Aggregate measures of well-being, England 1781-1850

I went in the field of economic history after I discovered how much it was to properly measure living standards. The issue that always interested me was how to “capture” the multidimensional nature of living standards. After all, what weight should we give to an extra year of life relative to the quality of that extra year (see all my stuff on Cuba)?

However, I never tried to create “a composite” measure of living standards. I thought that it was necessary, first, to get the measurements right. However, I had been aware of the work of Leandro Prados de la Escosura who has been doing considerable work on this in order to create composite measures (Leandro also influenced me on my Cuba reasoning – see this article).

A year ago, I discovered the work of Daniel Gallardo Albarrán from the University of Groningen at the meeting of the Economic History Society (EHS). Daniel’s work is particularly interesting because he is trying to generate a composite measure of well-being at one of the most important moment in history: the start of the British industrial revolution.

Because of its importance and some pieces of contradicting evidence (inequality, stature, amplitude of real wage increases, amplitude of income increases, urban pollution leading to increased mortality risks etc), the period has been begging for some form of composite measure to come along (at least a serious attempt at generating it). Drawing on some pretty straightforward microeconomic theory (the Beckerian in me likes this), Daniel generates this rich graph (see the paper here).

Daniel

The idea is very neat and I hope it will inspire some economic historians to attempt an expansion upon Daniel’s work. I have already drawn outlines for my own stuff on Canada since I study an era when (from the early 1800s to the mid-1850s) real wages and incomes seem to be going up but stature and mortality are either deteriorating or remaining stable while inequality is clearly increasing.

Star Trek Did More For the Cultural Advancement of Women Than Government Policies

The fondest memories of my childhood center on the time I spent with my father watching Star Trek. At the time, I simply enjoyed science fiction. However, as an adult I have often revisited Star Trek (on multiple occasions) and I realized that I had incorporated subconsciously many elements of the show into my own political reasoning.

Not to give too much away about my age, my passion with Star Trek started largely with the Voyager installments. As a result, I ended up seeing Kate Mulgrew as Captain Janeway. And that’s what she was: the captain. I never saw the relevance that she was a woman. A few years ago, I saw her speak at the Montreal Comic-Con (yes, I am that kind of Trekkie) and she mentioned how crucial she thought her role to be for the advancement of women. By that time, I had already started to consider Star Trek as one of the most libertarian-friendly shows ever to have existed. While its economics were strange, its emphasis on tolerance, non-intervention and equality of rights make it hard to argue that it is not favorable to broadly-defined liberal mindset. However, I had not realized how much so until I heard Mulgrew speak about her vision of the role. After all, I had somehow forgotten that Mulgrew was a woman and how novel her role was.

One person who understands how important was this point is Shannon Mizzi who wrote a piece for Wilson Quarterly which I ended up reading while I was still a PhD student. Her core point was that in Star Trek, women were simply professionals. They were rarely seen doing other things than their work. While she argues that this meant that Star Trek played an underappreciated role in the history of women’s advancement, I am willing to go a step further. That step is to assert that the cause of the cultural advancement of women has been better served by Star Trek than by governments. (Please note that I am only considering cultural advancement)

The pre-1900 economic and social history of women would be sufficient in itself to make this point of mine. After all, women were given a lesser legal status by governments. This is both a necessary and sufficient element to assert that, overall, governments have been noxious to women’s advancement over many centuries. One century of legal emancipation would still leave Star Trek as a net positive force. But that would be a lazy argument on my part and I should simply focus on the present day. In fact, thanks to a wealth of data on wage gaps, gender norms and measures of legal institutions, I can more easily back up the claim.

My friend Rosemarie Fike of Texas Christian University is the first person that comes to mind in that regard. Her own doctoral dissertation, Economic Freedom and the Lives of Womenintroduced me to a wide literature on the role of economic freedom in the advancement of women. To be sure, Rosemarie was not the first to try to measure the role of economic freedom (which we should understand as how small and non-interventionist a government is). There had already been some research showing that higher levels of economic freedom were associated with smaller hourly wage gaps between genders and how liberalizing reforms were associated with wage convergence between genders. However, some economists have been arguing that there are other “soft sides” to economic freedom – like in the promotion of cultural equality and norms that promote certain types of attitudes. This is where Rosemarie’s work is most crucial. In a section of her dissertation, she essentially builds up on the work of (my favorite Nobel laureate) Gary Becker regarding preferences and discrimination. Basically, the idea is that free markets will penalize people who willingly discriminate. After all, if an employer refuses to hire redheads for some strange reason, I can compete by hiring the shunned redheads at a lower wage rate and out-compete him. In order to stay in business, the ginger-hating fool has to change his behavior and hire redheads which will push wages up. Its hard to be a racist or misogynist when it costs you a lot of money.

