
Pop Economics: Economics through the lens of pop culture
And those cries for attention seem to be working. We have politicians, policymakers, environmentalists, lawyers, global action groups, local community groups, writers, actors, singers, and talk show hosts talking about the state of the economy. Interestingly, these groups of non-experts seem to understand the economics of daily life better than their accomplished counterparts, or at least they have a knack presenting the ideas more easily. This realization dawned on me when I started my economics PhD on the nexus between debt and the real economy, at which time I had an existing specialization in marketing and only an elementary knowledge of financial concepts. As I read through books, reports and academic papers, I found myself on a perilous expedition with complicated models, charts, techniques and a lexicon that left me baffled. It took me months of annotations, underlining and highlights to make sense of economic text, which continues to date. During this time, I came across multiple pop culture economics references that were closely associated with daily life, more so than tortuous journal papers which often focus on very specific areas of research that aren’t very relatable. It seems impressive how pop culture references integrate the intricacies and complexities of economic concepts and principles into our daily experiences, while economic texts and journal articles feel distant and notional. <11an>limit:3;categories:PhD Programs;disciplines:Economics</11an> So, I got insights into economics’ most debated topics from philosophy, poetry, jazz, rap, satire, movies, podcasts, etc. For starters, consider the statement "Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair" which comes from a former baseball player, Sam Ewing. This humorous quote fits the general sentiment very well during times of inflation. We also have the Beatles singing about the government's tax policies, a topic you least expect to make for a good gig, with the catchphrase, "Let me tell you how it will be, there's one for you, nineteen for me". Meanwhile, the line "the way the taxes are, you might as well marry for love" by Joe E. Lewis is another comical take on the grave issue of high taxation. These statements seem to traverse the boundaries of politics and time, remaining relevant to people and groups throughout the eras. Though pop culture has touched all significant economic areas, two trends that tend to be prevalent are consumer sentiments and widening inequality. Time and again, messages about economics in pop culture has represented the aspirations, problems and expectations of the general populace, and when an economic crisis hits (which is often), it highlights the on-the-ground realities better than the designated indexes compiled by economists to represent sentiments. Famous 18th-century philosopher and composer Jean Jacques Rousseau observed, "When the people shall have nothing more to eat, they'll eat the rich", accurately representing the kind of animosity behind growing populism and cynicism towards the elite class. A similar point was put forward in the 1970s by Gil Scott-Heron in his song “Whitey on the moon” , where he blatantly points out the partisan policies of the US government. He writes, "I can't pay no doctor bills, But whitey's on the moon. Ten years from now, I'll be payin' still, While whitey's on the moon.” Similarly, in his satirical take on the government's policies, comedian Will Rogers comments "The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover didn't know that money trickled up." We also have prose and poems commenting on the economy and offering suggestions. The 1980s rock band Dire Straits provided an accurate description of the state of affairs when they sang, "these are class symptoms of a monetary squeeze…sociologists invent words that mean industrial disease". Then we have the 2008 song “Circulate” by Jeezy. "Sound like the country's going broke. The industry's going up in smoke…Please (please), Please (please) Let the dollar circulate", a seemingly workable solution to the liquidity crisis faced by the countries then. In the drama realm, we have popular movies such as Modern Times, Mother India, The Wizard of Oz, Robin Hood, and more recently, The Pursuit of Happyness, Sorry to Bother You, Parasite, Inception, Born Equal, Nightcrawler, High Rise, and Squid Game. There are also dystopian movies like The Hunger Games, The Age of Stupid, and Atlas Shrugged which explain the dynamics of the economy, though they are not a part of the typical wall street genre. So, while you are going over your economic textbooks and journal articles again and again, it might be nice to take a step back and reflect on how these topics affect the average person. And, while you’re at it, you might as well play some good records. Header image picture credit: Pexels via Pixabay.com
So, the economy is in crisis. Well, when is it not? The global economy is becoming like that one histrionic person that is always miserable, in shambles and crying for attention.
