Universal Basic Income: The Next Generation

"Wait, you're saying that in the Federation you don't have to worry about money? You can just schlep around the galaxy seducing alien women?"

“Wait, you’re saying that in the Federation you don’t have to worry about money? You can just schlep around the galaxy seducing alien women?”

Over at Five Thirty Eight, there’s a nice piece by Daniel Flowers on the idea of a universal basic income (UBI). Proponents say it will allow people to choose their careers and live their lives without having to worry about ever being poor. A common criticism is that it will create a massive disincentive to work at all. Several experiments have already been run which have found small, but non-negligible effects on the willingness to work. It is one of the outcomes that a host of new experiments of giving people a long term guaranteed basic income will test.

I am a little worried that these new experiments won’t capture the long term, generational impact of a universal basic income. Let’s imagine I really wanted to be a filmmaker (*cough*), but decided to become an economist because filmmaking is more likely to leave me in poverty. If I’m half way through my career as an economist and I start receiving a basic income, it might be too late for me to really break into filmmaking. Even if I pull it off, adjustment costs will be high, and it’s likely I’d end up embarking on a career which would be less successful than if I had started at a much earlier age. It is these decisions that will largely be picked up when the targets of a UBI experiment are largely adult workers.

What is more interesting is the impact on the next generation. Let’s imagine the UBI is introduced and governments can credibility commit to providing it for one’s entire lifetime. Now, all those aspiring filmmakers can select into the job of their choice with lower adjustment costs and a higher likelihood of actually being accomplished at what they’d most like to do. Who knows if this would have a net positive or negative impact on the creation of value, but it certainly would lead to better sorting. But even the most ambitious UBI experiments which are being proposed are unlikely to pick up these effects. Instead what we need to do is find a group of high schoolers and offer some of them (randomly) a credible lifetime UBI, then sit back and see how it affects career decisions and labour market participation in the long run.

As a side note – how much does relative poverty in developing countries lead to sub-optimal career decisions?

The limitations of the Absolute Palma Index, in two graphs

OVER_9000

Last year, the ODI’s Chris Hoy released a really useful and thoughtful paper pointing out that the basic maths of inequality are often not on the side of the poor. Even if economic growth is evenly spread, the absolute difference between the incomes of the poor and the richest must increase. That is, if you are 10 times as rich as I am and our incomes both grow by 10%, you’ll be taking home more money than I will at the end of the day. If we wanted to see a decrease in absolute differences of income around the world, it would require that the income of the poorest grow a great, great deal faster than that of the richest, something we are unlikely to see any time soon.

The unanswered question, and one that Hoy even posits himself end of the paper, is whether or not focusing on absolute differences in income makes more sense than doubling down on the relative differences in income that are captured by traditional inequality measures such as the Gini, Thiel or Palma indices. We know that income is correlated with lots of good outcomes for the beholder – better health, education, happiness and political power. However, if we are being truly honest with ourselves, we would have to admit that we don’t quite fully understand whether relationships are absolute or relative in nature (although we suspect both matter for happiness). Do the richest 1% of Americans have more political power in the US than the richest 1% of Nigerians have in Nigeria? These are the questions we must ask ourselves if we are to make a strong case for caring about absolute income differences.

In the meantime, I woke up this morning to find that Nick Galasso from Oxfam has made a pitch for using the “Absolute Palma Index” as the next big measure of inequality. The Absolute Palma is a variation of the Palma Index of inequality, which itself is the ratio of the share of income earned by the top 10% of the distribution and that of the bottom 40% of the distribution. The Absolute Palma, by contrast, is the absolute difference between the average income of the top 10% and the average income of the bottom 40%.

As the title suggests, I think there are limitations to the Absolute Palma Index, so consider the post a word of caution. I can think of one strong case against absolute measures: while they might be reasonable at describing immediate gains across a country’s income distribution after a year of growth, they aren’t very useful at describing differences between countries across the globe.

