Very sad news – Brendan Walsh

We just heard this morning that Professor Brendan Walsh, formerly of UCD School of Economics and the ESRI, passed away suddenly.

Brendan was a hugely important and influential figure in the Irish economics community and a terrific colleague to boot.

People better qualified than me will no doubt write an appreciation, but in the meantime, deepest sympathies are extended to his family.

Update: appreciations from the Irish Times, Irish Independent.

Latest edition of Economic and Social Review now out

It is available at  www.esr.ie/

Contents:

Vol 47, No 1, Spring (2016)

Table of Contents

Articles

ÉIRE Mod: A DSGE Model for Ireland
Daragh Clancy, Rossana Merola   1-31

Revisions to Macroeconomic Data: Ireland and the OECD
Eddie Casey, Diarmaid Smyth   33-68

Wagner in Ireland: An Econometric Analysis
Stephen Moore   69-103

Spillover in Euro Area Sovereign Bond Markets – Corrigendum
Thomas Conefrey, David Cronin   105-107

Policy Section Articles

Taxes, Income and Economic Mobility in Ireland: New Evidence from Tax
Records Data
Seán Kennedy, Yosuke Jin, David Haugh, Patrick Lenain   109-153

Searching for the Inclusive Growth Tax Grail: The Distributional
Impact of Growth Enhancing Tax Reform in Ireland
Brendan O’Connor, Terence Hynes, David Haugh, Patrick Lenain   155-184

Latest edition of Economic and Social Review now available online

Here is the list of contents of the latest edition of the Economic and Social Review:

Vol 46, No 4, Winter (2015)

Table of Contents

Articles

The Demand for League of Ireland Football
Barry Reilly 485–509

The Relative Age Effect and Under-21 Irish Association Football: A
Natural Experiment and Policy Recommendations, David Butler, Robert
Butler  511–519

Housing Bubbles and Monetary Policy: A Reassessment
Graeme O’Meara 521–565

To Weight or Not To Weight? A Statistical Analysis of How Weights
Affect the Reliability of the Quarterly National Household Survey for
Immigration Research in Ireland
Nancy Duong Nguyen, Patrick Murphy 567–603

Book Review

EOIN O’LEARY, Irish Economic Development: High-Performing EU State or
Serial Underachiever. London: Routledge; 232 pages; March 2015
Frank Barry  605-611.

All papers can be accessed at www.esr.ie

Angus Deaton wins 2015 Economics Nobel Prize

A very good choice in my opinion.  Though in some ways a pity it was not on a joint ticket with Tony Atkinson.

Here is link to his personal web page   http://scholar.princeton.edu/deaton/home.

Deaton has written extensively on consumer demand systems, taxation, health, welfare, poverty, well-being, econometric methodology, the list is very long.

There is a good discussion of his contributions at  http://marginalrevolution.com/marginalrevolution/2015/10/nobel-prize-winner-is-angus-deaton.html and http://marginalrevolution.com/marginalrevolution/2015/10/deaton.html.

Note that Deaton is due to speak in Ireland soon, along with our own Cormac O Grada on the topic of “Modern Plagues: Lessons Learned from the Ebola Crisis”.

More details here  http://fungforum.princeton.edu/program/agenda.

Geary Policy Peer Review Series

The Geary Institute at UCD has initiated a Policy Peer Review Series.  This involves members of the Geary Institute reviewing research/evaluation reports which have significant implications for public policy.  The authors of the evaluations/reports are then invited to reply to the review.  The first two such reviews (and responses) are on (a) an evaluation of the School Support System under DEIS and (b) an evaluation of  FAS training programmes where the participants exited in 2012.  The reviews and responses are available here:

