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Economic impacts from floods have been increasing over recent decades, a fact often attributed to a changing climate. On the other hand, there is now a significant body of scientific scholarship all pointing towards increasing concentrations and values of assets as the principle cause of the increasing cost of natural disasters. This holds true for a variety of perils and across different jurisdictions. With this in mind, this paper examines the time history of insured losses from floods in Spain between 1971 and 2008. It assesses whether any discernible residual signal remains after adjusting the data for the increase in the number and value of insured assets over this period of time. Data on insured losses from floods were sourced from Consorcio de Compensación de Seguros (CCS). Although a public institution, CCS compensates homeowners for the damage produced by floods, and thus plays a role similar to that of a private insurance company. Insured losses were adjusted using two proxy measures: first, changes in the total amount of annual surcharges (premiums) paid by customers to CCS, and secondly, changes in the total value of dwellings per year. The adjusted data reveals no significant trend over the period 1971–2008 and serves again to confirm that at this juncture, societal influences remain the prime factors driving insured and economic losses from natural disasters.
An economics book used in some high schools holds that the Antichrist — a world ruler predicted in the New Testament — will one day control what is bought and sold.
How much authority should we give to such work in our policy decisions? The question is important because media reports often seem to assume that any result presented as “scientific” has a claim to our serious attention. But this is hardly a reasonable view
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A rational assessment of a scientific result must first take account of the broader context of the particular science involved. Where does the result lie on the continuum from preliminary studies, designed to suggest further directions of research, to maximally supported conclusions of the science? In physics, for example, there is the difference between early calculations positing the Higgs boson and what we hope will soon be the final experimental proof that it actually exists. Scientists working in a discipline generally have a good sense of where a given piece of works stands in their discipline.
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often, as I have pointed out for the case of biomedical research, popular reports often do not make clear the limited value of a journalistically exciting result. Good headlines can make for bad reporting.
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"We are currently offering one course in ethics, taken by 10-20% of students. What would happen if we offered an entire semester with only ethical courses? I suspect many of our students would have serious problems passing those. If they had to engage with complex ethical issues in debates … many would fail. These are people with a strong mathematical bent, the future 'quants', many with mild Asperger-like qualities.
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"Quants are extremely good at recognising patterns and structures, and at working in very detailed and systematic ways. Quants feel a strong psychological need for those structures, too, and they tend to presume the existence of such structures and patterns for the world to behave predictably, in ways that can be modelled.
"Quants don't have very good social skills. If you react to a quant in a way that requires empathy, this is difficult for them.
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In addressing our current fiscal and economic woes, too often we neglect a key ingredient of our nation's economic future—the human capital produced by our K-12 school system. An improved education system would lead to a dramatically different future for the U.S., because educational outcomes strongly affect economic growth and the distribution of income.
Over the past half century, countries with higher math and science skills have grown faster than those with lower-skilled populations.
For almost two centuries, starting around 1800, the history of the global economy was broadly one of divergence in average incomes. In relative terms, rich countries got even richer. There was growth in the poorer countries, too, but it was slower than rich-country growth, and the discrepancy in prosperity between rich and poor countries increased.
CommentsThis “divergence” was very pronounced in colonial times. It slowed after the 1940’s, but it was only around 1990 that an entirely new trend could be observed – convergence between average incomes in the group of rich countries and the rest of the world. From 1990 to 2010, average per capita income in the emerging and developing countries grew almost three times as fast as average income in Europe, North America, and Japan, compared to lower or, at most, equal growth rates for almost two centuries.
CommentsThis has been a revolutionary change, but will this 20-year-old trend continue? Will convergence remain rapid, or will it be a passing phase in world economic history?
competition among governments leads to better governance. In choosing where to live, people can compare public services and taxes. They are attracted to towns that use tax dollars wisely. Competition keeps town managers alert. It prevents governments from exerting substantial monopoly power over residents. If people feel that their taxes exceed the value of their public services, they can go elsewhere. They can, as economists put it, vote with their feet.
The argument applies not only to people but also to capital. Because capital is more mobile than labor, competition among governments significantly constrains how capital is taxed. Corporations benefit from various government services, including infrastructure, the protection of property rights and the enforcement of contracts. But if taxes vastly exceed these benefits, businesses can — and often do — move to places offering a better mix of taxes and services.
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at one point Kissinger said he thought the best academic preparation for government service was training in philosophy, political theory, and history. In particular, he argued that training in political theory taught you how to think in a disciplined and rigorous manner, and knowledge of history was essential for grasping the broader political context in which decisions must be made. It was clear that he also sees a grounding in history as essential for understanding how different people see the world, and also for knowing something about the limits of the possible.
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I found this observation intriguing because these subjects are not what schools of public policy typically emphasize, even though they are supposedly in the business of preparing students for careers in public service. The canonical curriculum in public policy emphasizes economics and statistics (i.e., regression analysis), sometimes combined with generic training in "public policy analysis" and political institutions.
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Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where "natural liberty" does not work. Let banks charge much more than 5% interest, and they will lend to "prodigals and projectors," precipitating bubbles and crashes. Let "people of the same trade" meet, and their conversation turns to "some contrivance to raise prices." Let market competition continue to drive the division of labor, and it produces workers as "stupid and ignorant as it is possible for a human creature to become."