I happened to be playing around with data from Christoph Lakner and Branco Milanovic’s paper on the global income distribution, so I decided to see how the Absolute Palma Index varied across countries. Check out the graph below, which looks at how the Absolute Palma Index varies with mean income across countries. I’ve also highlighted countries which are either very unequal, very equal or somewhere in the middle as measured by the traditional Palma Index.

palma_avg

 

The first thing to note is that there is almost a one-to-one relationship between the log of GDP and the log of the absolute Palma. This is hardly surprising – take any income distribution and raise all incomes by a set percentage and by definition you will see an increase in the Absolute Palma. What this means is that on this index, poor countries do really, really well and rich countries do terribly. And that is most of the story. Log per capita income explains about 93% of the variance in the log of the Absolute Palma. The relative Palma explains most of the remaining unexplained variance, but on the whole has very, very little explanatory power.

The result is that we get some pretty counter-intuitive results. Even though Denmark, Sweden and Norway  are considered by pretty much every person I’ve ever ever spoken to be the most equal places on the planet, they come out as being more unequal than countries that are at the top of the relative Palma Rankings, places like South Africa, Honduras and Brazil.

Which of these countries would you rather be poor in? Presumably the one with the highest average income for the poorest 10%. If we graph the same relationship, instead using the average income of the bottom decile, we find the relationship is less strong, especially so for the poorest countries of the world. But if I had to choose whether I wanted to be born poor in a country with a high or low Absolute Palma index, sign me up for more inequality!

palma_b10

 

Now for the caveats: the data here is as good as 2008, so the basic cross-sectional relationship may have changed (although it hasn’t appeared to have done so ipapen the years leading up to 2008). There is also a difference between moving between countries of different average/median/poorest decile levels and observing individual countries as they grow richer or poorer. This means that there might be use in keeping track in how growth is `allocated’ across the income distribution, something which is already done (and was done carefully in Chris Hoy’s paper).

Absolute measures might tell us something interesting in the world, and I welcome more work on them. But there is a world of difference between adding a tool to the (now overflowing) box of inequality measures and pushing for headline measure that automatically penalizes rich, developed countries for being rich and developed. In addition, before we begin agonizing about absolute differences within countries, someone needs to make a pretty compelling case that they matter more than both absolute levels or relative differences, because these are things we already go through great pains to measure. If we are worried that the incomes of the poor aren’t growing fast enough, then why isn’t it enough to measure that?

Stata code and underlying data available here.

Update: good comments from Chris Hoy below.

The IMF, inequality and the trickle-down of empirical research

"It took so many assumptions to put you together!"

“It took so many assumptions to put you together!”

By Nicolas Van de Sijpe

recent IMF staff discussion note has received a lot of attention for claiming that a smaller income share of the poor lowers economic growth (see also here and here). This piece in the FT is fairly typical, arguing that the paper “establishes a direct link between how income is distributed and national growth.”

It quotes Nicolas Mombrial, head of Oxfam International’s office in Washington DC, saying that (my emphasis): “the IMF proves that making the rich richer does not work for growth, while focusing on the poor and the middle class does” and that “the IMF has shown that `trickle down’ economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us.”

The aim of this blog post is to clarify that the results in Table 1 of  the paper, which are based on system GMM estimation, rely on assumptions that are not spelled out explicitly and whose validity is therefore very difficult to assess. In not reporting this and other relevant information, the paper’s application of system GMM falls short of current best practices. As a result, without this additional information, I would be wary to update my prior on the effect of inequality on growth based on the new results reported in this paper.

The paper attempts to establish the causal effect of various income quintiles (the share of income accruing to the bottom 20%, the next 20% etc.) on economic growth. It finds that a country will grow faster if the share of income held by the bottom three quintiles increases. In contrast, a higher income share for the richest 20% reduces growth. As you can imagine, establishing such a causal effect is difficult: growth might affect how income is distributed, and numerous other variables (openness to trade, institutions, policy choices…) might affect both growth and the distribution of income. Clearly, this implies that any association found between the income distribution and growth might reflect things other than just the causal effect of the former on the latter.

