Friday night’s alright for fighting

Afternoon all,

It’s a weekend for competition – whether you prefer golf, dancing or bear fights. No, not Burnham vs. Starmer at Labour Party conference, but the wonderful fat bear competition. I wonder who Mark Carney will be backing this weekend… Presumably, his days of party conference endorsements are over, but he’ll have to pick a side as the English and Canadian ladies battle it out in the rugby.

Keep reading for our take on the Ryder Cup, the politics of the Tour de France, and why age outweighs income in determining how likely you are to vote Labour.

Have a great weekend,

Ruth

Chief Executive
Resolution Foundation

P.S. Anyone headed to Labour or Conservative conference in the coming weeks can find the details of our events here.

Cycling to the centre. As the Labour party gathers one question on their minds will be how to take on Farage – and where better to look for inspiration than our French friends. This analysis indicates that MPs wanting to counter challenges from the right in their constituencies should…simply get the Tour de France to cycle through their town. Seriously, the authors looked at twenty years of Tours to determine that towns within 10 km of the route saw an average reduction in support for the National Front/Rally of 0.03–0.04 standard deviations (approximately 0.44 reduction in vote share in legislative elections). Hmm, not quite enough to fix the Labour party’s poll woes… Anyway, intriguingly it *doesn’t* seem to be driven by economic factors, since these regions saw only modest increases in local GDP per capita and no change in employment. The effect may instead be largely psychological, with National Front/Rally support falling more in areas where French riders won stages. Maybe there’s something in shoring up regional pride.

Readying for a rainy day. Why do people save? And how might promotions, sickness, and marriage influence their saving behaviour? This to-die-for research built a model of labour supply and savings choices that reflects the complexity of family dynamics for Americans born in the 1940s. One clear conclusion is that the desire to leave bequests has a strong impact on household behaviour. When the authors removed bequest motives from their model, they saw a 24 per cent drop in aggregate wealth. That meant that saving for bequests was a bigger motivator than saving for medical expenses (13 per cent) or wage risks (10 per cent). Is it any wonder that changes to Inheritance Tax elicit such strong reactions?

Drink deaths down. Data out this week has revealed that deaths in Scotland caused by alcohol have fallen by 8 per cent from their height in 2003. Alcohol specific deaths are now at their lowest level since 2019. Check out this great BlueSky thread for a closer look at the data, including a neat chart showing the pronounced fall among older age groups, who are now the heaviest drinkers. As ever, it’s hard to pin down cause, but this could be a sign of the efficacy of the Minimum Unit Pricing brought in in 2018.  We believe a similar Salt and Sugar Tax should be introduced to relieve pressure on the NHS, and fund the end of the two-child limit on benefits.

Mulling mobility. It is an unfortunate truism that your parents’ salaries will have a not-insignificant bearing on your economic outcomes. Where this paper adds to the debate is by examining *when* factors like family income and structure have the greatest impact, throughout a person’s childhood. In other words, the authors track income and family patterns over time (rather than treating them as static). Turns out, middle childhood (6 – 12) and adolescence are the most critical periods for skill-building and development.  So given that the oldest kids affected by the two-child limit will be turning 9 next year, acting now rather than later in the Parliament really will help to limit long-term harm for hundreds of thousands of kids.

Something for the weekend | Ryder Cup

The big event this weekend is the Ryder Cup. A great intercontinental spectacle – the best of the US vs the best of Europe. It’s a unique structure for a sports tournament: a series of individual match-ups amidst a collective continental endeavour. The only problem? Golf is boring. So, let’s step it up with the *economics* Ryder Cup….

1st hole – Incomes. The lucky people of Switzerland pip the rest of Europe, with average annual wages of $87,468. That’s massive… but still less than the moneyed people of Massachusetts, with a huge $104,828 median income. America takes the lead.

2nd hole – Inequality. Using the Gini coefficient measure, Slovak republic is the most equal country in Europe, with a score of 0.25. The most equal state in the union – Utah – is no match with its measly 0.42. Neck and neck as we approach the midway point.

3rd hole – Jobs. The great state of South Dakota leads America with the very low unemployment rate of 1.8 per cent, below Czechia with 2.6. It’s 2 – 1 to the Yanks.

4th hole – Wellbeing. This is a wobbly stat, but on various measures Europe pulls ahead. The people of New Hampshire have a Human Development Index of 9.56 – no match for the 9.70 of Norway. Meanwhile happy Hawaii brings a self-reported happiness score of 6.8 – but sunshine isn’t everything because the Finns laugh at that score with their 7.7.

5^th hole – Productivity. So, it’s all to play for in the final round. New York is the most productive US state, at $133 per hour worked… but this is pipped by Ireland’s $139 an hour. Perhaps US tech giants would have thought twice about minimising their tax bills via Ireland if they knew it would have cost them the coveted Ryder Resolution Cup.

Chart of the week

Supposedly age has replaced class as the big divide in British politics – a trend rammed home by Brexit – and that we’ve examined as part of our Intergenerational Centre. As Labour head to Liverpool this weekend, Chart of the Week examines the dramatic evolution of its vote share across the age and income distribution. Going back to the heady days of 1992, when Neil Kinnock was leader, pensioners were just as likely to vote Labour as people in their 20s, while the poorest fifth of households were more than twice as likely to vote Labour as the richest fifth. Fast forward a generation (quite literally: we have Stephen Kinnock speaking at our fringe event on Sunday) and the age/income switch is complete. Poorer voters are no longer any more likely to vote Labour than their richer counterparts – indeed Labour’s peak vote share is among those living in households with gross incomes between £75,000 and £149,999. The age gradient has eased since 2019, but it is still the case the voters in their 20s (turnout rate of roughly two-in-five) are almost twice as likely to vote Labour as those over 65 (turnout rate of nearly three-in-four). Do these trends affect political priorities? We’ll find out this Autumn if Labour’s support among better off families and older voters has dimmed their appetite for progressive tax rises…