Binge watching pensioners and binge reading kids

Afternoon all,

The cost of living crisis got real this week: Nigel Farage hasn’t even got the £3 million minimum savings needed to stop Coutts taking back control his debit card. Forget foodbank usage being up 50 per cent vs pre-pandemic levels, this is what real hardship looks like (you’d think from the huge media attention).

The big news digital economy wise is people celebrating signs of real competition, with Meta’s Threads providing by far the biggest challenge to Twitter to date. I’m happy to follow the herd (already done so) but it’s hard to get too excited about getting to choose which dodgy libertarian west coast squillionaire’s platform is right for you.

Keep an eye out for the Chancellor’s Mansion House speech on Monday (which will focus on encouraging pension funds to invest in UK firms), before Tuesday sees the latest labour market stats (where the big question is whether private sector wage growth will slow).

Before all that kicks off, enjoy the quiet weekend.

Torsten

TV time.I love time use data (having learnt loads from a project we did on it a few years back) so would encourage you to check out the ONS’ update on how we’re all spending our time. Maybe have a read rather than watching quite so much TV (a full half of us are watching at 9pm on a weekday and we spend four times as much time on it as we do socialising with others). Given all the recent focus on the rise in economic inactivity, note the big differences in time use by reason for economic inactivity. Unsurprisingly the sick watch a lot of TV, but the retired manage almost as much leisure/entertainment as dossing students. Thinking about time use is time well spent.

Salary surges. It’s fashionable to say too many people go to university, but back in the real world there’s still a substantial graduate premium (ie graduates earn substantially more than otherwise similar non-grads). And it grows as we age. A recent US study shows that in fact it doubles: graduates earn 27 percent more than non-graduates at 25, but that skyrockets to 60 percent by age 55. Why? Because a degree isn’t just about raising your human capital immediately (ie teaching you things) – it sorts you early in your career into jobs where you’ll keep learning. Grads move jobs lots immediately after uni (and then not very much), sorting into professional (‘non-routine’) jobs where wages rise with experience (wages stop growing after just 4 years’ experience for highly routine jobs). The key takeaway for policy makers is how crucial the school to work transition is for future wage growth – and in the UK it’s currently a disaster for loads of kids. Let’s focus on fixing that rather than pretending we’ve got a cunning plan to retrain 55 year olds as AI developers…

Sibling spillovers. Yesterday saw Keir Starmer’s big speech on education/social mobility. At the school level this kind of focus often translates into specific interventions targeted at individual pupils – which we then evaluate by seeing what difference they make to that individual. But that might under-estimate their impact suggests an interesting new study demonstrating wider effects on families, specifically siblings. The authors examine an education policy in Florida aimed at raising reading standards, showing that not only did it improve test scores for the targeted children, the benefits spilled over to younger siblings (who saw test score improvements worth about 30 per cent of the gains for the directly targeted children). This was especially true where the children are boys/disabled/from immigrant families, with some of the effect coming from parents being more likely to shift younger siblings into better schools. Turns out we live as families not individuals. Who knew.

Fatal forecasts. I like this paper because it takes the ‘rubbish forecasts’ heat off economists, focusing instead on meteorologists. The headline = inaccurate weather forecasts cost lives (or more positively, better forecasts would reduce mortality rates). The work shows in particular that forecast errors are a problem when it’s extremely hot (surprise extreme heat is more deadly than expected/forecast extreme heat). This makes sense given we know that extreme heat/cold raises mortality levels and that people change their behaviour in response to forecasts (this paper shows it effects our energy and time use for example). For a sense of what’s at stake here, the authors show that reducing forecast errors by 50 per cent would save 2,200 lives per year in the US, which they estimate the public would be happy to pay $2bn per year for (rising to $3bn given climate change induced growth in extreme weather). Obviously it’s easier to say better forecasts would be valuable than to actually make them happen. Just ask the Bank of England.

Wavering work. We touched last week on the disability employment gap, but what happens to those with a disability who are in work: they’re more likely to face insecurity. A new note from the Work Foundation concludes that 27 per cent of disabled workers (1.3 million people) are in severely insecure work (vs 19 per cent of their non-disabled counterparts). This is the result of being more concentrated in low paying, part time work (note the latter isn’t just a choice – disabled workers are more likely than others to be underemployed ie want more hours than they’ve got). And because many are self-employed or have shorter tenures they lose out from employment protections that are only for employees and kick in after a few years (e.g unfair dismissal). As ever inequalities interact: disabled women are approximately 2.2 times more likely than disabled men to experience severe work insecurity. So we need better, as well as more, work.

Chart of the week

Here comes the science complex modelling bit – concentrate. I know degrowth nonsense is in fashion, but after 15 years of little productivity growth (and flat wages as a result) everyone should recognise Britain badly needs to get back in the growth business. But would growth alone deliver the shared prosperity Britain badly needs? No is the answer from the latest Resolution research for the Economy 2030 Inquiry. COTW tries to fit into one chart our argument that Britain needs an economic strategy combining growth + predistribution + redistribution. The yellow bars model what a return to modest productivity and wage growth would do for incomes over the next decade. With poorer households on left, richer on the right, it shows incomes would rise by 14 per cent at the top but just 2 per cent at the bottom – given that poorer households have fewer workers in them: 11m people live in households that get less than half of their income from paid work (hardly any are traditionally unemployed – this is about those with children/a disability). So, how can we spread the gain of growth? The blue bars shows what difference predistribution (rising employment and falling pay inequality on scales we’ve achieved before) could make. This would make income growth more focused on the squeezed middle. But if you want to see inequality and poverty actually fall working-age benefits have to rise in line with wages (just as the state pension already does). The green bars show that with the three strategies combined Britain really could deliver rising and more fairly shared prosperity. Which would be nice.