This is a bit of a wonky and technical post on an important debate over how we measure innovation, and in fact, what innovation actually means in the economy. Much of the debate over innovation in manufacturing has focused on the notion of productivity defined as a measure of the ratio of inputs to outputs. This is all well and good, but how should we define inputs and outputs? By their quantity? Their weight? Their color? Or perhaps economic value? If so, should that value be adjusted for price changes over time?
The Information Technology and Information Foundation and a few others argues for the importance of using quantity as a metrics of manufacturing output, whereas most economics prefer to use economic value. Which measure makes more sense?
Above is a graph from the St. Louis Fed's excellent data portal which shows manufacturing employment in the US (blue), Germany (black) and Japan (red) from 1990 to 2010 (2011 for the US, note 100 = the series average over 1990 to 2010). The data clearly show that each of these three big manufacturing powerhouses have seen about the same proportional decline in manufacturing employment. Claims that Japan or Germany have not seen the same declines in manufacturing employment as the US are watching wiggles not trends.
The wiggles are important as they can represent the effects of policies aimed at reducing the impacts of recessions. But the trend is important as well, and seeing the same trend in manufacturing employment across three of the world's largest economies is pretty strong evidence that there is a single over-whelming dynamic at play - productivity growth in manufacturing.
The crisis of liberal capitalism has been rendered more serious by the rise of a potent alternative: state capitalism, which tries to meld the powers of the state with the powers of capitalism. It depends on government to pick winners and promote economic growth. But it also uses capitalist tools such as listing state-owned companies on the stockmarket and embracing globalisation. Elements of state capitalism have been seen in the past, for example in the rise of Japan in the 1950s and even of Germany in the 1870s, but never before has it operated on such a scale and with such sophisticated tools.
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Between 1900 and 1970 the pro-statists had the wind in their sails. Governments started off by weaving social safety nets and ended up by nationalising huge chunks of the economy. Yet between 1970 and 2000 the free-marketeers made a comeback. Ronald Reagan and Margaret Thatcher started a fashion across the West for privatising state-run industries and pruning the welfare state. The Soviet Union and its outriggers collapsed in ruins.
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The era of free-market triumphalism has come to a juddering halt, and the crisis that destroyed Lehman Brothers in 2008 is now engulfing much of the rich world. The weakest countries, such as Greece, have already been plunged into chaos. Even the mighty United States has seen the income of the average worker contract every year for the past three years. The Fraser Institute, a Canadian think-tank, which has been measuring the progress of economic freedom for the past four decades, saw its worldwide “freedom index” rise relentlessly from 5.5 (out of 10) in 1980 to 6.7 in 2007. But then it started to move backwards.
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Just because it can’t be tabulated in financial terms does not negate our value at home. Being a SAHM is not for those who can’t make it in the “real” world. I will tell you that it takes grit, determination and lots of dying to self to make it as a fulltime SAHM. And who says you don’t need to be an educated mom to handle the demands of SAHM-dom?
The working world is alluring and glamourous and usually financially rewarding. More power to those who are able to juggle work and motherhood and enjoy both. But for the rest of us who are unable or choose not to, think of this season at home as that – a season. When our children are no longer so dependent on us, we can venture out to the workplace once again. Sure, some of us can return to the workforce earlier than others and our season at home varies. But we are most certainly not wasting the country’s or our parent’s money and recourses by being educated to the best of our abilities and then choosing to stay home for our family’s well being.
With professional & business services currently employing about 18 million people, as compared to about 12 million in manufacturing, someone will have to remind me why manufacturing is supposed to be a special sector and not not professional and business services.
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Why is manufacturing special? Because someone with a high school diploma can make a better living there than they can in most other sectors of the economy that they are qualified to work for.
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Manufacturing is special because it tends to pay generally good wages to people whose skills and education are limited.
In her new book, How Economics Shapes Science (Harvard University Press), Paula Stephan outlines and explains a wide variety of ways in which economics impacts research, from what motivates scientists to falsify their findings to whether it's cheaper for a lab to employ grad students or postdocs. Along the way, Stephan shows how funding for scientific research is inefficiently allocated, and offers some suggestions on how the system could be improved to the benefit of all -- not least those underemployed Ph.D.s.
young women who won access to the pill in the 1960s ended up earning an 8 percent premium on their hourly wages by age 50.
Gasoline is significantly undertaxed in the United States — in two senses. The federal 18.4 cent-per-gallon gas tax is the main source for the Federal Highway Trust Fund, but it hasn’t been raised in two decades, starving U.S. infrastructure. Also, the gas tax is set too low to offset the negative side effects for society — economists call them “externalities” — associated with gasoline consumption.
The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
And as more middle-class families like the Gulbransons land in the safety net in Chisago and similar communities, anger at the government has increased alongside. Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it and resent the government for providing it. They say they want less help for themselves; less help in caring for relatives; less assistance when they reach old age.
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Politicians have expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and mushrooming debt. In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.
The recent recession increased dependence on government, and stronger economic growth would reduce demand for programs like unemployment benefits. But the long-term trend is clear. Over the next 25 years, as the population ages and medical costs climb, the budget office projects that benefits programs will grow faster than any other part of government, driving the federal debt to dangerous heights.
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the reality of life here is that Mr. Gulbranson and many of his neighbors continue to take as much help from the government as they can get. When pressed to choose between paying more and taking less, many people interviewed here hemmed and hawed and said they could not decide. Some were reduced to tears. It is much easier to promise future restraint than to deny present needs.
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