Archive for May 11th, 2020

How Spanish Flu led to voter extremism in Germany (1918-1933)..

May 11, 2020

Papers are coming thick and fast.

Kristian S. Blickle of NY Fed in this paper:

We merge several historical data sets from Germany to show that influenza mortality in 1918-1920 is correlated with societal changes, as measured by municipal spending and city-level extremist voting, in the subsequent decade. First, influenza deaths are associated with lower per capita spending, especially on services consumed by the young. Second, influenza deaths are correlated with the share of votes received by extremist parties in 1932 and 1933. Our election results are robust to controlling for city spending, demographics, war-related population changes, city-level wages, and regional unemployment, and to instrumenting influenza mortality. We conjecture that our findings may be the consequence of long-term societal changes brought about by a pandemic.

……………..

We are able to document several important findings. First, we show that areas which experienced a greater relative population decline due to the spread of influenza spend less, per-capita, on their inhabitants in the following decade. This holds especially for spending on amenities more likely to be
consumed by the young, for example school funding.

Second, influenza deaths of 1918 are correlated with an increase in the share of votes won by right-wing extremists, such as the National Socialist
Workers Party (aka. the Nazi Party), in the crucial elections of 1932 and 1933. This holds even when we control for a city’s ethnic and religious makeup, regional unemployment, past right-wing voting, and other local characteristics assumed to drive the extremist vote share. A one std. deviation increase in
the proportion of the population killed by influenza was associated with an up to 3% increase in the share of the vote won by the national socialist party. This phenomenon is not observed for other parties also considered “extremist”, such as the communists, or influenced by deaths due to common diseases,
such as tuberculosis. Moreover, while we corroborate evidence by Galofré-Vilà et al. (2019) and show that the amount local governments spend on their inhabitants is correlated with the share of the vote won by extremist parties, we also show that this is not the driver of our results.

They use railway lines as density:

Our results on the correlation between influenza mortality in 1918 and extremist voting in 1932/33 hold for a number of important tests. Firtsly, we can instrument influenza mortality using the length and density of local railway lines in 1918. Holding population density and wealth constant, pandemics
are more likely to spread in areas that are more densely connected. We argue that our instrument does not influence election results directly, as the vote share won by right wing extremist was actually slightly higher in rural areas with less dense train networks.

Secondly, following Voigtländer and Voth (2012a), we show that the correlation between influenza mortality and the vote share won by right-wing extremists is stronger in regions that had historically blamed minorities, particularly Jews, for medieval plagues.

Our findings are possibly tied to the type of victims most directly affected by the virus. Given that it was disproportionately fatal for young people, the change in demographics may have affected regional attitudes going forward. Moreover, the disease may have fostered a hatred of “others”, as it was
perceived to come from abroad.

An increase in foreigner/minority hate has been shown by Cohn (2012) or Voigtländer and Voth (2012a) to occur during some severe historical plagues. Regions more affected by the pandemic may have gravitated towards political parties aligned with anti minority sentiment.

 

Bank of England/Financial Times Schools blog competition results: Behavioral economics reaches schools!

May 11, 2020

Bankunderground blog announced the results.

The winner is South Wilts Grammar School. The winners wrote on using behavioral economics to reduce disposable coffee cups.

One sees people carrying their bags in shopping stores to avoid paying extra for the plastic bag at the store. Why don;t we see something similar for coffee at cafes?

To help save the planet and gain a competitive edge, cafes should obey a basic rule of behavioural economics by switching from offering discounts for customers who bring their own cups in favour of charging more for disposable ones.

Consider the astronomical success of the introduction of a 5p charge on plastic bags by British supermarkets. Volumes plummeted by over 86 per cent — an unexpectedly high proportion when the majority of consumers would not even pick up a 5p coin if they saw it lying in the street.

Yet there has been a muted response to the more substantial discounts offered to consumers bringing re-usable cups to cafes for their morning coffee — of up to 50p at Pret A Manger. Up to 55 per cent of shoppers remember to carry their reusable grocery bags to save just 5p, while fewer than 2 per cent of coffee drinkers bring their own cup.

Given that they could save up to ten times as much, why are consumers responding to two seemingly similar scenarios in profoundly different ways? I put it down to the behavioural economics theory of ‘loss aversion’.

Loss aversion arises when the cost associated with giving something up is perceived as greater than the benefit that would accrue from the acquisition of the same thing. This behavioural concept is clearly evident in how consumers react to bringing a re-usable bag or a re-usable cup.

There are many instances in which suppliers offer monetary incentives to promote environmental practices even when it may be significantly more effective to introduce a fine. Just a tweak of policy can often have a disproportionately positive effect.

So to encourage the use of re-usable cups, scrap the discount and introduce a small charge for those who demand disposables. This would play to consumers’ tendency to go to greater lengths to avoid a loss than to seek an equivalent gain.

Starbucks is the first large coffee chain to have rolled out a charge (of 5p) on their paper cups. Given a fantastic consumer response — with three times more people now bringing their own cup — it is baffling why other businesses are not taking the same approach. 

One possibility is that they worry the practice may make them less price competitive: charging 5p for a cup amounts to raising the price of the product for the majority. However, if businesses like Starbucks are transparent about the environmental benefits of the 5p charge, as many supermarkets have been, it could actually increase competitiveness by attracting the rapidly growing number of environmentally conscious consumers. Tackling climate change may begin at the level of the individual. But if businesses can nudge their customers to consume sustainably then by applying behavioural economic theories such as loss aversion, we will have a significantly greater chance of controlling waste before it takes an irreversible toll on the environment.

This is really interesting. Behavioral economics reaches schools!

Five best books on viruses

May 11, 2020

Dorothy Crawford, Professor of medical microbiology and the author of Viruses: A Very Short Introduction, selects five of the best books on viruses for the general reader.

Check this:

In Viruses: A Very Short Introduction, you quote George Klein to the effect: “The stupidest virus is cleverer than the cleverest virologist.” Where does that leave us? Are we fated to be finally wiped out by a virus that has outsmarted us?

Let me first say that George Klein was a wonderfully clever thinker and a great research virologist. I love that quote. But, no, I have faith in the human race. I think we are genetically diverse enough for there always to be some people who will be able to survive infection with any ‘new’ virus that comes along.

 


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