Island hopping
I leave for England tomorrow, so I won’t be blogging for a few days. Monday I will present a paper on the Great Depression at Oxford, and then Tuesday I will be on a panel at Oxford discussing the current economic crisis (with Kevin Dowd.) Wednesday I will be at the Institute for Economic Affairs in London. I recall that the IEA provided some of the intellectual firepower for the Thatcher Revolution.
Speaking of British politics, check out this great interactive graph at The Economist. The Brits are much more logical than we are, using red for the left wing party. Notice how the Conservatives easily win more square miles of land in England, just as the Republicans do in America. If you move your cursor over the blue districts in England you’ll see how often the Liberal Democrats came in second, with the Labour Party a distant third. No wonder the LD got 23% of the vote and less than 10% of the seats.
England has always been one of my favorite countries. I have fond memories of living in London during the first 5 months of 1986, despite being sick for an entire month. (Don’t ask me about the NHS.) When I was younger I thought the best time and place in world history was the London of Stevenson, Chesterton, and Sherlock Holmes.
Another country that has always intrigued me is Iceland. Recently I realized that this might be my last chance to visit Iceland, so a few months ago I had the bright idea of booking my London flight on IcelandAir, with a 1o hour stopover in Reykjavik. A few weeks later the volcano erupted, so we’ll see how things go. Here are a few of my favorite things about Iceland:
Bands: Sigur Ros, Bjork
Films: The Seagull’s Laughter, Cold Fever, Children of Nature
Economist: Gauti Eggertsson
Book: The Sagas
Joke: Iceland’s last wish: to have its ashes spread all over Europe
I am especially interested in their pop music. Last night I saw Jonsi in Boston, and had every ounce of postmodern irony drained out of my system. I’m wide-eyed, and ready for Iceland to work its enchantment. I don’t really know what to expect—I suppose I will see a bunch of Vikings, elves, and unusual pop stars.
I also like how lots of their names end with “dottir.” And what’s not to like about an egalitarian Scandinavian country with a flat tax and wildcat banking! Well, I suppose the banking was a mistake, but nobody’s perfect.
I am most comfortable when it is 86 (30C), so the fact that the all-time record high in Reykjavik is 76 is a bit disturbing. I can’t imagine living my entire life in a country where I am never warm. I suppose they get used to it.
HT: Tyler Cowen
Update: Bad luck! My flight was diverted from Reykjavik to Glasgow.
Tags:
7. May 2010 at 18:37
In Iceland, your last name is your Father’s name plus ‘dottir’ or ‘son’ (depending on your gender).
7. May 2010 at 22:23
here s a reader request u can get around to if u feel like it. as a noneconomist i dont quite understand the concepte of maximizing utility. MR had a post about a week ago in which the media made lurid statements about the level of smoking among children in some asian country like indonesia. he clearly portrayed it as a trap for those not in the know about economics. TC doesnt often reveal his entire hand but u do so i ask the question here. my guess is that increased levels of smoking in a third world country should be viewed as a positive not a negative because at least they have advanced that far and life expectancies have likely gone up on the margin despite increases in smoking.
this gets me thinking. im a drunk living in a first world country, yet i think my quality of life, tho not great, has been better than it would have been otherwise over the past decade were i not a drunk. the question is whether i have been economically rational or not.
7. May 2010 at 22:39
My favorite joke:
Q. What’s the capital of Iceland?
A. About 20 Euros.
8. May 2010 at 03:21
Is Iceland going somewhere? Why would this be your last chance to go?
8. May 2010 at 05:41
Some Icelandic trivia:
1) Iceland gets 70% of its electrical power from geothermal and the remainder from hydropower. Thus Iceland emits no greenhouse gases from electrical production unless you indirectly count the volcano.
2) Male inherited y-chromosonal DNA reflects Iceland’s Viking heritage. Female inherited mitochondrial DNA implies a heavy Irish contribution. Is the folklore about Viking bachelors kidnapping Irish brides on their way West true?