If you have your own insights about the #EconMeToo movement and would like to write a blog post about it, we invite you to contact us at submissions@inomics.com. Discrimination in Economics Not only are women outnumbered and underpaid in economics, they also face a disproportionate amount of harassment and discrimination within the field. These issues are unfortunately very common; an AEA survey found that 48% of female economists reported they had experienced discrimination based on their sex, compared to just 3% of male respondents. Some of these other forms of discrimination include not being invited to speak at panels as often as men, and receiving extra scrutiny during presentations relative to their male peers. Harassment in Economics A recent movement, dubbed #EconMeToo on Twitter, has drawn renewed attention to the sexual harassment, assault, and other abuses faced primarily by women in economics. This recent movement began when a professor of economics at an American university spoke out publicly against specific economists. They did so after allegedly being in conversation with a number of female economists who complained about sexual harassment and even assault. These public accusations have been controversial, but the accusers have alleged that very little was accomplished through official channels, and they had no other choice but to escalate. Part of the lingering frustration that has led to this movement is that even despite prior efforts to combat sexual harassment, there are a lack of meaningful consequences for perpetrators in certain spaces in economics. For example, in 2019, the AEA implemented a policy that allows economists to file complaints about sexual misconduct from others, particularly at conferences. Conferences are a realm where university policies often do not help prevent misconduct or punish perpetrators, because attendees are usually from different universities. However, since the AEA is a professional organization and does not have authority over economists’ actual jobs or employers, its policies have little power to enforce consequences. Unsurprisingly, those who have complained through the AEA policy have expressed that problems have persisted due to the lack of consequences for perpetrators. It is unclear how the recent resurgence in attention on gender inequality in economics will affect the field. We hope the environment improves, though time will tell. If you have an opinion about discrimination or harassment in economics, and the issues outlined above, then join the discussion in the comments below. We also invite well-written articles or research summaries that deal with these topics. If you have an insight or case study that you would like to share, we invite you to contact us at submissions@inomics.com. Header Image Credit: Viarami on Pixabay (free for use under the Pixabay Content License)
We have previously written about the gender pay gap and the leaky pipeline in economics. This article highlights other gender-related issues within the field, particularly around gender-based harassment and discrimination in economics.
The Post-Pandemic Recovery of the Economics Job Market
However, our 2022 Salary Report delivered some good news: the job market for economists appears to have recovered significantly since the beginning of the pandemic. In this article, we will analyze the Salary Report’s findings and show how economist jobs appear to have recovered across the world. In the INOMICS Salary Report, we collected and analyzed survey data about economists’ careers worldwide. You can download the full report and examine the economics gender gap information in detail by downloading the Report. Economist employment levels and pay increasing after 2021 The Salary Report showed that fewer economists were unemployed during 2022 than in 2021. This is especially true for economists with Bachelor’s and Master’s degrees, according to our survey data: Just 2.2% of PhD economists were unemployed during the 2022 survey period, compared with 6.6% in the 2021 period. 4.4% of economists whose highest degree attained is a Master’s degree were unemployed in the 2022 survey period. For the 2021 period, this figure was 11.6%. About 21.7% of economists whose highest degree attained is a Bachelor’s degree were unemployed during the 2022 survey period compared to 51.4% in the 2021 survey period. The above figures clearly show that while PhD economists’ employment was least affected by the pandemic, even PhD economists have enjoyed a 4.4 percentage point reduction in unemployment since 2021 (i.e., from 6.6% down to 2.2% for a total reduction in unemployment of 4.4 percentage points). Meanwhile, Master’s degree economist unemployment decreased by 5.2 percentage points and Bachelor’s unemployment decreased by 29.7 percentage points. Moreover, earnings rose for economists in this period compared to earlier years. While PhD economist earnings rose 7.0% over the 2022 survey period, average Master’s earnings rose 26.3%, and average Bachelor’s earnings rose 32.1%. Taken as a whole, this data suggests that the job market for less-educated economists, which was more negatively affected by the pandemic, has been recovering. Meanwhile, the job market for PhD economists has been experiencing moderate growth since the depths of the pandemic. Re-examining economist jobs in the Global South Again, our data from 2021 showed that economists in the Global South were more negatively affected by the pandemic than others. How have economist jobs in these regions been recovering? Economist unemployment in select regions The above data from our survey show that the trend of reduced unemployment since the height of the pandemic is realized in the Global South, too. There are two important things to note about this data taken from our Salary Report: first, these statistics combine economists of all backgrounds and levels of experience. Second, countries that are often considered part of the Global North were removed from the calculations that generated these statistics. Specifically, Australia, New Zealand, Japan, Russia, Israel, South Africa, South Korea, the Hong Kong SAR region of China, and Singapore were removed when creating this graph. As a comparison, the following chart tracks the same data for the remaining regions in our salary data: Change in economist unemployment in Europe and North America When comparing these regions to the regions in the Global South, it appears that unemployment for economists was similarly reduced