Progress Daily

Globalization has accounted for only a small share of job creation and destruction over the past few decades. According to Pankaj Ghemawat, 90% of fixed investment around the world is domestic. Companies open plants overseas, but that’s mainly so their production facilities can be close to local markets.

According to Thomas Duesterberg, the US’s share of global manufacturing output has actually increased slightly since 1980.

The chief force reshaping manufacturing is technological change (hastened by competition with other companies, foreign and domestic). Manufacturing productivity has doubled over two decades. Employers now require fewer but more highly skilled workers. According to William Overholt, between 1994 and 2004 the Chinese shed 25 million manufacturing jobs, 10 times more than the US.

“The Cognitive Age,” by David Brooks

 

Using selective breeding, researchers can make rats, bees and flies a lot better at learning. Animals that are better learners should over time come to dominate a population. Yet improved learning ability does not get selected amongst these animals in the wild. Tadeusz Kawecki may have discovered why.

Kawecki gave flies two different fruits as egg laying sites. One of these was laced with a bitter additive that could be detected only on contact. The flies were then given the same fruit but without an additive. Flies that avoided the fruit which had been bitter were deemed to have learned from their experience. Their offspring were reared and the experiment was run again.

After repeating the experiment for 30 generations, the offspring of the learned flies were compared with normal flies. Learning ability was bred into the flies, but it shortened their lives by 15%. And when flies were bread to live abnormally long lives, they learned less well than even average flies.

“Critical thinking,” The Economist

Lant Pritchett and Michael Clemens have devised a new measure of wealth: “income per natural” (.pdf file here). Rather than measuring the income of people who are now residents of a country, they estimate the income earned by people who were born in that country.

For poor countries there is a significant difference. The Liberian-born make 50% more than Liberian residents. The income of the Samoa- & Guyana-born is about twice the income of the residents of Samoa & Guyana (respectively).

“Two of every five living Mexicans who have escaped poverty did so by leaving Mexico; for Haitians it is four out of five.”

Traditional measures of income tend to mask the fact that migration has made a lot of migrants richer. Imagine a man who moves from earning €10,000 in Poland (an above-average wage) to £15,000 in the UK (a below-average wage). Simple arithmetic says that he has reduced the average income of both countries.

“Of income and incomers,” by Tim Harford

Reading the 3bn “base pairs” in human DNA — akin to letters, encoding a total of between 20,000 and 30,000 genes that are the “words” of genetics — is getting faster as companies find quicker ways to “read” entire stretches of DNA at a time, like reading a sentence in chunks rather than letter by letter.

The cost of sequencing an individual genome is thus falling exponentially — just as the cost of hard disk space or transistors on a chip did when computing took off.

The rapidly falling cost and time needed to map your DNA:

2003
$440M
13 years to map

2007
$10M
4 years

2008
$100K
4 weeks

2012
$100*
2 days

*Forecast

“Mapping the individual - cheaply,” by Charles Arthur

Justin Wolfers and Betsey Stevenson analyzed all the major post-war happiness studies data (.pdf file here), including new data from the Gallup World Poll, which contains detailed data on subjective well-being for 132 countries in 2006. Contrary to previous researchers using less complete date, they found that: 1) Rich people are happier than poor people. 2) Richer countries are happier than poorer countries. 3) As countries get richer, they tend to get happier.

The following chart takes the average levels of satisfaction reported on the Gallup Poll’s 0-10 scale, and plots it against G.D.P. per capita (note the log scale):

The correlation between average levels of happiness and average incomes is very high — greater than 0.8.

The relationship between happiness and log income appears nearly linear. Thus, a 10% rise in income in a rich country like the USA appears to increase happiness by about as much as a 10% rise in income in Burundi — in fact, the slope appears to get steeper above $15K!

A 10% rise in income in Burundi requires one-sixtieth as much income as a 10% rise in income in the USA. Thus, even if the slope is three times as steep for rich countries as poor countries (as Wolfers & Stevenson estimate), this still means than an extra $100 has about a twenty-times-greater effect on happiness in Burundi.

“The Economics of Happiness, Part 1 & Part 2,” by Justin Wolfers

Robert J. Barro and Rachel M. McCleary (”Religion and Economic Growth Across Countries” & “Religion and Political Economy in an International Panel“) researched the relationship between religion and development.

Their cross-country analysis shows that per capita gdp has a significantly negative effect on religion, both in terms of beliefs and participation. This tendency is gradual as countries grow richer. A steady pattern of secularization has only applied to a few countries, such as Britain, France, and Germany.

For a given level of religious participation, increases in core religious beliefs — notably belief in hell, heaven, and an afterlife — tend to increase economic growth. In contrast, for given religious beliefs, increases in church attendance tend to reduce economic growth. In other words, the main growth effect is a positive response to an increase in believing relative to belonging (attending).

A certain amount of participation in religious activities is positive, in that people acquire useful beliefs. But if people spend too much time in religious activities, there is a negative effect on economic growth.