3) Iceland at 80.2 years has the longest male life expectancy in the world, and at 81.8 has the third longest overall life expectancy after Japan and Hong Kong.
4) Despite the somewhat frigid Northern climate, seasonal affective disorder (SAD) is virtually unknown there. Must be all the natural hot tubbing from the geothermal springs.
8. May 2010 at 06:30
John, Thanks.
rob, I don’t think there is any well-established definition of utility, at least in terms of something that can be measured. Thus I don’t think the questions that you ask can be answered by using economic theory. Economists generally shy away from telling people whether they are living their life in the right way, and instead focus on how people respond to incentives. We often do assume that people are rational, and choose options that maximize utility, but beyond that there’s not much more that can be said. And of course many economists believe that people aren’t always rational.
I also read that Tyler Cowen post, and I was also unable to figure out his take on the issue. I have never viewed smoking as a horrible affliction, so I am out of step with the current view of our society. As a result I don’t know how others would view the Indonesian situation.
Mobile, That’s a good one.
JPIrving, I usually vacation with my wife. For some strange reason she thinks any country named “Iceland” is likely to be rather cold. And when I do go to Europe alone, it is usually to a conference in the winter. I’d rather not go to Iceland in the winter (and yes I know it never gets extremely cold, but it is rather dark.)
Mark, Thanks for that data. Off topic, but I still say the life expectancy data for Americans by race is mind-boggling. So much so that I doubt it’s accuracy. A recent study that was widely linked to shows Hispanics at 82.8 years, virtually the longest in the world if they were an independent country. And Asians in America live more that 86 years, which is even more amazing. If anyone knows anything about whether this data is accurate I’d be very interested.
8. May 2010 at 06:48
The US should have offered to bailout Iceland in exchange for merger / absorption / annexation as a permanent US Territory with a future option for Statehood.
Somehow, I doubt the Icelanders would have accepted even for a few dozen billion dollars and preservation of their pre-crisis standard-of-living, but it would have been worth a shot.
It’d be hard to make the flag look right with 51 stars, but if we also split up the biggest super-states into 10-million person chunks (4 Californias!) then we could have a number that fits into an aesthetically-pleasing flag design.
8. May 2010 at 07:04
Scott,
Yes, off topic, but I’ll indulge you. Most of the longevity by ethnicity data I’ve seen shows a strong correlation between socioeconomic status and life expectancy. The only thing I’ve found showing Hispanics living that long concerns women only and is from Colorado. Is this what you are referring to?
http://www.denvergov.org/women/editorials/editorials3/tabid/396067/default.aspx
8. May 2010 at 10:07
Scott,
Well I just saw that Eyjafjallajökull (say that three times fast) spewed some more ash and diverted your flight. No hot springs tubbing for you! (Just a suggestion.)
On the bright side you can enjoy a pint of Gillespie’s stout with some haggis while in Glasgow (and perhaps a wee nip of Glenfiddich afterwards).
P.S. I’m only half Polish/Lithuanian. The miserly half is Scottish/Viking.
8. May 2010 at 13:26
Based on your enjoyment of Bjork and Sigur Ros, I recommend checking out Mum (also from Iceland). Their albums Finally We Are No One and Yesterday Was Dramatic Today is Okay are my favorites.
8. May 2010 at 22:13
Mum sure, but where’s the love for Benni Hemm Hemm, Amina and Emiliana Torrini? Back when Fabchannel was still up, you could watch full-length BHH and ET concerts.
If you didn’t get enough of Amina touring Iceland with Sigur Ros on Heima, you can see them on Icelandic TV here:
http://www.youtube.com/watch?v=BYIDUvAtiGc
There’s no doubt tons more good Icelandic music out there. They do have 300K people, after all.
9. May 2010 at 04:25
Indy, In a post called The American Union, I argued the US should break up into 50 separate countries–which is exactly the opposite of the argument you are making. At one time I would have agreed with you, but no longer.
Mark, No, I read the study closely, and it was all Hispanics. Indeed they had data on the the major races and ethnicities, broken down by state as well. Asians in NJ lived longest. I believe that MR and several other blogs linked a few weeks ago.
