Top of the Charts: Saving the world, one research paper at time

Published on Intergenerational Centre

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Afternoon all,

Yesterday we learnt that it’s Johnson vs Hunt. Gung ho vs reluctant no dealing. Everyone’s understandably focused on the odds of no deal rising. But they are missing the real risk to our international reputation – an outside chance that PMQs descends into a weekly row between two blokes called Jeremy. Some things there are no coming back from.

Rather more seriously on the Jeremy front, for anyone at a low ebb on their faith in British public life, yesterday saw the memorial service for, and celebration of, Jeremy Heywood – the nation’s most senior civil servant who passed away last year. Four past and current prime ministers stood to give their testimonies to a truly great civil servant (you can read many others). Which is reassuring, because a country that forgets to value and celebrate genuine public service, even when it’s not in the public eye, doesn’t stay a great country for very long.

Have a great weekend everyone – and enjoy our attempt at public service below.

Torsten Bell,
Chief Executive,
Resolution Foundation

Euro-economics. This week the European Central Bank held their annual conference in Sintra, Portugal – a kind of Euro-remake of the US Fed’s annual Jackson Hole do. Their star evening speaker was Olivier Blanchard, whose talk paid special tribute to the outgoing ECB chair Mario Draghi. It provides a succinct summary of Draghi’s role in tackling the Euro-crisis: in 2012 he famously promised to do “whatever it takes” to save the Euro. But more importantly, Blanchard’s speech is a challenge for policy makers everywhere to ask themselves whether their macro-economic frameworks are fit for purpose, not least for a world of near zero interest rates. That is a massive challenge for the Eurozone – but one we should be taking more seriously this side of the Channel as well.

Euro-politics. 2019 is meant to be the last European election for us, so UK psephologists need to make the most of it. A new paper from political scientist Matthew Goodwin and colleagues this week (summary here) does just that. We all know who did well: the two parties with the clearest positions on Europe. But what was the relationship between Brexit Party/Lib Dem success, and the Conservative Party/Labour collapse? The paper finds that Labour was hit by a ‘pincer movement’ in which it lost support both in its working-class heartlands (to the Brexit Party) and in younger cosmopolitan areas where it performed well in 2017. The Tories did worst in richer, older areas where the Lib Dems swept up many votes from Remain supporters (in part a reversing of the Tory cannibalisation of Lib Dem votes in 2015). The story underpinning all of this is a long building political realignment, being turbo-charged (but also confused) by the Brexit referendum aftermath.

Is anyone listening? Public policy world is transfixed by quantitative ‘programme evaluations’, where economists seek to test the effect of a given policy. Classic studies have looked at the impact of class sizes on pupil attainment, and shown that minimum wages don’t in fact drive down employment. But do policymakers take any notice? New research (working paper version) uses its own quantitative experiment to try to answer this question in Brazil. The authors collaborated with several hundred municipal mayors, and discovered that they are willing to pay to learn the results from policy evaluations and that they do update their beliefs – and change policies – in light of the evidence. That’s a relief then. Let’s get researching.

The Hours. We spend a lot of time talking about hourly pay, but not enough on actual hours worked. The latter is particularly important because, while pay rates don’t change much week to week, hours worked can. This drives income volatility for workers – and crucially for some workers more than others, as new US research shows. It finds that workers in the bottom quarter of the wage distribution (ie low earners) have always faced the greatest week-to-week volatility in working hours. This isn’t hugely surprising (we’ve found similar results in the UK by looking at pay packets rather than hours worked), but the paper also shows that since the financial crisis the difference in hours volatility experienced by lower earners and everyone else has widened substantially.

Finders keepers returners. We’ve all lost our wallet or purse at some point in our lives. And it’s bloody annoying, especially having to make those calls to replace cards you barely use anyway. So how can we avoid such mishaps happening in the future (other than the obvious plan of not losing it in the first place)? Stuff your wallet with oodles of cash is the answer from this neat study. It finds that people were MORE likely to return wallets with large amounts of cash in – against the expectations of economists. Honesty 1, economic rationale nil.

Chart of the week comes from our inaugural Intergenerational audit – a 144-page, 84 chart beast of a report looking at 21st century Britain through a generational lens. Obviously you should study every chart, but the one I’ve picked out this week is a reminder of how inequalities between and within generations can interact. Older generations have benefited overwhelmingly from recent increase in household wealth – those born between 1956 and 1965 saw almost half of all household wealth growth between 2006-08 and 2014-16 – despite making up only one-sixth of the adult population. But gender matters. A lot. Older female baby boomers (born 1946-50) have just over half the wealth in their late 60s that their male counterparts do, reflecting lower lifetime earnings driving lower financial and pension asset accumulation. Generous defined benefit pensions were historically more common in jobs where men were concentrated. When you hear people say the old pension system was great what they really mean is great for higher-paid white men. You can hear more from my colleague Laura Gardiner discussing this in greater depth on Woman’s Hour.

Women born before the 1960s have substantially less wealth than their male counterparts