To try to get around this problem, the authors use a system GMM estimator. This estimator consists of (i) differenced equations where the changes in the variables are instrumented by their lagged levels and (ii) equations in levels where the levels of variables are instrumented by their lagged differences (Bond, 2002, is an excellent introduction). Roughly speaking, the hope is that these lagged levels and differences isolate bits of variation in income share quintiles that are not affected by growth or any of the omitted variables. These bits of variation can then be used to identify the causal effect of the income distribution on growth. The problem with the IMF paper is that it does not tell you exactly which lagged levels and differences it uses as instruments, making it hard for readers to assess how plausible it is that the paper has identified a causal effects.

Continue reading

I drink your milkshake

blood

The Ethiopians appear to be close to finalizing construction of a large hydroelectric dam on the Omo river, primarily to generate power but also to support local irrigation efforts.  Over the past five years the project has received substantial foreign financing and investment by China and indirectly by the World Bank. However, there appears to have been little consideration of the potential downstream impacts: the Omo river feeds Lake Turkana, which is a source of livelihood for a large number of communities in northern Kenya. The possibility that the lake may be partially drained is obviously upsetting a lot of people, although it does not seem that the Kenyan government is making a big fuss over the project.

This is a typical problem of negative externalities: the Ethiopians aren’t factoring in the welfare of Kenyan Turkana residents in the decision to build the dam. There’s actually some research showing that this is a common problem. From a recent World Bank paper by Sheila Olmstead and Hilary Sigman:

This paper examines whether countries consider the welfare of other nations when they make water development decisions. The paper estimates econometric models of the location of major dams around the world as a function of the degree of international sharing of rivers. The analysis finds that dams are more prevalent in areas of river basins upstream of foreign countries, supporting the view that countries free ride in exploiting water resources. There is weak evidence that international water management institutions reduce the extent of such free-riding.

By their very nature dams generate inequality in the flow of water between upstream and downstream areas. It is easier to pay the cost of hurting downstream communities when they are are in a different country (hey, they don’t vote for you). Ergo, countries are more likely to build dams when the costs are external.

It would be interesting to see what mitigates these effects – it is possible that Kenya’s relative indifference is due to lack of political power on the part of the northern tribes. Are dams with substantial cross-border costs less likely in areas where the proximate ethnic group is quite powerful?

afri_river

LaTeX Wars Episode V: The Word Users Strike Back

Of course I edit all my documents using the original Nintendo Power Glove

Of course I edit all my documents using the original Nintendo Power Glove

Throughout the mid-90s, my father used a DOS-based typesetting program called PC-Write to produce his books and journal articles. In stark contrast to more-popular word processing programs, PC-Write relied on a what-you-get-is-what-you-mean approach to typesetting: dad would indicate his formatting preferences as he wrote, but he would be forced to print out a page in order to see his formatting options being applied. By contrast, I grew up working with Microsoft Word and so with each passing year I found my father’s system to be increasingly archaic. Eventually, after a substantial amount of healthy mockery from his son, he migrated over to Word and hasn’t looked back since.

However, by the time I arrived in grad school an increasing number of other (economics) students were using LaTeX, a typesetting language that was much closer in design to the old-fashioned PC-Write than to the what-you-see-is-what-you-get format of Word. Although I suspected that LaTeX was another manifestation of the academic economist’s tendency to choose overly-complex methods and technical mastery over user-friendliness, I eventually became a convert. Somehow, I found my preferences begun to mirror Dad’s original love of PC-Write.

If you ever feel like experiencing a wonderfully-arbitrary argument, ask a group of economists if they prefer LaTeX or Word. Within the profession there is a pretty serious division between those who prefer the look and workflow of the former  and those who prefer the accessibility of the latter. While there are some of us who are comfortable working in both formats, each camp has its stalwarts who find members of the other camp to be bizarrely inefficient.

