Why blaggers do it better Top of the Charts 15 May 2020 Torsten Bell Afternoon all, I hope you’re adjusting to the brave new world of opening things up rather than shutting them down. It’s definitely taking time to adjust to – practically, but emotionally too. I’ve not ventured to the garden centre yet, but just to flag that I’ll be really angry if you lot have ransacked the place before I make it. Some people obviously have a lot more choice than others about that adjustment, not least work wise. And many others will be wishing they had that adjustment to manage, having lost their jobs already. We know quite a bit about who is at risk of those job loses, and about overall numbers making benefits claims, but we won’t have a clear picture from official stats of actual job losses until mid-June (ONS stats next week will only take us to the end of March). To help fill that gap we’ve conducted a big survey of workers. The first results are out tomorrow morning so keep an eye out for that. Torsten Chief Executive Resolution Foundation R we nearly there yet? We all have a lot of eggs in the finding a vaccine basket given it’s ‘the only feasible long-term solution’ according to the government. So this interesting (and firmly pre-covid era) paper from 2013 that examines how long it takes to develop a new commercial vaccine is important stuff. Important but not relaxing… it concludes that on average it takes 10.7 years from pre-clinical phases. Gulp. Oh, and things have slowed in recent decades. Which is nice. The take-away: the speed of vaccine development for coronavirus needs to be as ‘unprecedented’ as the economic shock and policy response it has triggered. Luckily the globe is throwing money and research at the problem and we’ve made progress studying similar viruses. Fingers crossed. Consuming coronavirus. Spending falls in all recessions as actual incomes fall and fear of income falls rise. But this time we’re seeing even bigger drops in spending because income falls are being combined with the biggest restrictions on our spending since war-time. A new paper looking at transactions data finds that spending has fallen by 40-50 per cent in British households. Unsurprisingly this is mainly about retail, restaurants and transport. More surprising/concerning is the findings that 1) the typical income fall in the sample was 30 per cent 2) bank charges for the likes of overdrafts are up 6% 3) the most economically vulnerable have seen the biggest falls in spending. Consuming checks. If consumption is falling, how to we get it back up? Across the pond, related research digs into the consumption impact of the direct payments (worth up to $1,200) made to households through the 2020 CARES Act. The checks increased immediate household spending (ie in the ten days after receipt) quite a bit ($0.25 – $0.35 per dollar received). And crucially the impact was biggest for lower income households – which is consistent with the results for the UK above that it’s poorer households whose consumption is income constrained. Households with high bank account balances saw no increases in their spending at all – an important lesson for debates about targeted vs universal stimulus policies. Brainy blagging. Now to lighten the mood, have a read of this moderately frivolous study into… bullshitting. In great news for politicians everywhere, it turns out that being able to convincingly make-up complete rubbish is not only interpreted by the audience as a sign of intelligence, it might actually be a sign of it. The research examined how convincingly participants could explain completely fake concepts – like ‘subjunctive scaling’. Participants that came up with explanations that others found convincing also got the top scores in tests of ‘intelligence’. The authors conclusion? That an advanced ability to ‘blag’ might be an evolutionary advantage, even if quite an annoying one. Either that or the researchers are a very clever bunch who’ve made the whole thing up… Harassment and inequality. With TUC research back in 2016 finding that over half of all women had experienced sexual harassment in the workplace, a recent Swedish report makes bleak reading. The paper finds that the likelihood of experiencing harassment is correlated with lower wages. Unsurprisingly it also goes along with more resignations and lower job satisfaction. In further bad news, it turns out that we’re willing to take a pay hit to avoid working somewhere where sexual harassment has occurred – but only if the incident we know about concerns someone of the same gender as ourselves. The idea that we only reject workplaces where harassment occurs on the grounds that we’re personally at risk is a seriously big empathy fail. Turns out us humans still have a long way to go on the harassment front. Chart of the Week The Chancellor extended the Job Retention Scheme this week. Thank god. Those advocating ripping the JRS plaster off immediately totally misunderstand the situation we are in. The record employment of the past decade has made us too complacent on the jobs front – as this week’s chart shows we should be far from relaxed. Britain is heading for the highest unemployment rate in more than 25 years, and people just do not flow out of unemployment quickly when lots of other people are workless. Crucially, we shouldn’t just assume a rerun of the financial crisis experience of unemployment being bad but nowhere near as bad as feared. Back then several bouts of well-above-target inflation pushed down on real wages, protecting jobs by making them cheaper but hammering incomes (as a previous TOTCs special explained). Plus the sectors that normally do a lot of hiring in job recoveries are the very ones shedding jobs this time. In 2010 and 2011, hospitality and non-food retail accounted for 22 per cent of people entering work from unemployment, despite only representing 10 per cent of employment. They can’t repeat that trick this time. The job of policy is to navigate these headwinds, not to let unemployment rip.