http://www.ucd.ie/geary/publications/policypeerreviews/

Educational Reform and all that…

Educational reform and Junior Cert reform in particular has been getting a bit of coverage lately.  One observation which struck me was by Tom Collins, formerly Professor of Education at NUI Maynooth.  He mentioned anecdotal evidence claiming that primary school teachers could predict eventual secondary school educational outcomes from as early as six years of age.  Some recent work I did is consistent with this observation (http://www.ucd.ie/t4cms/WP14_20.pdf) .  Using Growing Up in Ireland data, I  looked at the scores of nine year olds in the Drumcondra maths and reading tests.  Children were partitioned into four groups on the basis of their mothers’ education.  Rather than looking at gaps in average outcomes for each group, I looked at gaps for selected percentiles.  This is in the spirit of John Romer’s analysis of inequality of opportunity, whereby between-group gaps calculated at the same percentile are regarded as having to some degree controlled for “effort” and the gaps can be regarded as reflecting ex post inequality of opportunity.  At the limit the gaps are about one standard deviation and are pretty constant across percentiles.  I also perform quantile decompositions for pairwise gaps and find that in general about one third to  one half of the gap is accounted for by observable characteristics (including school, class-size and teacher characteristics) with most of this “explained” gap arising from income and the number of books in the house.  Unobserved factors and “returns” to observed factors thus account for more than half the gaps.

The paper provides evidence that gaps in educational outcomes, on the basis of parental education, kick in at remarkably early ages.  It is also consistent with the idea that returns to education apply across as well as within generations.  There is a good recent review of this area by my colleague Paul Devereux here http://wol.iza.org/articles/intergenerational-return-to-human-capital.

The 75% of the world’s population not covered by Piketty

In between grading exam papers I have been wading through the Piketty book.  Its a bit like walking through a muddy field.  The going is sometimes a bit stodgy, but you eventually get there.  There have been many reviews and commentaries on the book – one of the best I think is by Debraj Ray (http://debrajray.blogspot.co.uk/2014/05/nit-piketty.html ), who also wrote what I believe to be the best textbook on Development Economics in 1998, which, alas, I don’t think was ever updated.

Ray is sceptical about Piketty’s “Fundamental Laws of Capitalism”, but believes that the book makes a major contribution in highlighting the concentration of top incomes, arising from both an increasing share of income accruing to capital and also the phenomenon of very high returns to human capital at the top of the wage distribution.

All of this I am sure is very familiar to readers of this blog – Piketty’s must be one of the most reviewed economics books of the last 30 years.  But what seems to get less coverage is what has been happening to the approximately 75% of the world population not covered by the Piketty book.  A recent World Bank study by Lakner and Milanovic (covered here in Vox http://www.voxeu.org/article/global-income-distribution-1988 ) shows that over the 1988-2008 period, growth for the bottom 75% of the world (with the exception of the very bottom 7% or so) has been well above average, thus contributing to an overall compression of the world income distribution.  There have basically been three broad changes in world income distribution over the last 30 years.  Yes, the top 1% have seen high growth, while those between about the 75th and 99th percentiles have done relatively poorly – these are the phenomena covered in Piketty.  But the vast majority of the bottom 75% have also done relatively well, particularly those just above the median – effectively the Chinese and Indian middle classes are catching up with lower income groups in the OECD countries.  The net effect of these three changes is a fall in overall world income inequality.  The data stops at 2008 but my guess is that developments since then have probably only accentuated these trends.  And further globalisation is likely to have the same effect.

The piece finishes off with some speculation about the political implications of all this, which I am not quite so convinced by.  But overall, given that inequality seems to be flavour of the moth these days, it is interesting to get a more global view.

Chartbook of economic inequality

Readers of the blog may be interested in a Vox piece by Tony Atkinson and Salvatore Morelli on the Chartbook of Economic Inequality. It provides a summary of changes in inequality for 25 countries (alas not including Ireland) over a 100 year period.  If you follow the links you can get the data on an Excel basis or in chart format.  The vox link is here  http://www.voxeu.org/article/chartbook-economic-inequality.

Forthcoming Conference on Obesity at NUIG

From Brendan Kennelly at NUIG

The Obesity Problem:

Insights and analysis from economics, medicine and public health

The Health Economics and Policy Analysis research group at NUI Galway is delighted to announce that it will host a one day conference on obesity on January 17, 2014. Obesity is a complex, interdisciplinary problem that involves genetics, physiology, the environment, psychology, and economics. Economic factors have played a significant role in the development of the obesity crisis and economics offers many insights into various solutions to ameliorate the crisis and to prevent more people from becoming obese. The conference will be of interest to researchers, clinicians and policymakers working in this area.

The keynote speaker at the conference will be Professor John Cawley from Cornell University. Professor Cawley is widely regarded as one of the world’s leading economists on this issue and we are delighted that he has agreed to attend our event. Professor Cawley’s research has covered three major issues: the economic causes of obesity; the economic consequences of obesity; and the economic analysis of interventions to reduce obesity. Professor Cawley will give an overview of his research in this area and will also participate in a roundtable discussion that will focus on policy options to reduce obesity.