However, if you prevent this mechanism from operating (by intervening in markets), you are making it easier to be bigoted-chauvinistic-male-pigs. As a result, laws that prevent market operations (like the Jim Crow laws did for blacks) enshrine discriminatory practices. Individuals growing up in such environment may accept this as normal and acceptable behavior and strange beliefs about gender equality may cement themselves in the popular imagination. When markets are allowed to operate, beliefs will morph to reflect the actions taken by individuals (see Jennifer Roback’s great story of tramways in the US South as an example of how strong markets can be in changing behavior and see her article on how racism is basically rent-seeking). As a result, Rosemarie’s point is that societies with high levels of economic freedom will be associated with beliefs favorable to gender equality.

But the mirror of that argument is that government policies, even if their spirits have no relation to gender issues, may protect illiberal beliefs. Case in point, women are more responsive to tax rates than men – much more. In short, if you reduce taxes, women will adjust their labor supply more importantly at the extensive and intensive margin than men will. This little, commonly accepted, fact in labor economics is pregnant with implications. Basically, it means that women will work less in high tax environments and will acquire less experience than men will. Since it is also known that differences in the unmeasured effects of experience weigh heavily in explaining the remaining portion of the gender pay gap, this means that high tax rates contribute indirectly to maintaining the small gender pay gap that remains. Now, imagine what would be the beliefs of employers towards women if they did not believe that women are more likely to work fewer hours or drop out of the workforce for some time? Would you honestly believe that they would be the same? When Claudia Goldin argues that changes in labor market structures could help close the gap, can you honestly say that the uneven effect of high tax rates on the labor supply decisions of the different genders are not having an effect in delaying experimentation with new structures? This only one example meant to show that governments may, even when it is not their intent, delay changes that would be favorable to gender equality. There are mountains of other examples going the larger effects of the minimum wage on female employment to the effects of occupational licencing falling heavily on professions where women are predominant.

With such a viewpoint in mind, it is hard to say how much governments helped the cultural advancement of women (on net) over the 20th and 21st centuries . However, Star Trek clearly had a positive net effect on that cultural advancement.  That is why I am willing to say it here: Star Trek did more for the cultural advancement of women than governments did.

Famine and Finance: Credit and the Great Famine of Ireland

41YjUSWp3JL._SX351_BO1,204,203,200_I have recently finished reading Famine and Finance by Tyler Beck Goodspeed. While short, it should have a prominent place on the shelves of economic historians interested (obviously) in Irish history and (less obviously) in Malthusian theory.

Famine and Finance is a study of the response of Irish farmers to the potato blight. As it is known to many, many individuals simply left Ireland. However, where micro-credit was available, Goodspeed finds that farmers adapted by shifting to different types of activities – notably livestock. These areas experienced a smaller decline in population. Basically, where the institution of micro-credit was present, the demographic shock was much less severe. If only for this nuance, the book makes a sizeable contribution to the historiography of Ireland. The methods used are also elegantly simple and provide an interesting road map for anyone interested in studying the responses of local population to environmental shocks.

However, the deeper point comes from it tells us about institutions. In Goodspeed’s story, the amplitude of the collapse of the Irish population in the 19th century depends on the presence of the institution of micro-credit. Basically, the institution determined the amplitude of the shock. Since Ireland’s potato blight is often presented as the textbook case of Malthusian pressures, Goodspeed’s results are particularly interesting. In his chatper titled”Was Malthus Right?”, he shows that when controls for the institution of micro-credit is present, the typical Malthusian variables fail to explain population changes. In other words (i.e.  my words) , Malthusian pressures (the change in population) are in fact institutional failures.

This is a point I have often made elsewhere (see here, here and here and a blog post here). And because Goodspeed backs this point of mine, he has earned himself a place on my shelf of “go-to” books.

The Heights of French-Canadian Convicts, 1780 to 1830

A few days ago, it was confirmed that my article with Vadim Kufenko and Alex Arsenault Morin on the heights of French-Canadians between 1780 and 1830 was accepted for publication in Economics and Human Biology. In that paper, we try to introduce French-Canadians before 1850 to the anthropometric history literature by using the records of the prison of Quebec City. Stature is an important measure of living standards. As it is heavily related to other aspects of health outcomes, it is a strong measure of biological living standards. More importantly, there are moments in history when material living standards and biological living standards move in opposite directions (in the long-run, this is not the case).