across the entire world. Every region experienced a reduction in unemployment, and every region’s “economist unemployment” rate was cut by more than half in 2022 compared to 2021. This lends further weight to the idea that the global pandemic was indeed a major factor causing higher unemployment for economists in 2021, since it was a global, indiscriminate phenomenon. Remote work appears to be sticking in most regions Beyond the apparent recovery of jobs and pay for economists, the distribution of work (whether in-person or remote) has shifted for most since before the pandemic. The majority have seen increases in remote work, and most of the remainder saw no change. Only 11.6% of economists reported working more on-site. These results are remarkably robust, as most economists across employment categories and different types of employer report similar results. Figure 29: How has the amount of remote work in your workplace changed since the pandemic? The largest deviation comes from those employed at central banks, which have seen a larger increase in remote work. Just over 76% of economists at central banks reported more remote work since before the pandemic, compared to about 56% of economists overall. Regionally, increases in returns to the office seem to be concentrated in South Asia and Central Asia, Africa, and the Middle East. It’s plausible that less reliable or widespread digital infrastructure could encourage economists to work in an office more frequently. It may also be less common for employees to have their own home office space in these regions. However, the increase in remote work in some regions has a downside. Among our survey respondents, a significant number of academic economists (though still a minority of academic economists overall) complained about the increase of remote work in their jobs. The downsides, as expressed by these economists, mainly consist of reduced contact with colleagues and students. In an academic setting, interpersonal interaction can be important. It can increase learning for students and effective collaboration among colleagues for teaching and research purposes. Several economists have lamented that increased remote work has hurt these typical benefits of working in an academic setting by reducing the amount of contact people would normally have. For more data on the state of economics in 2022 and since the COVID-19 pandemic, see the 2022 Salary Report. Do these survey results reflect your work experience since the COVID-19 pandemic? Are you working more remotely, for better or worse, as well? Feel free to share your own experiences in the comments below!
The outbreak of COVID-19 created a worldwide recession, and many people experienced reduced work hours or unemployment because of it. Economists were not immune from this. In early 2021, INOMICS reported that one third of economists (especially those in the Global South) faced negative impacts on their careers due to the pandemic. Most affected were economists working in the private sector, though economists in the academic sector faced other issues.
So, it’s no surprise that there are many films that can be thought of as economics movies. Some of them might not even be explicitly movies about economics, but nevertheless discuss themes that some economists study, like strategic behavior. As a follow-up to our popular article 10 Movies All Economists Will Love, we’ve collected 10 more movies that will surely give the economist in your life something to talk about. Next time you sit down for a movie night, be sure to give the following options a try! INOMICS is a member of the Amazon Associates affiliate program and the Apple affiliate program. This article contains affiliate links, which means we may earn money through any qualifying purchases made after you click through. However, this is not a sponsored post. 1. Up in the Air Up in the Air follows a corporate downsizer and motivational speaker (named Ryan Bingham, played by George Clooney) who specializes in helping companies lay off their employees. Although Ryan does this, he wants to do so in a sensitive way, and is against a new remote termination program that the company decides to implement. The movie explores some difficult emotions that may resonate with our own careers, and challenges the philosophies of life that several characters have. For those who enjoy a more personal movie that explores the human side of the economy and ends on a hopeful note, this is a good choice. 2. The Hunger Games The Hunger Games is a popular book and movie series from the mid-2010s that follows the story of a group of teens as they fight for survival. But under its surface the movie has surprising economic depth. The entire concept of the titular Games is something of a commentary on capitalism shown by the staggering system of wealth inequality between the glitzy Capitol and each of the Districts (which specialize in producing specific goods). Moreover, the characters attempt to secure sponsors before the Games begin to improve their chances of surviving, and their actions during the Games showcase the strategic decision-making that Game Theory teaches – and how concepts like honor and altruism can break theory’s expectations. This movie is a fun choice to touch on economics concepts in a thrilling, action-filled way. 3. Equity Described as a financial thriller, Equity follows an investment banker trying to work her way up the corporate ladder. Unfortunately, she gets tangled up in a web of corruption as an old friend investigates the shady practices of a company whose IPO she is tasked with promoting. She must find the truth of the matter to save her career. This movie makes a great choice for economists who love both drama and finance in equal measure. 4. High Flying Bird A sports-focused movie, High Flying Bird is a fictional story that nevertheless seems inspired by the real-life 2011 NBA lockout. It follows a sports agent, Ray Burke, whose company is at risk of bankruptcy following failed negotiations that led to the lockout. Ray must pitch an intriguing new business plan to his star rookie talent – including streaming games on social media platforms – that might help them both keep their jobs. Among many themes, the movie touches on the principal/agent problem, which is a known phenomenon in game theory. Moreover, besides delving into the business behind the game, the movie also features interviews with real NBA players about their own rookie years. This one’s sure to please any fan of economics and sports. 