The other speakers and the topics they will address will include the following:

· An overview of the extent of the obesity problem in Ireland (Professor Tim O’Brien, NUI Galway)

· Cost-effectiveness of bariatric surgery (Dr. Francis Finucane, University Hospital Galway)

· Socioeconomic inequalities in childhood obesity in Ireland (Brendan Walsh, NUI Galway)

· Exploring individual preferences for obesity treatment and willingness to pay for treatments (Michelle Queally, NUI Galway)

· Economic cost of obesity in Ireland (Dr. Anne Dee, Mid-West HSE)

· The distributional effects of a ‘fat tax’ in Ireland (Professor David Madden, University College Dublin)

Format of the conference:

9.00: Welcome

9.15 – 9.45: Overview of the obesity problem in Ireland (Tim O’Brien)

9.45 – 10.45: Economic Analysis of Obesity (John Cawley)

11.15 – 12.45: Series of presentations on ongoing work on obesity in Ireland (Michelle Queally; Brendan Walsh; Francis Finucane; John Cullinan)

2.00 – 2.20: Economic cost of obesity in Ireland (Anne Dee)

2.20 – 2.50: Distributional effects of a fat tax in Ireland (David Madden)

3.00 – 4.00: Roundtable discussion on interventions to reduce obesity

The conference will be held in the Aula Maxima at NUI Galway. For more details please contact Brendan Kennelly at brendan.kennelly@nuigalway.ie or 091 493094

Registration is free but is required for catering and logistical purposes. To register, please go to http://www.conference.ie/.

Reminder re conference on The Developmental Origins of Health

The Developmental Origins of Health Conference

Keynote Address by Professor James J Heckman


9.00 am-3.30 pm Thursday 10th October 2013

Royal College of Physicians of Ireland, No 6, Kildare St, Dublin 2

On Thursday October 10th, 2013, UCD Geary Institute will host a conference entitledThe Developmental Origins of Health. This conference presents the mid-term results emerging from a major European Research Council Advanced Investigator project led by Professor James Heckman at the University College Dublin, in partnership with the University of Bristol and the University of Essex.

Understanding the origins and the evolution of health inequalities is key to developing policies to promote human development. The conference highlights the work of aninterdisciplinary team of researchers who are active at the frontier of their disciplines ineconomics and epidemiology. This team is working together to create an integrated developmental approach to health which will allow us to understand the socio-biological determinants of health.  The conference presents innovative findings on the role of cognition, personality, genes, and the environment on health across the life course and across generations. Speakers will include Professor Frank Windmeijer(University of Bristol), Dr. Neil Davies (University of Bristol), Professor Steve Pudney (University of Essex), Dr. Orla Doyle (University College Dublin). The keynote address will be given by Professor James Heckman (University College Dublin & University of Chicago).

To register for the conference, please email: Carol Ellis atgeary@ucd.ie. Advance registration is essential for attendance at the conference, as numbers are strictly limited. There is no charge for the conference. Tea/Coffee and lunch will be provided.The deadline for registration is Friday 20 September 2013. For further details see UCD Geary Institute Website

Health and Recessions Again

Cormac O Grada recently blogged here about the link between recessions and health, citing a comment made by Brendan Walsh on an article in the BMJ.  Some more evidence in a couple of recent working papers.  One by Christopher Ruhm, who has written quite a lot on this topic (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2308256) and the other by authors from Georgia State University (http://ftp.iza.org/dp7538.pdf).  Both papers seem to suggest that the link between health (and health behaviours) and the economic cycle has become weaker in recent years, and at a macro level appears to be practically zero, though this masks some links for individual conditions.  This is not inconsistent with some of Brendan’s recent work for Ireland ( http://www.ucd.ie/t4cms/WP11_27.pdf) and some recent work which I did ( http://www.ucd.ie/t4cms/WP13_05.pdf, see tables 9 and 10 and figures 6 and 7) which indicate that the correlation between income and self-reported health appears to be weakening, particularly below the poverty line.  Following on from another recent post, the weaker link between health and income below the poverty line is not just because older people (who typically have poorer health) have seen their relative position improve during the recent recession.  The results also holds for under-65s.