The two sides appeared to be in a stable stalemate until recently, when a new study comparing the efficiency and error rates among LaTeX and Word users appeared in PLOS One. The headline result: Word users work faster AND make less errors than LaTeX users.

journal.pone.0115069.g004

Ooof – I hear the sound of a thousand co-authors crying out with righteous indignation. The Word camp was quick to seize upon this study as clear evidence that LaTeX users were probably deluding themselves and that now would be a good time for everyone to get off of their high horse. The authors of report  even went as far to suggest that LaTeX users were wasting public resources and that journals should consider not accepting manuscripts written up using LaTex:

Given these numbers it remains an open question to determine the amount of taxpayer money that is spent worldwide for researchers to use LaTeX over a more efficient document preparation system, which would free up their time to advance their respective field. Some publishers may save a significant amount of money by requesting or allowing LaTeX submissions because a well-formed LaTeX document complying with a well-designed class file (template) is much easier to bring into their publication workflow. However, this is at the expense of the researchers’ labor time and effort. We therefore suggest that leading scientific journals should consider accepting submissions in LaTeX only if this is justified by the level of mathematics presented in the paper.

Pretty damning, eh? Not so fast! There are several reasons we should doubt the headline result.

For one, rather than randomly assigning participants to Word or LaTex, the researchers decided to allow participants to self-select into their respective groups. On one hand, this makes the result even more damning: even basic Word users outperformed expert LaTeX users. The authors themselves admit that preference for the two typesetting programs varied wildly across disciplines (e.g. computer scientists love LaTeX and health researchers prefer Word). It’s perfectly possible that the types of people that select into more math-based disciplines are inherently less efficient at performing the sort of formatting tasks set by the researchers. Indeed, the researchers found that LaTeX users actually outperformed Word users when it came to more complex operations such as formatting equations.

Furthermore, the researchers only evaluated these typesetting programs along two basic dimensions: formatting speed and error-rates, ignoring other advantages that LaTeX might have over Word. As an empirical researcher, I find it enormously easier to link LaTeX documents to automated data output from programs like Stata, making it simple to update results in a document without having to copy and paste all the time. Word can also do this, but it has always been far clunkier.

So, in short, the jury is still out. Feel free to return to your respective camps and let the war continue.

You just don’t get me

Timothy Taylor has an excellent write up on the behavioural economics results coming out of the recently-released 2015 World Development Report. One of the most striking findings is that World Bank staff tend to overestimate the tendency for poor people to be fatalistic. From Taylor’s post:

What do development experts think that the poor believe, and how does it compare to what the poor actually believe? For example, development experts were asked if they thought individuals in low-income countries would agree with the statement: “What happens to me in the future mostly depends on me.”  The development experts thought that maybe 20% of tthe poorest third would agree with this statment, but about 80% actually did. In fact, the share of those agreeing with the statement in the bottom third of the income distribution was much the same as for the upper two-thirds–and higher than the answer the devleopment experts gave for themselves!

A number of other bloggers have picked up on this result, albeit without too much discussion about what this implies. I think the implicit assumption here are that development professionals are out of touch with the poor. I think there’s a number of ways we can interpret these results. Here’s the graph in question:

control_wdr

So the first possibility is the implicit one, that Bank staff don’t know what the poor believe, and possibly even that they assume the poor are fatalistic, possibly to a fault. Development economics is only starting to turn its head towards the convergence of fatalism, aspirations and economic outcomes (see, for example, the recent paper by Kate Orkin and her co-authors on aspirations in Ethiopia). The story that development experts buy into this belief is an easy one to believe, but not necessarily the right one. Note that it doesn’t at all take into account what the truth is, only perceptions.

Imagine your life’s outcomes are determined by (A) your own actions and (B) everything else, including randomness. How much weight would you put on (A) vs (B)? There’s no easy answer to this, but it is perfectly possible that the world’s poor ARE poor because (B) is actually much larger than (A). When you live in a country with terrible institutions, no social safety net, frequent economic or environmental shocks, it becomes very clear that (B) dominates (A).

So the second possibility is that Bank staff aren’t assuming the poor are being fatalistic, but that they are being realistic. That they (correctly?) judge that they have little control over their own lives. If they did, then they probably wouldn’t be poor. In this case, if the responses from the above sample are genuine (we might worry that respondents would be unwilling to admit that they have little control), then it’s the poor who have it the wrong way around: they are too optimistic about how much control they have over their own lives.