5. Boiler Room Boiler Room is a drama similar to the more recent The Wolf of Wall Street that shows how pump-and-dump stock market schemes work and how they ruin the people caught up in them – except those running the scheme. The movie follows a college dropout named Seth who is hired at one of these firms, targeted by the FBI to become their informant, and who tries to right some of his wrongs in the process of taking the company down. 6. Enron: the Smartest Guys in the Room Enron’s bankruptcy and fraud is a famous true story. This dramatic documentary explores the doomed venture and how they cooked the books, abused the stock market, and more to stay afloat for as long as possible before eventually collapsing. It’s an especially good watch for economic historians and those interested in policy. 7. The Wizard of Lies Amidst the 2008 financial crisis, Bernie Madoff was arrested for running one of the largest Ponzi schemes in history. The news story made waves when it became public knowledge, and showed how fraudulent activity can ruin well-intentioned, average people victimized by financial crimes like this one. This movie is a documentary set in the aftermath of Madoff’s arrest, and flashes back frequently to show how Bernie’s business lies affected his family members, too. For a drama that explores one of the most famous financial crimes in history, give this movie a go. 8. Dune: Part One (2021) A well-known sci-fi movie based on a book, Dune: Part One is another film that is undergirded by economic themes throughout. Amidst a backdrop of political intrigue, House Atreides is given charge of a planet producing the most valuable substance in the galaxy – spice that is necessary for space travel. But the House that formerly controlled the spice trade doesn’t take the Atreides’ ascension lightly, and the ensuing conflict leaves the fate of the planet and many of the characters uncertain. For a movie where politics and the flow of valuable resources are crucial to the plot, look no further. 9. The Lorax Based on a book of the same name written by Dr. Seuss, The Lorax shows the story of a town with an environmental problem. All of the trees were cut down to produce garments, and this history has been hidden from the town until a young boy goes on a journey to find a real tree. This is a family-friendly movie option that touches on themes of sustainable development, tragedy of the commons, and resource exploitation. 10. The Corporation The Corporation is a 2003 documentary film that concentrates on the history of corporations and the behavior of the modern corporate entity. It analyzes and criticizes this behavior, especially with regard to how corporations’ rights are perceived as similar to humans’ in the legal system. Although clearly not an unbiased film, the movie was praised for avoiding overly partisan rhetoric and received positive reviews. It’s worth watching for those who wish to think critically about one of the main vehicles our economies use to conduct business. Still hungering for more top movies in economics? Do you have a favorite option that we’re missing? Share your favorite choices in the comments below! Whatever your movie choice, we wish you a happy viewing.
Economics touches every aspect of our lives, whether we know it or not. Game theory, statistics and econometrics, politics, government policy, and of course finance are all aspects of economics that affect our daily lives.
The Glass Ceiling and the “Leaky Pipeline” in Economics
In the INOMICS Salary Report, we collected and analyzed survey data about economists’ careers worldwide. You can download the full report and examine the economics gender gap information in detail by downloading the Report. One key feature of gender inequality in the workplace is that equally-skilled women may be passed over for career advancements (like promotions) in favor of men. The term “glass ceiling” is a metaphor for this artificial barrier that impedes women in the workforce. This effect has been well-documented in many industries, and may explain some of the gender pay gap. Quantifying the Glass Ceiling in Economics In order to examine the following figures fairly, we must take into account the overall number of women in economics. IDEAS/RePEc estimates that 26.2% of economists are women; meanwhile, 28% of our survey respondents were women. For more information on the gender ratio in economics, see The Gender Ratio in Economics in 2022. Proportion of Women in Academic Roles in Economics In academia, women make up larger relative proportions of people in less prestigious positions. There are more women than men in Postdoc, Research Assistant and Student Assistant roles relative to their sample sizes in our data. There are a roughly representative number of women in the PhD Candidate, Associate Professor and Lecturer/Assistant Professor roles. However, proportionally fewer women than men are full Professors of Economics. Proportion of Women in Industry Roles in Economics Industry roles exhibit a similar but more pronounced pattern. Although women make up only 27% of our sample, they account for a large proportion of entry or lower-level roles, particularly traineeships and internships. Meanwhile, the amount of women who are researchers/analysts or middle managers is slightly below what would be expected if there was no gender inequality. Finally, the number of women in executive positions is a mere 7%, far below what would be expected with equality. Research by French economist Dr. Emmanuelle Auriol and colleagues reaches a similar conclusion. Dr. Auriol and her team found that women account for 32% of all economics positions and that women’s representation falls as seniority increases. They find that women make up about 40% of entry-level positions but only 27% of senior positions. They additionally found that the disparity is greater in the US than in Europe. What is the “Leaky Pipeline”? The above discussion has highlighted a phenomenon of women disappearing towards the upper ranks of economics. This phenomenon has been dubbed the leaky pipeline. It partially explains why there are fewer women in more senior positions; more women than men drop out of the field, or stop getting promoted, as their career progresses. It’s not perfectly clear why this occurs, but it is likely due to a combination of gender-based discrimination, lack of support networks, and other hindrances (such as unequal pay) within the field of economics, which are explored