Forthcoming Conference on The Developmental Origins of Health

The Developmental Origins of Health Conference

Keynote Address by Professor James J Heckman


9.00 am-3.30 pm Thursday 10th October 2013

Royal College of Physicians of Ireland, No 6, Kildare St, Dublin 2

On Thursday October 10th, 2013, UCD Geary Institute will host a conference entitledThe Developmental Origins of Health. This conference presents the mid-term results emerging from a major European Research Council Advanced Investigator project led by Professor James Heckman at the University College Dublin, in partnership with the University of Bristol and the University of Essex.

Understanding the origins and the evolution of health inequalities is key to developing policies to promote human development. The conference highlights the work of aninterdisciplinary team of researchers who are active at the frontier of their disciplines ineconomics and epidemiology. This team is working together to create an integrated developmental approach to health which will allow us to understand the socio-biological determinants of health.  The conference presents innovative findings on the role of cognition, personality, genes, and the environment on health across the life course and across generations. Speakers will include Professor Frank Windmeijer(University of Bristol), Dr. Neil Davies (University of Bristol), Professor Steve Pudney (University of Essex), Dr. Orla Doyle (University College Dublin). The keynote address will be given by Professor James Heckman (University College Dublin & University of Chicago).

To register for the conference, please email: Carol Ellis at geary@ucd.ie. Advance registration is essential for attendance at the conference, as numbers are strictly limited. There is no charge for the conference. Tea/Coffee and lunch will be provided.The deadline for registration is Friday 20 September 2013. For further details see UCD Geary Institute Website

Long Run Income Inequality in Ireland

Those of you interested in long run trends in income inequality in Ireland might like to take a look at this piece from the magazine “Significance”.  It uses the difference between incomes of the top 10% less the incomes of the top 1% as its summary measure for inequality.  It takes a pure time series approach and suggests that for the last 40 years or so there is a  12 year cycle in inequality with a very slight upward trend.

Warning: As John McHale might put it, it is “wonkish”!

http://www.significancemagazine.org/details/webexclusive/4386781/Income-inequality-in-Ireland-from-1922-to-2009.html

Cormac O Grada awarded RIA Gold Medal

Congratulations to Cormac O Grada who has been awarded 2010 Royal Irish Academy Gold Medal.  This is the premier Irish academic award and in Cormac’s case it is richly deserved.

PS: I released this yesterday but then quickly withdrew it as I thought it was embargoed!  But I think its OK to release the news now – just tell one person at a time!

Terry Baker

A few weeks ago I informed readers of the passing away of Terry baker, formerly of the ESRI.  Joe Durkan has asked me to post this personal tribute to Terry.

It was a great shock for me when I heard of Terry Baker’s death.  He was someone I had known for over 40 years, had worked with as his research assistant on the Quarterly Economic Commentary, and had also enjoyed a good friendship.  I met him first when I was interviewed for the job of Research Assistant in the ESRI in January 1969.  We had more points of contact than is probably usual in these circumstances, as we had a shared, but not overlapping  history, in Tanzania – Terry as a civil servant and me as a teacher.  For both of us the experience convinced us that we wanted to stay in economics, and that economics could make a difference.  We differed in approach, as Terry believed in calm persuasion offered over time, while I was ready to do battle.  In the end we were both disappointed to see the mess the country is in now.

 

Terry and the then ESRI Director (Michael Fogarty) encouraged me to go to Nigeria. His judgement about the merits of the move was, as with so much of what he did, inspired.  It was a tough physical environment, but the work was fantastic. When I returned he threw me into the Quarterly straight away.  When I took over the Quarterly finally, Terry could always be relied upon to talk about the forecasts, to offer a different perspective and simply to bounce ideas with.  Writing came easy to him and he would simply rewrite cumbersome sentences without comment.  When I, very reluctantly, decided to leave the Institute in 1983, I persuaded him to go back doing the Quarterly and I think this was a good move for him. 

 

Within the Institute Terry did an extraordinary amount of internal referring.  His comments were incisive, but always took a positive bent.  He also ran a team in the management game, which the ESRI won on many occasions.  Terry well knew the value of the game, as it forced people to put numbers on the usual waffle about company strategy.  This benefited generations of research assistants.  He was also very generous.  When I ran a team separately he kept a place for me on his when I finally bit the dust as he had well anticipated.  I suspect he enjoyed the experience, but he made me feel welcome.