We find three key results. The first is that the French-Canadians grew shorter throughout the era when living standards did not increase importantly (and were very volatile). This puts them at odds from other places in North America where increases in stature were experienced up until the 1820s. Furthermore, stature stops falling around 1820 when economic growth picked up. This places the French-Canadians in a unique category in North America since it seems unlikely that they experienced a strong version of the antebellum puzzle (decline in stature with increases in material living standards which is what the US experienced). The second key result is that the French-Canadians are the shortest in North America, shorter even than Black Americans in slavery. However, they are considerably taller than most (save Argentinians) Latin Americans. More importantly, they are considerably taller than their counterparts in France. The third key result is related to the second key result. Today, French-Canadians are noticeably shorter than other Canadians. However, the gap was more important in the late 19th century and early 20th century. Pegged as a “striking exception” within Canada, we do not know when it actually started. Thanks to our work, we know that this was true as far back at the early 19th century.

The working paper (dramatically different than the accepted version) is here and I am posting key results in tables and figures below.  Moreover, I will be talking about anthropometric history and economic history with Garrett Petersen of Economics Detective Radio this Tuesday (I do not know when the podcast will be made available, but you should subscribe to that show anyways).

Heights.png

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Household size and growth since 1870 (albeit in Canada)

Two days ago, I posted something on how much we were estimating growth since the 1950s. While organizing another research paper that I am trying to finish, I realized that I could make a follow-up to this based on previous research of mine.

A few months ago, I published (alongside Vadim Kufenko and Klaus Prettner) a short note in Economics Bulletin where we showed that the large differences in household size in Canada that existed up to 1975 led many to overestimate the level of differences between provinces. Moreover, we pointed out that because household size were converging at the same time as incomes, we argued that the rate of convergence from 1945 onwards was slightly overestimated. That paper convinced us to do the same between all the OECD countries (we are assembling the data right now).  But this was an argument about variance, what if we simply plot the “per capita” income of Canada with the “per adult equivalent” income of Canada since 1870.

By using the Maddison dataset combined with the data from my article, it took me a few seconds to get the graph below. What is important to notice in this graph is that, incomes per adult equivalent (measured in 1990 Geary-Kheamis dollars) have increased 40% less than incomes per person. Since adult equivalents are a better measure of living standards (because you capture the economies of scale associated with household size), we can easily say that we have been underestimating the level of improvement in Canada (it is still substantial however).

growthfactors

“Watch” the (industrial) revolution!

I don’t know how I missed such a valuable article, but O’Grada and Kelly have this fascinating piece on the price of watches in England from the early 18th century to the early 19th century in the Quarterly Journal of EconomicsStarting from Adam Smith’s quote that the price of watches had fallen 95% over roughly one hundred years, they collected prices of stolen watches reported in court records.  They find that Smith was wrong. The drop was only 75% (see the sarcasm here).

watch-prices

Why is this interesting? Because it shows something crucial about the industrial revolution. This was a complex good to build which required incredible technical advances – many of which could be considered general purpose technologies which could then be used by other industries for their own advances (on the assumption that other entrepreneurs noticed these technologies). But, more importantly, it provides further evidence against the pessimistic view of living standards in Britain at the beginning of the Industrial Revolution. These “new” goods became incredibly cheaper. Along with nails, glass, pottery and shipping , watches did not weigh heavily in the cost of living of the British. However, they did weigh heavily as industrial prices which meant that costs of production were falling progressively which augured well for the beginning of the industrial revolution*.

Literally, you can watch the industrial revolution in that paper! (sorry, bad pun)

* By the way, I use the term because it is conventional but a revolution is a clean break. The British industrial revolution was not saltation as much as it was a steady process of innovation from the early 18th century up to the mid 19th century. The real “revolution” in my eyes is that of the late 19th century. The technological changes from 1870 to 1890 are the most momentous in history and if there was any technological revolution in the past, this was it.

When (Where and Why) Women Were More Literate than Men

For most of history, men tended to be more literate than women. In essence, illiteracy was widespread but even more so for women. There is one exception: the French-Canadians. For most of the 19th century, literacy rates were greater for French-Canadian women than French-Canadian men.

literacy

This is a fascinating piece of economic history and somewhat of a puzzle (given that it is an oddity). It also shows how important institutions are to determining paths of development. In a 1999 article in the Journal of Economic History, Gillian Hamilton indicates that the more “liberal” institution of marriage contracts for the French-Canadians probably induced this result :

Quebec’s unique legal institutions offered the opportunity to draw up a prenuptial contract to couples who could benefit from a different property structure than the law provided. Not surprisingly, a prenuptial contract was unnecessary for most couples. Within this transaction cost-competitive marriage market framework, contracts generally were desirable only in cases of mismatch, either due to an exceptional woman or a relatively productive husband whose job did not entail a significant component of family participation. Their contracting decisions are consistent with terms that would have provided them with more appropriate incentives for work and the production of jointly produced goods, and at least the potential for greater utility and wealth than they otherwise would have accumulated. The use of contracts likely provided Quebec with higher overall wealth and a wider income distribution than it would have experienced without contracts (because the skilled disproportionately signed agreements).