below. Moreover, in certain regions childcare expectations, cultural pressure, or lack of parental leave may prevent women from advancing in their careers after having children. It’s possible that more women than men choose to work part-time after starting a family (whether due to personal choices, these cultural expectations, lack of affordable childcare, etc.). Further, within economics itself, women may face barriers entirely unrelated to their personal situation. An IMF article reveals some of these additional discriminatory factors. They include a look at stereotype-promoting comments on referee reports, the fact that women are more highly underrepresented in macroeconomics, finance and international economics, and the childbirth penalty to earnings that women face across their entire careers. Their article corroborates earlier findings in this article as well, and includes more data that is worth reading. The European Student Think Tank, drawing from other research, describes the state of women in STEM fields this way: “...the majority of Master’s students in science are women, but they tend to leave the sector at higher rates than their male counterparts (Thornton 2019). This may be explained by a gender pay gap and the lack of women in senior positions in the digital sector (European Commission 2019), which could discourage younger women from pursuing a career in STEM.” Moving forward: how to address gender inequality in economics? One of the best ways to address any problem is to recognize it and make it known. Therefore, we invite all of our readers to study your professional surroundings. Examine if there are ways in which your university, economics department, workplace, etc. discriminates against women in economics. Engage in conversation about the issues. Check if there is equal pay in your workplace, and advocate for it if not. Be an ally – do not doubt reports of sexual harassment or other forms of discrimination, and take them seriously. Together, we can build a more egalitarian field where all economists are equally valued.
The 2022 INOMICS Salary Report allowed us to examine the field of economics across employer types, job positions, and regions. This article continues with our look at gender (in)equality in economics by examining the glass ceiling. Below, we examine this effect in academia (economists employed by universities) and industry (other employer types).
In the INOMICS Salary Report, we collected and analyzed survey data about economists’ careers worldwide. You can download the full report and examine the economics gender gap information in detail by downloading the Report. The Gender Ratio in Economics Compared to STEM fields Historically, economics has been a male-dominated field. IDEAS/RePEc estimates that 26.2% of economists are women. Meanwhile, 28% of our survey respondents were women. This is worth comparing to Science, Technology, Engineering and Mathematics (STEM) fields, which are notorious for being historically underrepresented by women: In the UK, according to UCAS data from 2022, 35% of STEM students in higher education are women. Computer science and engineering have the lowest proportions: in both fields only 19% of students are women. In mathematics and physical sciences, this percentage is in the 35-40% range. In our survey data, 29.7% of economists in the UK were women. According to the Pew Research Center in 2021, in the US women make up half (50%) of workers in STEM fields. However, this varies wildly by discipline; women made up 74% of workers in health-related jobs, but only 25% in computer-related jobs and 15% in engineering jobs. Among our survey respondents from the US, 32% are women. In the EU, 34% of STEM graduates were women in 2022. Out of the 27 EU countries, 22 have more male scientists than female. Eurostat data from 2021 shows that 41% of scientists and engineers in the EU are women, up from 32% in 2008. Our survey suggests there are fewer female economists in the EU: 31.3% of economists who responded to our survey from the EU were women. According to UNESCO Bangkok in 2020, in East Asia women made up 23.4% of research positions in STEM, while in South and West Asia women made up only 18.5% of these. The Brookings Institute reports (based on UNESCO data) that in sub-Saharan Africa in 2022 women made up 18-31% of science researchers. In our survey data of economists, 16.1% of respondents from Africa are women. According to a UNESCO interview in 2020, women made up 36% of STEM researchers in Latin America. In our survey data, 23.2% of economist respondents in Latin America were women. Economics thus appears to have a comparable amount of women as STEM fields on average, though slightly more than engineering and computer science and likely somewhat less than mathematics and physical sciences. It is possible that women choose to become economists at lower rates than men simply due to diverging interests. However, when examining the gender ratio in light of other research, this explanation appears unlikely to be true. A Centre for Economic Policy Research (CEPR) article found that economics scores lower than other STEM fields across gender diversity metrics. Their article only considers university employment; it corroborates our findings that there are proportionally fewer women in more senior positions at universities. The Women in Economics Index publishes reports that track gender inequality in economics, as well. Their most recent report from 2020 corroborates many of our findings, and features additional insight on the lack of female economists in leadership positions in the field. Further Reading Our Blog includes further information on the gender disparity in economics. The 2022 INOMICS Salary Report data allowed us to examine gender differences in economics such as the glass ceiling and leaky pipeline as well as the gender pay gap. Both phenomena suggest that women may be choosing fields other than economics due to unequal treatment rather than a lack of interest. How should we work towards a more representative field of economics? A recent post on INOMICS discusses the ways that one economics department is aiming to increase diversity (in both gender and racial equality) in their program, with some early success. These types of initiatives can highlight the issues and the need for change while working towards that change. At INOMICS, we value contributions from economists of all genders equally. We look forward to a future where the same can be said of our entire field.
