Angry tweets, hungry millennials and useless entrepreneurs

Afternoon all,

I think Theresa May might have good reason for feeling miffed as we head into the weekend. We’ve had a triple whammy of pretty good economic news – the fastest rising pay packets since the financial crisis, lowest borrowing in over a decade and lower than expected inflation. And what gratitude does she get? One Tory MP saying not only that he wouldn’t join her government, he wouldn’t even vote for it, another saying Conservatives are “close to despair” over Brexit negotiations, others (rightly) calling for swift action to put more money into Universal Credit, and the prospect of David Davis as an interim Conservative leader being talked up (definitely not by David Davis – definitely not). No wonder the Prime Minister felt invested in the loneliness strategy she launched this week… It’s tough at the top.

So have a good weekend enjoying this week’s reads, and being grateful that you don’t have to deliver Brexit (not you Olly Robbins) or the Budget (although you can have a go at making the numbers add up if you fancy). Happy reading.

Torsten

Torsten Bell,
Director, Resolution Foundation

It doesn’t help to talk tweet. Well this is depressing. We’re all a bit worried about political polarisation and all the angry shouting on social media. You’ll have seen angsting about echo chambers of people holding mutually-reinforcing views on the likes of Twitter and failing to engage with anyone holding other opinions. The popular answer to this has been to say we need to break out of these echo chambers and hear from people that we don’t agree with so the polarisation can be undermined. The only problem? It turns out it doesn’t work. A new study (summary here) conducted an experiment in which self-identifying Republican and liberal-minded people were paid to follow Twitter bots that retweeted news stories of an opposing political slant, and the effect was that they actually ended up more polarised rather than less. Republicans exposed to liberal tweets were substantially more conservative when surveyed a month later, while liberals seemed to have hardened their views too (though less clearly). So basically you need to quit Twitter, not just follow different people.

Growing together. Time for some good news. For decades much of the development economics literature has pondered the question – why don’t poorer countries catch up with the income levels in richer ones? Well a new blog examining recent developments has a very positive answer: they are. Since the fall of the Berlin Wall developing countries on average are outpacing the developed world. And to add further perk the piece notes that this isn’t just because rich countries have been doing badly recently, or about China and India alone. The last decade has taught us that “things can only get better” was not only a bad song, but not true. But it turns out sometimes, just sometimes, things do indeed get (a lot) better.

Croissant munching: You are what you eat goes the phrase that could lie behind this short piece of light-hearted polling on the links between what we eat for breakfast and how we vote. Shockingly it tells us that Labour has a 19-point lead among people who regularly eat croissants. Who knew. More worryingly it tells us that one-in-three millennials regularly skip breakfast altogether. Madness.

Personality flaws. We love celebrating entrepreneurs. Elon Musk dominates the headlines (if not always for the right reasons). But who does and doesn’t become self-employed or an entrepreneur? We’ve long known it certainly helps to have family wealth, but a new paper takes a broader view looking at the characteristics of self-employed people along three dimensions: access to credit, relative earnings, and preferences for things like risk. The key finding: the traits that make people most likely to start a business aren’t the same as those that make people likely to be successful at running one. The authors are therefore opposed to most subsidies for encouraging entrepreneurs which attract not the frustrated few with great ideas but people with “strong preferences for running a business and low-quality business ideas.” Ouch.

Unsteady pay. Most workers’ pay is relatively constant month-to-month or week-to-week, many people might reasonably assume. But a growing literature is showing that this is not so, for a surprising proportion of the workforce. Noah Smith recently wrote about the phenomenon in the USA, arguing that ‘stable earnings are increasingly a thing of the past’. He refers to a paper showing that ‘U.S. income volatility rose in the late 1970s and early 1980s, plateaued from the mid-’80s through the late 1990s, and then began to rise again’. This week at RF we published our own research on recent income volatility here in the UK, which found that the issue here isn’t increasing volatility but it’s surprisingly high level. Almost three-quarters of employees with a steady job experienced notable changes in month-to-month pay. This rises to four in five low-paid employees, versus two-thirds of those on higher earnings. Something for policy makers, and employers, to spend more time thinking about.

Chart of the Week: comes from this week’s Office for National Statistics labour market stats. It was generally a strong set of figures showing that surging employment over recent years is at last feeding through to faster (although far from fast) wage growth. But the overall strong employment stats are hiding one big trend that shouldn’t pass without notice. While every other sector is seeing jobs growth, there was a 73,000 reduction in the number of retail jobs in the year to July. Examining what exactly has happened to the people behind that big impersonal figure will be a priority for future RF work.