Fast-talking Italians and sailing to a green future

The latest from Resolution Foundation Chief Executive Torsten Bell’s weekly Observer column, Hidden gems from the world of research and academia. Read more of the latest economics and policy research in our weekly reading email, Top of the Charts.

Renewable energy’s plummeting price should put the wind in our sails

It’s been a good week on the science front. Vaccines are ready to be jabbed into us and artificial intelligence has solved the mystery of protein structures. I got further cheer to counter 2020’s gloom from our friends at Our World in Data, who work tirelessly to make data on the world’s biggest challenges accessible. Their deep dive into the costs of producing electricity examines why renewable energy has become so cheap, so fast. The relative cheapness of electricity generated from fossil fuels has stopped us reducing our reliance on them (coal/oil/gas still account for 79% of world energy production).

But in the past decade, renewable prices have plummeted: onshore wind down 70%, solar by 89%. Why? Because while the cost of fossil fuel-generated electricity depends on the cost of those fuels, the renewable costs are all about the cost of the technology – costs that come down fast as we use more of them. Offshore wind is still costly, but the good news for those of us in island-bound Britain is that its costs should fall too.

This is fortunate because we’ll need more electricity as cars and homes switch to it. Plus, further learning-by-doing from our renewable use will drive down costs for low- and middle-income countries consuming more energy in the years ahead. As with vaccines, so with renewables: they are invented somewhere but can help everywhere.

Originally published in the Observer.

How we feel about the rich depends on how they got so wealthy

It’s the nature, not just the level, of your inequality that matters. How a country feels is about differences in income between rich and poor, but also how the sources of that income differ.

That’s the useful reminder from new research examining how capitalism varies between countries and over time. In olden times, the rich got their income from capital (ie owning assets), while the masses relied on labour income (ie from doing some work). Many cling to that view of the world, but it’s not a good description of today’s capitalism in many countries, including the UK.

Our rich today earn both labour and capital income, with the offspring of today’s landed gentry becoming bankers, lawyers or management consultants rather than characters from a Jane Austen novel. It is higher inequality of earnings from labour that has done most to increase income inequality, so we need a more complex understanding of class than thinking in terms of capital v labour.

But some countries, including ones we think of as more equal than us, retain more of the old kind of class divisions – the top in Scandinavia and Germany are much more reliant on capital than the rest of their populations, reflecting those countries’ higher wealth inequality (that their UK fans ignore). Those after an equal and classless society will have to wait for the afterlife, but Taiwan and Slovakia are apparently as close as we get on Earth. Book your post-Covid flights now.

Originally published in the Observer.

The more you earn the less unfair the world seems to you

As a society, we’ve become much more worried about inequality. But what determines whether individuals see levels of inequality as fair? We think what matters is people’s politics: a “lefty” will think big gaps between top and bottom unjustified, the right believe the rich are simply being rewarded for hard work. But new research, combining information on what people think with data on what they earn, shows that our social status also matters a lot.

Generally, we have a fairly accurate view of where we sit in the income pecking order, although we assume others are more like us than they are. The rich think everyone is better off than the reality, while the poor underestimate top incomes.

Our social status also shapes how fair we think the world is. The higher we rank income-wise, the fairer we think inequality is. And our views shift with our social position. Moving down the income ladder, or losing your job, makes you recognise inequality as less fair.

Helpfully for those wanting to engage the public in tackling inequality, the research shows which inequalities people find most unfair: big earnings gaps between those working in the same sector or with the same qualifications. And transparency helps. Those on lower incomes overestimate how well they are doing relatively, but when told the truth they see inequality levels as less fair.

The real lesson? What you earn determines not just what you can buy but what you think.

Originally published in the Observer.

Italians might speak faster but they’re not actually saying more than the rest of us

The pandemic has brought universal harm to humans. But this universalism has been combined with many believing in the exceptionalism of those they live among and the culpability of those they haven’t met.

In March, many in the UK told themselves we couldn’t possibly suffer like Italy, with its “more tactile culture”. Within Britain, we’ve focused on small differences in approach between nations, ignoring the near-identical huge failures in England, Wales and Scotland to lock down earlier or protect lives in care homes. Complaints about rulebreakers fleeing London last week tended to ignore rulebreaking elsewhere.

For a reminder that we have rather a lot in common, check out research into one of our big differences: language. We notice the pace of different languages – Italian is fired like a machine gun while Chinese emerges with leisure. But if we focus on what is being communicated, we’re all “talking” at the same speed – 39 bits per second, to be precise. Those languages that contain lots of information per syllable emerge more slowly from our mouths, while those that pack less meaning into each sound gallop along.

Wherever we live we’re constrained by a shared limit on how quickly we can produce and absorb information. So we might not all understand each other, but if this year has taught us anything it’s that we’re all in this together.

Originally published in the Observer.