The second possibility isn’t necessarily any more likely than the first, but we should be cautious about what stories eventually emerge out of the above figure – there are a number of potentially overlapping biases at play, to the extent that it is not just a straightforward story of development professionals not `getting’ the poor.

When every argument begins with “is it better than cash?”

"Where the hell is the Jaeger?" "Oh the government couldn't figure out how to evaluate the anti-Kaiju programme, so they just do cash transfers now."

“Where the hell is the Jaeger?” “Oh the government couldn’t really figure out how to evaluate the giant robots-fight off giant aliens programme, so they basically just do cash transfers now.”

Kevin Grier grumbles about the IDA, arguing that its investments couldn’t possibly stack up to cash transfers:

The last 3 year replenishment of IDA was for 49.3 billion dollars. So for a decade of IDA, we can use 150 billion dollars as a cost number. People, for $150 billion dollars, you could give 75 million people each $2000 in cold hard cash. From my point of view, that sounds a lot better than giving them “access” to services. Now sure, there are aid agencies worse than the IDA (phone call for USAID), but there is nothing in Mombrial’s post that backs up his claim that the IDA is a good investment, and in my opinion, it’s actually a bad investment relative to unconditional cash transfers.

Even without the growing body of empirical evidence indicating that just giving cash is an incredibly cost-effective way to increase welfare, there is an extremely compelling theoretical case to be made for cash transfers. Poor households have preferences (replace these with `needs’ if you are so inclined, although there are important distinctions between the two), and no one will ever have better information on these preferences than these households. Transferring households cash allows them to best allocate these new resources to meet these preferences – otherwise, we run the risk of wasting resources on stuff that households just don’t want.* Combine this with the fact that cash transfers are getting quite easy to make, especially in the era of mobile money, and they appear to be a reasonable standard by which to compare all other interventions.

Yet, the most ardent supporters of cash transfer programmes often forget that many societies (read: all societies) are still struggling with pretty severe collective action problems which inhibit the provision of public goods. It’s far from clear that distributing cash will solve these problems: if a village of people haven’t banded together and produced a well-functioning school by now, although giving them cash certainly increases their purchasing power to do so, it’s unlikely to solve the basic collective action problem resulting in the failure to produce the school.

This is important, as there are a range of public goods (or semi-private goods which have substantial externalities) which we can imagine might increase welfare a great deal more than a cash transfer of equivalent cost: schools, health facilities, roads, a functioning police force. Basically, any semblance of a local or national state. How many of you would vote for your own government to transfer its entire budget evenly across the population and then shut down all its operation for good? It certainly would make it easier to pay the rent next month, if your apartment complex hadn’t been burned down by the marauding hordes yet.

Now, if the collective actions problems we care about have already been solved by the market, we should be less worried. Despite a steady flow of misinformed rhetoric from NGOs suggesting that private schools in developing countries are a distraction, there is a great deal of evidence suggesting that in settings where the state is failing to provide quality schooling, private schools present a reasonable (and probably strictly superior) alternative for poor families. In these settings, unconditional cash transfers should be enough. However, there are going to be a lot of contexts where markets are not filling these gaps. For example, rural health clinics tend to be the preserve of government or NGO work, rather than the private health sector, so the effect of income on health outcomes in these contexts is going to be more complex.

The hypothesis “is intervention X better than cash?” is relatively easy to test for a whole slew of interventions: run an RCT and see if this is the case. Yet, while development economists are getting quite good at making and replicating these comparisons for private or small-scale interventions, many of the large public-good investments that have the potential for a large payoff remain difficult to convincingly empirically evaluate (I am somewhat optimistic that we will get there, but we’re certainly not there yet). The current bias towards cash represents not only a positive assessment of the returns to these types of interventions, but also a preference for interventions that can easily be shown to work.

Yet we know that public goods matter and that cash-transfers, to the extent that they cannot be taxed by the state, are unlikely to help in this regard. Multilateral lending/aid organisations like the IDA tend to focus more on projects which have some public good element, such as infrastructure. Whether or not these organisations are any good at producing successful, cost-effective projects is certainly a question we should be asking. But the choice that Grier presents us with is a false one: that we must choose between wasteful public good spending and cash, as if the cash-only equilibrium is the only one that could ever make any sense.