Mark#2, Thanks for the tip. I am in Glasgow right now. More delays!&*%$!
John, Yes, I have the CD Finally We are No One.
anon/portly, I did see Amina open for Sigur Ros. I plan to get their CD someday. I should say that I am not really all that knowledgeable about Icelandic pop music, mostly Sigur Ros and Bjork. I am amazed that a country of 300,000 people can produce two such distinctive pop artists. There are European countries with 60 million people than haven’t produced anything that appealling to me. I’m not even sure why I like Sigur Ros, it’s not the type of music I generally listen to.
9. May 2010 at 08:53
Scott,
Not to be a noodge but I can’t find the study you are referring to. I looked for it in MR and googled in general and turned up nothing. You or somebody will have to give me better hint.
On the other hand I do recall a 2006 study (“The Eight Americas”) by Christopher Murray of Harvard that found Asian women in Bergen County new Jersey live 91 years on average. He also found that Hispanics in Texas live a long time despite poor health habits and limited access to health care.
9. May 2010 at 08:58
Well, my post was a little tongue-in-cheek, but not entirely. I read your “American Union” post, and I understand your reasoning, but I was wondering if you could further explain the path of your transition from national-federalist-expansionist (?) to fluid-confederationist (?). I’m no political scientist, so I’m just winging it with my terminology. Please pardon my ignorance.
And is the EU/Euro really so fluid and loose, after all, or is it, as in my judgment it has always been envisioned by its creators, a kind of semi-stealth, politically-feasible long-term ratcheting apparatus to establish a gradual process of melding a super-nation from the diverse mutually-suspicious European states?
Consider the bizarre “failure is not an option” “EU Constitution”/”Lisbon Treaty” process, or the assertions by various leaders that Greece leaving / getting kicked-out of the EU/Euro is “impossible”. Kind of a Lincoln’s view of the right to succession (i.e. it doesn’t exist).
I think that “the way Europeans do things” isn’t the way they actually are hoping to continue to do things, but as a transitional arrangement merely seen by the Eurocrats as an inconveniently indispensable stepping stone on the way to their real goal of ever-increasing centralization.
It’s interesting that Economic realities seem to have thrown a larger monkey wrench into the culmination of these plans than “mere” political resistance and widespread citizen objection in various member-nations.
9. May 2010 at 23:31
Maybe you can report back from London about Starbuck’s flat white.
10. May 2010 at 06:58
Mark, Check this out:
http://www.measureofamerica.org/acenturyapart/
And then click in “download the data tables”
I found it in this WSJ article:
http://blogs.wsj.com/economics/2010/04/28/looking-to-live-better-move-to-new-jersey/
I still doubt the accuracy.
I’ll respond to the others when I have more time.
10. May 2010 at 11:57
Gallup reports: Although the Federal Open Market Committee said “inflation is likely to be subdued for some time” after its meeting last Wednesday, 55% of Americans in an April 8-11 Gallup poll are “very concerned” inflation will climb, and another 29% are “somewhat concerned.” … Concern is greatest among lower-income Americans, Westerners, conservatives, and Republicans and independents.
Are we beginning to expect expectation-creep?
10. May 2010 at 17:25
Scott,
Thanks. I’ve heard of the American Human Development Report but was not aware of the ethnic detail it provided. Just a cursory examination reveals that the report is published by Columbia University Press and Social Science Research Council. The life expectancy figures are calculated from federal government statistics. It seems pretty reputable to me. But the hispanic life expectancy figures are indeed surprising given the low income and educational standing for hispanics according to the report.
11. May 2010 at 09:56
Scott,
I have looked at Gauti Eggertsons AER paper on Roosevelt. Have you ever talked about his “deflationary bias of descretionary policy” in this blog? Would be interesting to hear what you think about it, as it would explain some form of “trap”, maybe even Japan’s “trap”… Of course, NGDP targeting would resolve it, but is it credible to commit to such a policy?
Looking forward to a post on this!
