The Quality of Politicians

In a recent paper entitled “Political Careers or Career Politicians?,” Andrea Mattozzi and Antionio Merlo ask the following questions: “Who wants to be a politician and why? How do monetary incentives affect the quality of politicians and their career paths?” Naive economic thinking would suggest that if society offers better financial rewards to politicians, it will attract the best talents, much like one can buy better-quality tomatoes, or a better car, if only one is prepared to pay more for them. But Mattozzi and Merlo suggest that the market for politicians differs from the market for tomatoes. How?

Green France

The innovative “bonus-malus” scheme introduced in France in Jan. 2008, where purchases of new, high carbon-emitting cars are taxed (between €200 – €2600) while purchases of new, low carbon-emitting cars are subsidised (between €200 – €5000), is having a great success. Sales of small cars (those emitting less than 130 CO2 per km) have gone up by 45% and CO2 emission by new cars have been reduced by 9%, more than the reduction planned for 2012-2020! The cost of the success: what was planned as a revenue-neutral scheme is costing €140 million to the tax payer in 2008, as the number of subsidised cars sold far outpaces the number of taxed ones. Does the environment have a price? No, says the French Environment Minister, Mr Borloo, who wants to extend green taxes and subsidies to a host of household items (television sets, computers, tyres, light bulbs, etc). Finance Minister, Mr Woerth, on the other hand, seems to be more concerned about the fiscal costs of the operation: France wants to balance its books by 2012. The question, of course, is whether the 9% reduction in CO2 emission is really worth an annual €140 million – i.e. €2.50 per capita. Also, can a similar reduction be achieved at a lower cost, say if the measures were less generous? It’s all about price elasticities of demand.

The Trouble with Boys

From Esther Duflo (at Vox) on China’s One-Child Policy:

This “only child” generation is now reaching adulthood. A child born in 1980 is now 28 years old, and China is beginning to realise the consequences of this demographic imbalance. Among 16-25 year olds today, there are nearly 110 boys for every 100 girls…

To what extent is the rise in the number of young men responsible for the increase in crime? A recent study by Edlund, Li, Yi, and Zhang…concludes that the one-child policy explains one-seventh of the increase in crime.

Why?

…the difficulty that young men have getting married is probably one source of this phenomenon. A long-term study of Vietnam veterans in 1998, cited in a recent New Republic article, provides some clue as to why. The subjects’ testosterone levels, which are linked to aggression and violence, dropped when they married and increased when they divorced. Men who remain single maintain high levels of testosterone, which may make them particularly aggressive.

Does corruption matter?

In a recent survey, the IMF paints a rosy picture of the economic prospects of Mauritius: the country is on its way to a second growth miracle. Despite the declining terms of trade (due to the erosion of trade preferences in textile and sugar), GDP growth was above 5% in the last 3 years and this trend is expected to continue into the foreseeable future. The country seems indeed to be doing the right thing: it has simplified business regulation, chosen a flat (and low) tax regime, and considerably strengthened its monetary policy framework. It is also addressing its level of public debt and, perhaps more importantly, it is aggressively seeking to diversify its economy, with emphasis on the financial sector and on tourism. There is, however, room for improvement, according to the IMF. The government ought to disengage itself from loss-making parastatals, labour market reforms and training ought to be accelerated, and social spending ought to be more targeted towards the needy. As ever, the IMF is silent on one important count: corruption.

Lost in Translation

I just discovered the second-best to Economics: learning a new language! As I learn Portuguese, I benefit from centuries of human endeavour in the Lusophone world. And it helps me better appreciate the art of translating. Which are the most difficult words to translate in the world? According to a panel of 1000 linguists, it is “ilunga” from the Tshiluba Language (spoken in DR Congo), meaning “a person who is ready to forgive any abuse for the first time, to tolerate it a second time but never a third time.” In second position, the Yiddish word “shlimazl” which is “a chronically unlucky person!” The Portuguese word “saudade” comes as the 7th most difficult word to translate in the world. “Saudade” is like a bit like nostalgia, in sadder, and has “the hope that what is being longed for might return, even if that return is unlikely or so distant in the future to be almost of no consequence to the present.” Source of the beautiful Fado, the word “saudade” is said to have originated from the Portuguese Discoveries, from the sadness felt by the women and children left behind as their loved ones embarked on journeys in unknown seas. Finally, although not present in the linguists’ list, a great word from Mauritian creole: “accorité“, which represents situations when “people sympathise with and help each other although they may be different or they may disagree on things.” There is no better word to capture the essence of being Mauritian.