I am frequently guilty of wheeling out the “but is it better than cash?” argument whenever I see an intervention which looks wasteful or too paternalistic** for my taste, but we should be cautious not to use cash transfers as the appropriate gold standard for every intervention. There are plenty of public-good-type interventions which are (currently) hard-to-measure but important. Whether or not aid donors and governments are any good at funding these interventions should be the starting point for the discussion.

*I’m ignoring a lot of potential problems here by using households instead of people, as well as ignoring issues with time-inconsistency, etc, because I want to focus on one particular argument in this post.

**There are those that doubt the efficacy of unconditional cash transfers due to concerns over the ability of households to discern what they should be spending the money on. These concerns are not entirely unfounded – we are all subject to a variety of cognitive biases which can lead to suboptimal decisions. I choose to ignore these concerns here, not because I don’t think that they apply, but because I’m pretty skeptical that aid agencies and charities would be better at determining optimal private expenditure patterns than households.

Of tribes and titles

deadwood-03-1024

“Sol, we’re new here and don’t really know anybody, so get over to Swearengen and secure us a title deed to some property.”

Things have been a bit quiet recently – part of this is due to a lengthy field-based ethnographic research trip focused on the interaction between late 80s and early 90s UK dance music and Croatian culture. I also was tied up by the always-impressive `Growth Week‘ held by the International Growth Centre Growth at LSE. I’ll let you guess which was more fun.

So let’s start with some blatant self promotion – I’ve got a new working paper out. Here’s the short, short version: most unplanned settlements or `slums’  in most of SSA are dominated by informal tenure, where your right over land is more likely to be determined by customary law, social connections, or ad hoc semi-formal methods of establishing occupancy, than it is by a formal land title. Some households are going to have an easier time of securing their tenure through informal means, others who face higher costs to doing so might be more likely to accept property rights provided by the state. I examine this by looking to see whether or not households in Dar es Salaam which are ethnically-isolated (surrounded by neighbours from other tribes) are more likely to buy property rights offered by the Tanzanian government.

For more detail, head over to the CSAE blog, where I talk about the paper in a little more detail.

I’ll leave you with an image which sums up all the fears and uncertainties of tenure in slums: a landowner on Oxford Street, Accra, who desperately wants to avoid the sale of his/her property (thanks to Elwyn Davies for this photo):

1266753_10151622795136570_102329590_o

Immigration smimmigration

"If you choose the red pill, then I'll show you just how deep the rabbit hole goes. But then we're going to stop releasing people from the Matrix. We're worried about wage effects in Zion."

“If you choose the red pill, then I’ll show you just how deep the rabbit hole goes. But then we’re going to stop releasing people from the Matrix. We’re worried about wage effects in Zion.”

Paul Collier writes about immigration for Bloomberg. I’m sure we’re only a matter of minutes away from some very serious commentary from the folks at CGD or from Roving Bandit, but here are a few of my own thoughts.

Firstly, Collier argues that new immigration inevitably will hurt the status of the recently-migrated, even if it does not hurt the native population:

The answer is that those who have already migrated lose, at least in economic terms, through the subsequent migration of others. Migrants lose because they compete with one another.

Migrants aren’t in close competition with indigenous workers. The advantage the indigenous have may be that they have better command of the language or that their greater tacit knowledge of social conventions makes them more productive.

The effects of immigration on the wages of indigenous workers vary between very small losses and modest gains. If immigration policy were to be set by its effects upon wages, the only interest group to campaign for tighter restrictions should be immigrants.

The individual behavior of immigrants evidently belies this interest: Immigrants typically devote considerable effort to trying to get visas for their relatives. But these two interests aren’t inconsistent.

An immigrant who enables a relative to join her receives benefits such as companionship. The increased competition in the job market generated by the extra migrant is suffered by other immigrants. In effect, a tightening of immigration restrictions would be a public good for the existing immigrant community as a whole.