Steve
11. May 2010 at 15:18
Scott, if you are skeptical of the famous “Hispanic Paradox” I suggest you take a look at a paper that was published in 2006 in the American Journal of Public Health. The paper suggests that the “hispanic paradox” is merely a result of incorrect coding over time. They found the paradox mostly arises from the fact that classifications of deaths and population changed from being done by Spanish surname on death certificates as estimated by a funeral home director / linguistic-based computation programs / other non-direct methods, to the use of Hispanic-origin survey questions in official statistics. They argued this creates a relative omission of 15-20% of deaths and that this fact undercuts most, if not all, of the “Hispanic paradox.”
See a summary of the study here: http://ajph.aphapublications.org/cgi/content/full/96/9/1686
On a similar note, recent literature has even suggested that self-identified Mexican-Americans change their self-identification over time (see: http://www.springerlink.com/content/q8r682x567501274/). This would provide an additional bias when doing life expectancy estimates if people are changing their identification in data over their life span.
Also, there is a vast literature that attributes some of hispanic paradox to the “salmon effect” among Mexican immigrants. They have discovered a lot of the Mexican advantage is being driven by the fact that many of them return to Mexico and thus are statistical counted as having, essentially, infinite lives because it’s hard to know migration patterns among illegal immigrants (“salmon bias”). See this study in the Demography from 2004 for one of many examples:
See a summary of the study here: http://biopop.pophealth.wisc.edu/wp/wp-content/uploads/2008/10/palloniarias_2004_dem.pdf
Similar evidence in a disease-specific context is presented here: http://www.ncbi.nlm.nih.gov/pubmed/15612509
Now, many studies still suggest the Hispanic Paradox does exist, but I’ve yet to see one that thoroughly addresses the concerns raised about the quality of the data. Biological studies are mixed. Micro-studies that examine small sub-populations directly give little support for the hispanic paradox, which would seem to confirm that it’s a measurement problem. Risk profile-estimates and disease-specific estimates seem to support some advantage towards Hispanic-Americans though (though not seemingly enough to explain the result). Interestingly, the results seem to be extremely weakened when you look at U.S.-born Hispanic Americans rather than migrant / immigrant Hispanic-Americans (this may be picking up the Salmon Effect since migrants would seem more likely to migrate back). Given the seeming implausibility of the Hispanic Paradox I’m inclined to believe that much of the result is driven by the “salmon effect” and the misclassification channel in the data I described above. Those two would seem to dwarf any inherent advantage of Hispanics. Also, I’m very disappointed in the public health / demography community that they have not adequately responded to and addressed the concerns put forth in these papers.
In short, I think the Hispanic-advantage is probably minor at best and mostly driven by data problems.
12. May 2010 at 05:44
Scott,
Completely off topic. I came across this piece by John Judis today:
http://www.tnr.com/article/politics/the-case-economic-doom-and-gloom
I’m so used to reading Austrian statements that the causes of the recession are malinvestment (real and not nominal). But here is a left winger also arguing that the causes are “real” (overcapacity). His article is a review of a book by Robert Brenner and it is strangely reminiscent of the underconsumption theories of John A. Hobson, Emil Lederer, Waddill Catchings and William Foster that were pervasive on the left in the 1930s and had great influence on such people as Herbert Hoover, Henry A. Wallace, Paul Douglas, and Marriner Eccles.
Now it appears there is both left wing and right wing pessimism to deal with. Strange how history seems to repeat itself.
12. May 2010 at 22:16
@mark
As far as I can tell overcapacity is what a left winger calls what austrians call malinvestment. The left tends to see it as a failure of demand, while the Austrians tend to see it as a failure of supply.