In late 2022, the field of economics came under additional scrutiny for its unequal treatment of women. This article will examine the relative share of women in the field of economics, complementing the analysis of our survey data in the INOMICS Salary Report. This is helpful context for other discussions of gender discrimination in economics, as many statistics can be better understood after learning about the distribution of men and women in economics.
Two quick notes before diving in – first, 99.8% of our 1,316 survey respondents identified as either male or female, so we will only consider these two genders in this article. Second, the numbers in this article have been adjusted with 2021 purchasing power parity data taken from the OECD, so some numbers in this article may not match their counterparts in the full Report. In the INOMICS Salary Report, we collected and analyzed survey data about economists’ careers worldwide. You can download the full report and examine the economics gender gap information in detail by downloading the Report. Overall Economics Pay Gap According to our survey data, male economists are paid 23.1% more than female economists on average. This broad figure is a worldwide average for economists at a wide variety of career stages and levels of education. How does the gender wage gap vary when we take a closer look? Gender Pay Gap by Highest Degree Held For PhD economists, men earn 20.4% more than women. For economists with a Master’s degree, this figure is 20.8%. Average Economist Wage by Gender and Degree Gender Pay Gap by Employer The gender pay gap varies substantially by the type of employer. Research institutions feature average pay that is higher for female economists on average. Unfortunately, this is the exception rather than the rule. Most employers exhibit a pay gap in favor of men. The worst offenders are private companies, governments, and universities, which show gaps of more than 20% each. Private businesses have the largest pay gap by gender, at almost 35% in favor of men. Wage Gap by Employer Type All of the preceding figures are worldwide averages. How does the pay gap change when examining specific regions? Average Regional Economist Wages by Gender and Degree The above graph shows a clear trend in most regions. Male economists with PhDs are paid the most, followed by female economists with PhDs, male economists with Master’s degrees, and female economists with Master’s degrees. Economists whose highest degree held is a Bachelor’s are not shown. There are some visible exceptions to the general trend that men are paid more. In two regions – the Caribbean, South & Central America and East Asia & Australasia – average pay for PhDs appears to be roughly at parity, though gender pay gaps still exist at the Master’s level. Moreover, in Africa and South Asia, average pay for women appears higher than for men on average. Our findings suggest that there are fewer women economists in these regions (as we had many more male respondents than female respondents in them), but that they tend to do quite well if they are among the few women to pursue the field in their region. Other Research A Centre for Economic Policy Research (CEPR) article found, like our survey, that the gender pay gap is worse in North America than in Europe. Figure 27 in the INOMICS Salary Report (below) shows that the gender pay gap is worse in both percentage and absolute terms in North America than in Western Europe & Scandinavia. Average Economist Pay by Gender in Select Regions Meanwhile, a 2019 IZA paper found that among academic economists in the UK, the gender pay gap was prevalent and that its size was persistent. The paper also found that men were more likely to have higher-paid, more prestigious positions (this was accounted for when examining the pay gap). They also found that women were 11 percentage points less likely than men to be promoted to full professor, which is in line with our survey data in 2022. Concluding thoughts The INOMICS Salary Report 2022 devotes several pages to examining the gender gap in economics in detail; download the Report for free and turn to the Gender Pay Gap in Economics section for more. We at INOMICS believe that every economist, regardless of gender or background, should be treated equally. Clearly, new action must be taken to eliminate the pay gap in economics. This will help the field to utilize its human capital to the fullest, and to ensure fair treatment for all who contribute to it.