 

We met about twice a year after I left the Institute, most recently last autumn, when we agreed to get together after Christmas.  His later years were sad, following the death of his wife, Pirjo, in 2007.  Sadly, when I returned from a short break after Christmas, I learned of his death.  His death, the more recent death of Mrs. Dempsey (the first ESRI Secretary), and now the death a colleague, Todor Gradev, just knocks the heart out of one.  Terry was a very nice person, and will be missed by those who knew him.  (Joe Durkan).

Terry Baker, RIP

It was only last night that I heard that Terry Baker, formerly of the ESRI, had died on January 3rd (see http://www.esri.ie/irish_economy/quarterly_economic_commen/ ).  Readers of an older vintage will recall his role as chief contributor and editor of the  Quarterly Economic Commentary in the 1980s.  I worked as a Research Assistant with Terry on a number of these and his modus operandi was to take my numbers, tables and clumsy sentences and magically transform them into the most elegant prose.  A pretty mean table tennis player too, if I remember.  RIP.

Distributional Effects of Latest CPI Figures

A lot of the recent analysis of the CPI figures on this blog has examined  which households (in terms of poor versus rich) have benefitted most from deflation.  The latest CPI figures released today  (http://www.cso.ie/releasespublications/documents/services/current/rsi.pdf) has prompted me to publish some preliminary results from some work I have been doing which looks at this from a slightly different (though complementary) angle to that taken by Jennings, Lyons and Tol in their recent ESRI working paper.  I have mentioned before on this blog the idea of what is known as the distributional characteristic of a good (or aggregate of goods), which essentially summarises the extent to which consumption of the good is concentrated amongst lower income households.  By calculating this measure we can then see which price changes will have the most impact upon poor (or rich) households.  Calculation of the measure requires detailed knowledge of expenditure patterns across households and this data is available in the Household Budget Survey (and thus unfortunately only be calculated for the years the HBS is carried out).  Some analysis I have done looking at the 2004/2005 HBS suggests the following ranking of goods in terms of their distributional characteristic (a high ranking indicates a good whose consumption is more concentrated amongst poorer households):

1.  Tobacco and Fuel/Light (their values are practically identical)

3.  Food

4.  Non-durable Household Goods

5. Miscellaneous Household Goods

6.  Housing (including mortgage interest)

7.  Durable Household Goods

8. Alcohol

9.  Clothing and Footwear

10. Transport

11.  Services

Unfortunately the classification of goods into aggregates in the HBS tables (http://www.cso.ie/releasespublications/documents/housing/hbs.pdf) does not correspond exactly with that in the published CPI but for many goods it is very close, if not exact.

So, taking this approach, what have been the relative distributional effects of recent changes in the CPI (bearing in mind that all households will benefit from price falls)?  The July fall in clothing and footwear will give greater benefit to richer households relative to poorer ones, given that this consumption of this good is relatively more concentrated amongst richer households (this is true for the broad aggregate though of course may not be so for some individual clothing items).  The fall in fuel prices is definitely very good news for poorer households as this category consistently has the highest distributional characteristic (along with tobacco).  Housing is pretty much bang in the middle in the ranking so the effect of falls in mortgage interest payments is fairly neutral.

It should also be borne in mind that these figures are based upon the HBS from about five years ago but having looked at previous HBS the rankings don’t seem to change much.  I will publish the detailed results in a UCD working paper with more information about the methodology etc in the next couple of weeks.

Inequality in the UK

The IFS have recently published a report on inequality in the UK (http://www.ifs.org.uk/publications/4524).  They show inequality at its highest level since a consistent time-series began in 1961.  Unfortunately the data has not picked up all of the recent declines in income but they speculate that incomes at the top (more heavily dependent upon interest and dividends and with a higher proportion of earners in the financial sector) may have experienced a greater fall.  It is interesting to carry out similar speculation for Ireland.  Certainly the same forces are at work at the top of the income distribution but we have also experienced a greater rise in unemployment.  However the recent ESRI analysis by Tim Callan and his colleagues has shown that the lowest quintile has done relatively well in recent budgets, particularly last year.  On balance this suggests a fall in inequality. The relative position of pensioners is of particular interest, with their reliance on interest and dividends (which have fallen) and on the old-age pension, which has risen in real terms in recent years.  No doubt Brian Nolan’s paper at Wednesday’s Conference in TCD will throw further light upon this.