13. May 2010 at 11:50
Now, many studies still suggest the Hispanic Paradox does exist, but I’ve yet to see one that thoroughly addresses the concerns raised about the quality of the data. Biological studies are mixed. Micro-studies that examine small sub-populations directly give little support for the hispanic paradox, which would seem to confirm that it’s a measurement problem. Risk profile-estimates and disease-specific estimates seem to support some advantage towards Hispanic-Americans though (though not seemingly enough to explain the result). Interestingly, the results seem to be extremely weakened when you look at U.S.-born Hispanic Americans rather than migrant / immigrant Hispanic-Americans (this may be picking up the Salmon Effect since migrants would seem more likely to migrate back). Given the seeming implausibility of the Hispanic Paradox I’m inclined to believe that much of the result is driven by the “salmon effect” and the misclassification channel in the data I described above. Those two would seem to dwarf any inherent advantage of Hispanics. Also, I’m very disappointed in the public health / demography community that they have not adequately responded to and addressed the concerns put forth in these papers.
+1
15. May 2010 at 03:18
I have looked at Gauti Eggertsons AER paper on Roosevelt. Have you ever talked about his “deflationary bias of descretionary policy” in this blog? Would be interesting to hear what you think about it, as it would explain some form of “trap”, maybe even Japan’s “trap”… Of course, NGDP targeting would resolve it, but is it credible to commit to such a policy?
15. May 2010 at 19:36
@Doc
Since our real unemployment rate is ~18%, clearly we have overcapacity in people, and the best way to address that overcapacity is to return to the gold standard.
@ssumner –
By way of Michael Pettis, Dani Rodrik’s trilemma:
http://rodrik.typepad.com/dani_rodriks_weblog/2007/06/the-inescapable.html
Since you have stated several times you are pro-democracy and pro-globalization, I can only imagine you are anti-national sovereignty.
Hoping to log in and see a post soon – Krugman has been having his evil way with Milton Friedman. Surely someone must come to the latter’s defense?
16. May 2010 at 14:48
D. Watson. I don’t think those polls mean much. Indeed I don’t think most Americans even know what inflation is. Most of my students don’t, and they are far above average in terms of economic education. Sometimes I ask my class “What happens if both prices and wages rise by 10%. Has the cost of living actually risen?” Most say “no”, although the answer is obviously that the cost of living has risen by 10%. If people expected inflation I don’t think you’d see housing prices so low.
Mark, If you look at the later comments, you will see that it is not at all clear that the statistics are reputable. Maybe they are, but I remain to be convinced that American Hispanics live longer than Japanese and Swedes.
Steve, I am skeptical of those sorts of theories. They tend to be backward looking. I recall that people like Barro had theories of the inflationary bias in discretionary policy. Those also fit the data well, until they didn’t.
Ted, Thanks, that was very helpful. Now I am even more skeptical.
Mark#2, That’s a very good point. It is discouraging how cyclical macro is. We keep reviving the discredited theories of the 1930s, without even understanding why they were discredited.
Doc Merlin. That’s a good point. The problem with demand isn’t that demand is insufficient, it’s that their theories of demand are based on income distribution, not monetary policy. At least the Austrian view has some validity, although they often push the argument where it doesn’t belong. The main problem today is demand.
Img, You quoted Ted:
“Also, I’m very disappointed in the public health / demography community that they have not adequately responded to and addressed the concerns put forth in these papers.
+1”
Make that +2.
Statsguy, I don’t get Rodrik’s point. With flexible exchange rates we can have all three. Small democratic countries that are open to globalization and have flexible rates (Australia, Sweden, Israel, Canada, Singapore, etc) tended to do better in the crisis than big countries or single currency zones.
17. May 2010 at 01:45
@ssumner:
You forgot Iceland in your list 🙂
Flexible exchange rates work if people in it play the game, i.e. borrow most of their needs in their own currency.
Foreign denominated debts is also a problem for eastern Europe countries, even if the situation is quite different since most of them have pegs.
I think that Rodrik’s point is that if a country has not a trustworthy currency (which is the case of most middle and low income countries), it might have to renounce to foreign denominated capital inflows.
18. May 2010 at 04:53
Jean, Krugman has a recent post showing Iceland suffered much less that financial crisis states with fixed rates (Latvia, Estonia, etc.)
I think that is a pretty generous interpretation of Rodrik. He is clearly referring to developed countries like Greece as well. Chile does fine with a floating currency, as do many other developing countries. I still don’t think he has an argument.