Health expectancy, home economics and how surnames help with success Top of the Charts 29 April 2022 Torsten Bell Afternoon all, I’ve been across the Atlantic this week, but it’s been good to see you’ve all been trying really hard to maintain Britain’s reputation while I’m away. Explaining our porn-perusing politicians, or the fact our Social Mobility Commission chair (who obviously hasn’t met the Resolution team…) thinks girls can’t do “hard maths”, to Americans has been awkward. And if I’ve understood it right our answer to the cost of living crisis is fewer MOTs? Top work, team. Anyway, an ocean/jet lag isn’t enough to stop TOTCs making its way to you. We’ve got reads galore, and a COTW that digs into something I’ve been pondering over here: why has the US had a much stronger recovery than us when it comes to GDP, but not employment? Have a great bank holiday weekend. Torsten Bell Chief Executive Resolution Foundation Zoning Zooming out. Chief execs who used to boast that remote working was a triumph are now desperate for employees to be back in the office (if we didn’t have a tight labour market they’d be doing something about it). Maybe they just got lonely, but the shift is also because some things are hard over Zoom. Coming up with new ideas is one according to a new Nature article that paired-up 600 people – half online and half in person – and asked them to come up with new ideas for how a product could be used. Those online came up with fewer – and less creative – ideas (they were just as good at the analytical/decision making tasks). The interesting bit is why. I thought the problem was people being online but switched-off attention wise, but apparently they’re too switched-on, i.e. online pairs narrowly focus on their partner. Staring at the screen rather than allowing your eyes to wander seems to prevent our minds wandering too. So maybe those people who don’t make eye contact with you aren’t being rude – just creative. Hey EU. We voted to leave the EU in 2016. You’ll remember. But actual leaving (in economic terms) didn’t come until January 2021 with the Trade and Cooperation Agreement (TCA). A year later what has been its impact? A new LSE paper examines UK-EU goods trade shifts following the demerger – which aren’t exactly what was expected. Yes, trade is down, but the main thing driving that? A sudden 25% fall in EU imports to the UK (vs those from elsewhere). The volume of UK exports to the EU (where big falls were expected given the EU has imposed many more checks than the UK) held up much better. However, the TCA has reduced the number of firms doing that exporting – basically knocking lots of smaller firms out of the exporting business via a whole world of form filling pain. We’re only one year into this brave new world so buckle up for years of research on this because Brexit isn’t something we get done, it’s a life we lead. Home economics. Energy prices are (rightly) dominating our cost of living debate, but for poorer countries food prices are a real concern (for those consuming wheat/corn rising food not energy prices are driving inflation up). For a brief explainer read this recent World Bank blog. It notes that while the so called ‘global’ financial crisis was really about advanced economies banks going bust, the surge in food prices of 2007 and 2008 was a bigger problem for many poorer nations (prices rose by over 4 per cent in 2008 after fairly consistent falls since the 1970s). Back then the result was millions pushed back into poverty. Food price rises have started building in early 2022 but we’re not rerunning 2008 yet. However, spillovers from the conflict in Ukraine are still to come so no-one should be complacent: food accounts for 30 to 45 per cent of spending in lower income countries. The authors aren’t keen on a repeat of the policy responses adopted in 2008 (export bans/price controls). Their preferred answer? Shockingly they opt for income support for those most in need, rather than cheaper MOTs. Unequal lives. You all know that those living in richer places live longer – confirmed again by new data on life expectancies this week that shows men and women in the most deprived areas live 10 and 8 years less, respectively, than those in the least deprived areas. That should make us angry, but two other things in the release should make us absolutely furious. First, this inequality is increasing, and second, the fewer years people in poorer places live are much less likely to be enjoyed in good health. Healthy life expectancy for both sexes is around 19 years lower for those born in the most vs the least deprived areas. To put it another way, women in poor areas live only two thirds of their lives in good health vs over four fifths for those at the top. Grim. Similar surnames. Who says economists don’t know how to have fun. An old paper’s done the rounds on Twitter this week that is basically an extended (bad) joke about economists with the same surname co-authoring. It’s entitled A Few Goodmen because it’s the first to have four co-authors with the same surname that aren’t related (yes you guessed it, they’re called Goodman. Hilarious). But there is a serious point here: amongst economists it does matter what your surname is, with evidence that those with initials earlier on in the alphabet are more likely to get tenure at top unis or win prestigious awards. Why? Because in economics the ordering of co-authors on a paper is alphabetic – in psychology (where authors are ordered based on contribution to a paper) there’s no impact of surnames on success. Feeling very smug about the whole surname beginning with a B thing. Chart of the Week US inflation is higher than in Europe, despite a smaller energy cost surge, because the US recovery has been significantly stronger. But the US labour market recovery hasn’t delivered higher employment, as this week’s chart shows. The interesting question is why the US has been more GDP rich/employment poor relative to the UK. I originally thought this is about policy: our furlough scheme kept workers without work in employment, while the US accepted job losses and raised out of work benefits (hence the much bigger US fall in employment early in the pandemic). But policy can’t explain everything, because we saw exactly this pattern of a stronger GDP/weaker employment recovery in the US after the financial crisis (see the 2nd chart) – and the UK had no furlough scheme back then. So I think we should look for wider answers. Those might include the barriers to women working in the US work (female labour market participation is up 5 percentage points in the UK since 1990 but hasn’t grown at all in the US). If you’ve got another suggestion I’d love to hear it.