So immigration doesn’t hurt the`indigenous’ population, but will hurt new migrants? Solution: every country in the world allows just one immigrant in its borders, then closes them forever. Seriously, it is unclear here what Collier’s assumed social welfare function is.* It’s perfectly understandable why immigration restrictions might be endogenous to levels of migration, but I’m struggling to recall any high-profile cases of recent-migrants calling for a curb on future migration.**

If we cared about general welfare and not just that of recent migrants, loosening restrictions are a bit of a no-brainer. Yes, it might depress wages in the short run for other migrants (evidence?) but compared against the enormous welfare benefits from the migration itself, this is really a second-order concern (a bit like arguing that we shouldn’t let anyone else into the life-boat because, damn it, it will be less comfortable).

Next, Collier argues that new immigration creates another set of externalities on existing migrants: more hate

There may be further social reasons that the existing stock of immigrants has an interest in tighter restrictions. The size of the immigrant stock also affects attitudes of the indigenous population. Contrary to the hope that exposure increases tolerance, the opposite appears to happen.

Heightened intolerance is a public bad suffered by immigrants as a whole, and is thus inadvertently generated by the individually maximizing migration decisions of each successive migrant. Hence, the paradox of migration. Individual migrants succeed in capturing the huge productivity gains from migration. But migrants collectively have an interest in precisely what individually is most detrimental: entry barriers.

Haters gonna hate – and haters gonna hate even more when there are more immigrants around, apparently. Again, no evidence is given to support this case. While I do think there is a worthwhile conversation to be had about how immigrants integrate into societies and how best to maintain social cohesion, falling back on the “We, the indigenous, are inherently racist, and are just going to get more racist as more foreigners show up and there’s nothing to be done about it” argument seems a bit silly.

Finally, Collier argues that migrants might not actually be that much happier and that, combined with the psychological cost of being in a new culture, immigration might be a bad deal. He turns to evidence from several studies showing happiness doesn’t increase when people are allowed to migrate.

This seems to me to be a better argument against using happiness as a welfare indicator, rather than against migration itself. It also leaves us with an entirely unsatisfactory explanation for current migration: that people are deluded about the benefits and would have preferred never to have traveled in the first place. This is particularly hard to swallow in an era where information is particularly cheap – it is relatively easy to send information back to one’s friends and family to clarify that, actually, it isn’t as cool here as I thought it was going to be.

In general, these feel like highly theoretical, armchair rationales for limiting migration. Surely we’ve moved past this by now?

 

*Update #1: To clarify, I mean the SWF Collier is using to make his case, not necessarily his personal preferences over migration!

**Update #2: a friend noted (via e-mail) that this is historically quite common – waves of immigrants turn around and try to stop the next group from landing. While I’d conceded that former-immigrants tend to resist those coming from a different national/ethnic origin, are there any cases where immigrants tried to close the door on immigration from their own country of origin?

NIMBY! Wait, where is my back yard?

uphouse

 

Most governments enjoy the ability to rely on eminent domain whenever land needs to be acquired for large scale development projects. China, a country where one would expect this sort of power to be exerted all the time, appears to be home to a surprising number of `nail houses‘ – property where owners refused compensation from private investors and refused to move out. If the government doesn’t exercise eminent domain and compensation cannot be agreed on, investors often go ahead anyway and build around the remaining property. There result is striking and more than a little funny – I stumbled across this collection of photos of Chinese nail houses (and a few from the US and Europe) on io9 – a few examples:

test

nailhouse

 

It’s hard to know how to feel about these situations. For the past few years I’ve been working on a project that has been trying to extent formal property rights to slum residents in Dar es Salaam. I’ve often sold the benefits as being primarily expropriation-related, but several seminar attendees have (rightly) pointed out that sometimes it’s better off for society if people can’t, on the margin, hold out for enormous compensation amounts. This opens up the enormous can of worms which is the rights-versus-efficiency debate, something I’m not going to get into at the moment. Yet, it’s still worth pointing out that this issue is far from straightforward: we want large investment projects to be successful, and to do so they need land. We also don’t want to trample on the rights of owners, especially the poor, especially when compensation is often neither fair nor transparently handled.