Motu researchers on the history of wellbeing, robot ethics, whether the left or right hand should pay tax, the 1918 flu epidemic, prestige and value for money, the effect of cash transfers, protecting large carnivores, and the expansion of the culture war

This week's guest Top 10 comes from Ben Davies, Kate Preston, Sophie Hale, Sally Owen, and Dom White of economic research institute Motu.

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1. Human history, in one chart.

This single chart above illustrates that, by six different measures, wellbeing of humanity increased dramatically during the industrial revolution. Prior to industrialisation, the path of wellbeing over time – as reflected in the metrics used – was essentially flat. Hardly anyone lived in a democratic society; most of the population lived in extreme poverty; and average life expectancy sat around 25 to 30 years. In comparison to the gains of the last 200 years, any impacts of catastrophic events such as the 1918 flu epidemic and World War II are barely noticeable in the chart.  

2. Self-driving car dilemmas reveal that moral choices are not universal.

Self-driving cars must resolve the subtle ethical choices that human drivers make on the road. A survey of 2.3 million people around the world finds that these choices vary between countries, and that moral preferences correlate with country-level social and economic factors. For example, drivers in countries with strong institutions are less likely to avoid hitting jaywalkers than drivers in countries with weak institutions. These results suggest that there are “no universal rules” for robot ethics, says Iyad Rahwan, an MIT computer scientist and co-author of the study.

3. Spain Debates Whether Left Hand or Right Hand Should Pay Tax.

This month, the Spanish Supreme court found itself divided by the question of whether a tax on the creation of mortgages, the AJD tax, should be paid by the banks or their customers. The question has caused major controversy, including public protests and a statement from the Prime Minister promising a royal decree to the effect that ‘Spaniards will never pay this tax again!’. What’s hilarious about all this commotion is that basic economics tells us that who pays the tax doesn’t matter; the cost will be passed on to consumers either way.

4. Why the flu of 1918 was so deadly.

This article by the Economist explores why the 1918 Flu epidemic was so damaging. During the outbreak, the virus infected 500 million people and killed between 50 and 100 million of them. By the end of the epidemic in 1921, it had reduced the population by 2.5% to 5%. Dubbing it ‘the worst catastrophe of the 20th century’, the article explores what scientists believe to be the two main driving forces behind its impact. The first being the potency of the virus itself and the second being external factors such as the First World War.

5. Less prestigious institutions deliver better value for grant money.

The US National Institutes of Health (NIH) is the world’s largest source of funding for biomedical research. It distributes more than 80% of its US$37.3 billion annual budget to universities, medical schools and other research institutions through competitive grants. A recent study of NIH grant allocations finds that, on average, prestigious institutions have 65% higher application success rates and receive 50% larger awards than less prestigious institutions. However, less prestigious institutions deliver more output per dollar spent: they produce 65% more publications and have 35% higher citation impact per dollar of NIH funding than prestigious institutions.

6. EU moves to protect large carnivores.

This article by the BBC looks at the decision by the European Union to allow farmers to receive full compensation for any damages caused by animals such as lynxes, wolves and bears in a move to protect these species. Expenses such as electric fences or guard dogs will also be reimbursed. There has been success in the conservation of many predator species across Europe but with their growing numbers, the likelihood of human contact also rises. Recently, there has been increasing pressure from governments in Germany and France to allow the culls of wolves to protect livestock. This new compensation arrangement aims to reduce the amount farmers and others kill such species when they come in contact.

7. The multi-country game plan to double wild tiger numbers by 2022.

With less than 3200 tigers remaining in the wild, the 13 Tiger Range Countries (TRCs) have together committed to doubling the world’s wild tiger population. This study outlines the best available data used by researchers to assess sites, implement targets and plan population recovery to achieve this goal.

8. Cash transfers and adult labour outcomes in developing countries.

This article summarises a recently published literature review on the effect of cash transfers on the working poor. The question is whether these cash transfers disincentivise work, a common conclusion for an ECON101 student to come to (the idea being we divide our time between leisure and labour). The authors categorise different channels by which these might affect labour, into missing markets, price effects from behavioural conditions, and dynamic and general equilibrium effects. The takeaway - work might not be as disincentivised as simple models suggest.

9. How everything became the culture war.

In the Trump era, just about every policy issue is a wedge issue, not only traditional us-against-them social litmus tests like abortion, guns, feminism and affirmative action, or even just the president’s pet issues of immigration and trade, which he has wielded as cultural cudgels to portray Americans as victims of foreign exploiters. These days, even climate change, infrastructure policy and other domestic issues normally associated with wonky panels at Washington think tanks have been repackaged into cultural-resentment fodder.

10. Modified Bayes’ Theorem.

What it says on the packet.

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That history of 'wellbeing' is interesting for what it omits.

If your trajectory is underwritten by an exponential line trending down, your trajectory is unsustainable.

In this case, no factoring-in of energy-use, resource draw-down, diminished sink capacity. It's a bit like tracking your increase in spending per week, without tracking your account.

The graph does not show the exponentially increasing capacity of the society to solve all sorts of challenging problems, the energy one being possibly one of them.

The graph is human wellbeing not planet wellbeing. Another graph could show populations of non-human species (try Pasenger Pigeon or Zebra or Blue Whale -v- pigs, hens, cows).
Think of human wellbeing as a football rolling along the ground until a Briton of your choice (James Watt or Abraham Darby) kicked it into the air. Everything looks better and better as it goes up. And then it will come down and we will discover if the ball bounces or is made of glass.

What’s hilarious about all this commotion is that basic economics tells us that who pays the tax doesn’t matter; the cost will be passed on to consumers either way.

Not really.

If the tax is placed on individual mortgagees, they are definitely paying it. If the tax is placed on multinational financial organisations with myriad revenue streams it is going to be paid out of something, but not necessarily mortgages.

If the tax is placed on individual mortgagees, they are definitely paying it.

That's not true. If the tax were on individual mortgagees and competition caused prices to fall to compensate, the financial organisations would be paying it.

The analysis says that if the tax is on the firms the sticker price should rise, and if the tax is on the mortgagees the sticker price shouldn't fall.

'Deep recession': Australian house prices could fall more than 30 per cent
House prices could fall more than 30 per cent as the country plunges into a "deep recession" if disgruntled borrowers launch class actions against the major banks for breaching responsible lending laws, new analysis suggests.
The worst-case scenario is one of five outlined by UBS analyst Jonathan Mott in a client note this week, "Catching a falling knife", in which he warned the outlook for the banking sector had "not been as challenged since at least 2008".
"The recently completed bank reporting season suggests the outlook for the banks remains challenging," Mott said.
"However, we believe the rapidly deteriorating housing market is a signal of even tougher times ahead."
glad our banks dont lend like that sarc