Religious participation is correlated with a lower probability of substance abuse, juvenile delinquency (Michael J. Donahue and Peter L. Benson, “Religion and the Well-Being of Adolescents“),  and depression (”Immigrant Generation, Assimilation and Adolescent Psychological Well-being“), and positive attitudes toward marriage and having children (Elaine Marchena and Linda J. Waite, “Re-assessing Family Goals and Attitudes in Late Adolescence”).

Overall, urbanization has a negative effect on religiosity, particularly in terms of participation.

“Religion and Economic Development,” by Rachel M. McCleary

The tallest quarter of the US population earns 9-10% more than the shortest quarter, according to two recent studies. Nicola Persico, Andrew Postlewaite and Dan Silverman (”The Effect of Adolescent Experience on Labor Market Outcomes“) think this is because height gives adolescents self-confidence. Anne Case and Christina Paxson (”Stature and Status“), on the other hand, argue that people who grow to their full potential are smarter, on average.

“Feet, dollars and inches,” The Economist

Katherine Kinzler has demonstrated that preverbal infants as young as 5-6 months of age “prefer” their own native speakers. She found that American infants look longer at someone speaking with an American accent than someone with a French accent, and the opposite pattern occurs with French infants. And when two adults simultaneously offer a 10-month-old the same toy, the baby usually reaches for the one being given to them by the native speaker.

In the ancestral past, neighboring communities were often at war with each other, and the most reliable marker of an out-group member wasn’t what they looked like but how they sounded.

“Babies Don’t Like Foreigners,” by Jesse Bering

Richard Sosis analyzed two hundred 19th-century US communes: 88 religious and 112 secular. He found that communes whose ideology was secular were up to four times as likely as religious ones to dissolve in any given year.

In a follow-up study, Sosis focused on 83 of these communes (30 religious, 53 secular) to see if the amount of time they survived correlated with the strictures and expectations they imposed on the behaviour of their members.

He found that the more constraints a religious commune placed on its members, the longer it lasted (one is still going, after 149 years). But the same did not hold true of secular communes, where the oldest was 40.

Ara Norenzayan has conducted experiments using what is known as the “dictator game,” a test used to gauge altruistic behaviour. Participants receive a sum of money — $10,in this case — and are asked if they would like to share it with another player.

Norenzayan and Azim Shariff primed half of their volunteers to think about religion by getting them to unscramble sentences containing religious words such as God, spirit, divine, sacred and prophet. Those thus primed left an average of $4.22, while the unprimed left $1.84.

An experiment by Jesse Bering subjected a bunch of undergraduates to a quiz. His volunteers were told that the best performer among them would receive a $50 prize. They were also told that the computer program that presented the questions had a bug in it, which sometimes caused the answer to appear on the screen before the question. The volunteers were therefore instructed to hit the space bar immediately if the word “Answer” appeared on the screen. That would remove the answer and ensure the test results were fair.

The volunteers were then divided into three groups. Two began by reading a note dedicating the test to a recently deceased graduate student. One did not see the note. Of the two groups shown the note, one was told by the experimenter that the student’s ghost had sometimes been seen in the room. The other group was not given this suggestion.

The so-called glitch occurred five times for each student. Bering measured the amount of time it took to press the space bar on each occasion. He discarded the first result as likely to be unreliable and then averaged the other four. Those who had been told the ghost story pressed the space bar in an average of 4.3 seconds. That compared with 6.3 seconds for those who had only read the note about the student’s death and 7.2 for those who had not heard any of the story concerning the dead student.

“Where angels no longer fear to tread,” The Economist

The single best gauge of economic performance is not growth in GDP, but GDP per person, which is a rough guide to average living standards.

Over the past five years, America’s average annual real GDP growth of 2.9% was much faster than Japan’s 2.1%.

However, America’s population is rising much faster, by 1% a year (thanks to immigration and a higher birth rate); the number of Japanese citizens has been shrinking since 2005. Once you take account of this, Japan’s GDP per head increased at an annual rate of 2.1% in the five years to 2007, slightly faster than America’s 1.9% and much better than Germany’s 1.4%.

Likewise, Spain has been one of the euro area’s star performers in terms of GDP growth, but over the past three years output per person has grown more slowly than in Germany, which, like Japan, has a shrinking population.

One of the supposedly booming BRIC countries, Brazil, has seen its GDP per head increase by only 2.3% per year since 2003, barely any faster than Japan’s. Russia, by contrast, enjoyed annual average growth in GDP per head of 7.4% because the population is falling faster than in any other large country (by 0.5% a year). Indians love to boast that their economy’s growth rate has almost caught up with China’s, but its population is also expanding much faster. Over the past five years, the 10% average increase in China’s income per head dwarfed India’s 6.8% gain.

During the past five years, world GDP has grown by an average of 4.5% a year, its fastest for more than three decades, though not as fast as during the golden age of the 1960s when annual growth exceeded 5%. But the world’s population is now growing at half of its pace in the 1960s, and so world income per head has increased by more over the past five years than during any other period on record.

Zero GDP growth in Japan, where the population is declining, would still leave the average citizen better off. But in America, the average person would be worse off. On this basis, America has been in recession since the fourth quarter of last year when its GDP rose by an annualised 0.6%, implying that real income per head fell by 0.4%.

“Grossly Distorted Picture,” The Economist