That gaps exist in economists’ pay and career attainment due to gender discrimination is not news. This article will discuss the findings of the 2022 INOMICS Salary Report as they relate to the gender pay gap in economics. Unless stated otherwise, the facts and figures in this article are taken from our 2022 survey data. INOMICS has previously published reports on the gender pay gap, but this is our deepest dive into the topic yet.
30 Top Twitter Feeds in Economics and Finance
On economics Twitter, anyone can challenge big name economists whom they otherwise wouldn’t have access to, promoting discussion. Many early-career researchers use the platform to share their job market papers, get in front of would-be employers, and advertise conference panels they are attending. Importantly, Twitter has also been a forum to call out abusive behavior against female economists with #EconMeToo. Although Twitter’s issues since Elon Musk took ownership of the platform have been widely publicized, no platform has yet achieved its level of reach and usability. Mastodon is one alternative that is becoming more popular, especially within well-defined niches like economics, but lacks the scale of Twitter. Whether you’ve been Tweeting since the site began or you’ve never sent a tweet, this list of thirty top economics and finance Twitter feeds includes many economists and organizations whose insight might be interesting for you. It includes institutions, individuals and groups from across the political and academic spectrum. In addition to this list (which is offered in no particular order), we of course encourage you to stay up to date with us @INOMICS. 1. @jenniferdoleac - Jennifer Doleac is an economics professor at Texas A&M University, host of the Probable Causation Podcast, and has been at the forefront of documenting #EconMeToo and pushing for meaningful action to stop the wide-scale abuse of female faculty and students. 2. @Mylovanov - Tymofiy Mylovanov is the President of the Kyiv School of Economics and Tweets of his daily experiences of running the school during the war and the daily threat of rocket attacks. 3. @Wootenomics - Econ Educator & UG Director at Virginia Tech who is the author of Parks and Recreation and Economics, which explains the foundations of economics through NBC’s hit TV show Parks and Recreation. 4. @rethinkecon - This Twitter handle shows students coming together to challenge their economic curricula and demand for better in society and in the classrooms. 5. @adam_tooze - Economic Historian Adam Tooze is an economic historian renowned internationally for his insights into the global economy. Read our exclusive interview with Adam Tooze. 6. @Nouriel Nouriel Roubini, Professor of Economics at NYU Stern School and former advisor to both the US Treasury and the White House, who is credited with predicting the 2008 financial crisis before it happened despite widespread belief that the collapse wasn't coming. 7. @izakaminska Izabella Kaminska, Financial Times Alphaville reporter on energy, central banks, markets and more. 8. @EconomicsinTen - Twitter account for the 'Economics in Ten' Podcast - Voted PodBible's 'OH. MY. POD. Independent Podcast of 2019' & named one of the top 25 Economics Podcasts by the Intelligent Economist. 9. @umairh Umair Haque, economist and contributor to Harvard Business Review. 10. @KhoaVuUmn - Heading out onto the job market in 2022/23, Khoa Vu made a name for themselves Tweeting while a PhD Candidate at U of Minnesota. 11. @RBReich Robert Reich, economist, Berkeley professor and former US Secretary of Labor. 12. @JosephEStiglitz - Joseph Stiglitz is a renowned Nobel laureate based in Columbia University and former chief economist at the World Bank. 13. @katie_martin_FX Katie Martin, Dow Jones currencies editor, and Wall Street Journal contributor. 14. @akibritcioglu - For our Turkish-speaking readers, be sure to follow Aykut Kibritçioğlu. 15. @qmuleconomics - An example of how to run an engaging Twitter profile as an Economics school, check out the feed of the School of Economics & Finance at Queen Mary, London. 16. @economistmeg Megan Greene, Senior Fellow at Atlantic Council, Chief Economist at Maverick Intelligence with focus on Europe. 17. @JustinWolfers Justin Wolfers, Senior Fellow at the Peterson Institute for International Economics, Professor of Economics and Public Policy at University of Michigan. 18. @DSchindlerEcon - Associate Professor of Economics at Tilburg University in the Netherlands who regularly posts about issues affecting the economics job market. 19. @delong J. Bradford DeLong, Professor of Economics at UC Berkeley, and blogger. 20. @lindayueh Linda Yueh, BBC Chief Business Correspondent, economist, and professor. 21. @benbernanke Ben Bernanke, former chair of the US Federal Reserve and co-winner of the 2022 Nobel Prize in Economics. 22. @UnlearnEcon a behavioral economist who also runs a YouTube channel about economics. 23. @MargRev Tyler Cowen and Alex Tabarrok, economics professors at George Mason University run a well-known blog for economists at marginalrevolution.com. 24. @Austan_Goolsbee Austan Goolsbee, Professor of Economics at Chicago Booth School of Business. 25. @agaviriau Alejandro Gaviria, economist and current Minister of National Education of Colombia (Twitter feed is in Spanish). 26. @ModeledBehavior Adam Ozimek, economist and blogger. 27. @MatinaStevis Matina Stevis, Wall Street Journal economics reporter in Europe. 28. @cullenroche Cullen Roche, Orcam Financial Group and Pragmatic Capitalism. 29. @garyseconomics - Former trader turned inequality economist gives a critical and alternative perspective on the economy and how it's rigged in the favor of the rich. 30. @BrianCAlbrecht - Applied economic theorist on competition and information with active Twitter feed and a newsletter. Did we mention that INOMICS is also on Twitter? Follow us to get updates about the latest opportunities in economics, as well as news and insights. Happy scrolling! Header image picture credit: Naturelady on Pixabay (Free for use under the Pixabay Content License)
Over the years, Twitter has become a useful and prominent tool within the social media fabric, particularly for professionals looking to network and make connections. Many renowned economists use Twitter, and economics researchers often post research updates using the #EconTwitter hashtag.
In an earlier post we showed which countries spend the most and on what. This article will concentrate more on the economic arguments for and against the Christmas season. Without further ado, read on for our list of interesting economics articles and arguments about Christmas. 1. The paper “Present values: The Economics of Christmas” by Frontier Economics describes how game theoretical concepts such as signalling, sequencing and reciprocity can be applied to Christmas and what deadweight loss is caused while buying presents. 2. “Commerce Claus” tells the reader how Christmas gift-giving helps commit a major sin in economic theory – destroying value. Nevertheless, we’ve compiled our list of gift ideas for the economist in your life; ‘tis the season, after all! 3. Learn about fake vs. real Christmas trees and the whole industry behind it in the Economist’s article “Christmas tree wars: Making fir fly”. 4. “The economics of Christmas presents” describes how one can model the utility function of agents giving and getting gifts. It argues that gift-giving is not a waste by accounting for the surprise factor and how different people react to receiving gifts. 5. Chris Snowdon from the Adam Smith Institute gives an opposite opinion on the above topic in his post “The economics of Christmas”. He suggests that market failure in gift-giving can not be avoided due to asymmetric information. 6. The “goods” and the “bads” of consumer spending are covered in the musical Christmas economics video “Deck the Halls with Macro Follies“ by EconStories. Made at the end of 2012, this delightful video presents the ideas of several renowned economists about savings, spending and growth. 7. Marginal Revolution University has posted their own take on the Christmas gifts debate in an informative and light-hearted video. They eventually settle on giving cash to charity as an efficient gift that also supports the holiday spirit of giving. You can watch it on their channel here. 8. The consulting firm Deloitte frequently conducts a United States-focused holiday spending survey, to project economic outcomes from holiday shopping. For the 2022 holiday season, they have published a report that includes Black Friday and Cyber Monday trends, the effect of inflation on holiday shopping, travel expectations, and more. 9. David Kyle Johnson writes in the London School of Economics blog, attempting to debunk the myth that Christmas spending is good for the economy. He argues that consumer spending at Christmas time, while healthy for the economy, is probably only being shifted from other times of the year. That is, Christmas merely concentrates consumer spending at the end of the year, and doesn’t create additional spending on its own. Give the article a read at LSE’s blog. 10. For a balanced article that discusses the positive and negative sides of the economics of Christmas gift-giving, check out Wired’s “Economists want you to have the most boring Christmas possible”. This article details the deadweight loss argument for why gift giving is inefficient, as well as the counter-arguments for why that idea is too narrow-minded – including the fact that 54% of surveyed economists disagreed that gift giving during the holidays is inefficient. 11. Finally, for a semi-academic look at the economics of Christmas, see Laura Birg and Anna Goeddeke’s spirited article “Christmas economics: a sleigh ride”. In it, they find insufficient evidence to support the welfare gain or loss theories of Christmas. But, they do discuss the pre-holiday effect, gas prices, employment, the Christmas tree market, and more – all from the perspective of Santa and his reindeer. Plus, they even provide a holiday soundtrack to accompany your reading! No matter which theory appeals to you and what attitude you have about Christmas presents, we wish you happy holidays and best of luck with all your shopping and celebrating endeavors! Header image picture credit: Pexels via Pixabay (Free to use under the Pixabay content license)
Christmas is approaching. For many people this is a magical season, filled with songs and decorations, when you hope that all your wishes come true. Others consider Christmas to be a stressful time when you need to rush around to get presents for all your friends and family.