International Trade
International Trade

What is the Toll of Trade Wars on U.S. Agriculture?

By and ·January 15, 2020
Robert M. La Follette School of Public Affairs, University of Wisconsin-Madison

What is the Toll of Trade Wars on U.S. Agriculture?

The Issue:

U.S. agriculture has been caught in the tit-for-tat of the trade wars. Retaliation to tariffs imposed by the Trump administration have taken a bite out of U.S. agricultural incomes. Agriculture incomes would have shown no growth in 2019 but for massive and unprecedented federal assistance. Even with this assistance, however, the agriculture sector shows signs of stress, with a rise in debt, a decrease in solvency and an increased number of bankruptcies.


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Data Point

-1.3%

Air pollution, including from wildfires like those in Australia, has measurable effects on health and productivity. A study of wildfire smoke in the U.S. finds that 17.7 days (the annual average) of exposure reduces labor income by 1.3 percent, or $93 billion.
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Immigration Policy
Immigration Policy
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Does Deporting Immigrants Lower Crime? Evidence from Secure Communities

By and ·December 11, 2019
University of California, Davis

The Issue:

The goal of reducing crime has been cited as one justification for policies that increase the government's ability to deport immigrants. The Secure Communities program, which led to a large increase in deportations in the U.S. between 2008 and 2014, offers an opportunity to study the impact of increased deportations on local crime and police effectiveness.

The Facts:

  • Between its introduction in 2008 and temporary suspension in 2014, the Secure Communities program led to over 450,000 deportations.
  • There are different — and conflicting — ways in which increasing deportations could impact crime. If immigrants targeted for deportation are more likely to be criminals, then deporting them could reduce local crime. Alternatively, if an increased emphasis on immigrant deportations ties up police resources that could be deployed more effectively, then such a policy could actually result in increases in crime rates. 
  • The implementation of Secure Communities was staggered — beginning in counties close to the Mexican border in 2008 and expanding to the entire country by January of 2013 (see maps). In our research we take advantage of the variation in timing across counties from this staggered roll-out to identify the effects of the policy. 
  • Our study finds that increased deportations relative to population had no significant effect on violent crime. And, in the case of property crime, we find that an increase in deportations resulted in a higher rate of property crime — however, the magnitude of this effect was quite small. This result is inconsistent with the notion of deportations removing criminals and thus reducing crime. We find that increased deportations did not have a significant effect on a measure of police efficiency for violent crimes and had a very small effect on efficiency in clearing property crimes.

What this Means:

Secure Communities was suspended by DHS policy in November, 2014. The Trump administration reinstated the Secure Communities program as of January 2017. Overall, our analysis of the roll-out and implementation of Secure Communities between 2008 and 2014, suggests that there is not empirical support that immigrant deportations reduce serious crime and make communities safer.

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Climate Change
Climate Change
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Development and Climate Change: International Dimensions of a Global Problem (VIDEO)

By and ·December 9, 2019
Tufts University
Michael Klein, Executive Editor of EconoFact and Gilbert Metcalf (Tufts) highlight that curbing greenhouse gas emissions does not have to come at the cost of economic growth - especially since countries today don't have to burn fossil fuels and follow the same path to prosperity that nations have in the past. Moreover, moving towards cleaner energy sources itself can open opportunities for faster economic growth.
 
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Required reading

The Role of Unions

The Role of Unions
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Should the Government Subsidize Exporters? (VIDEO)

Should the Government Subsidize Exporters? (VIDEO)
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Are Taxes (And Also Spending) Progressive?

Are Taxes (And Also Spending) Progressive?
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Poverty
Poverty
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A Nobel Way to Fight Poverty in the United States

By ·December 3, 2019
J-PAL North America

The Issue:

The Nobel Memorial prize in Economic Sciences awarded this year to Abhijit Banerjee, Esther Duflo, and Michael Kremer has focused attention on how an experimental-based approach, which they have popularized in the field of development economics, is helping to fight poverty in developing countries. But the use of randomized controlled trials (RCTs) is not limited to the developing world.

The Facts:

  • Randomized evaluations seek to determine the impact of programs and policies by comparing the outcomes of a group that receives the program against a group that does not. The evaluations use random assignment to determine who is in each group, so that the groups do not differ systematically at the start of the program. This allows researchers to attribute any differences in outcomes between the groups to the program or intervention rather than to another cause (see diagram). 
  • These evaluations are being used to study problems across policy areas in the United States. In the health sector, researchers have used randomized evaluations to generate convincing evidence on the effects of Medicaid expansion in Oregon. In education, the methodology has been used to identify a variety of effective (and ineffective) approaches to helping students transition to college. Randomized evaluations have also been used to produce compelling evidence related to labor markets, crime, housing and homelessness, the environment and energy, household finance, and more (see here). 
  • Evaluations can guide investment decisions towards programs that are most effective and can ultimately result in the scale-up of these programs. Researchers have also used randomized evaluations to improve the take-up of existing programs that benefit low-income families and to better understand why a certain program or policy is effective. 
  • Do the results of one study apply in a different context? Policy and program funders and developers often face the question of whether the results of a specific program will generalize, scale up, or apply to other contexts. Using a generalizability framework can help policymakers determine whether an evidence-based program is appropriate to implement in a new context.

What this Means:

Poverty is a pressing and complex problem in the United States. While many programs and policies seek to address poverty, we often do not know which are effective. Randomized evaluations, a particularly rigorous type of impact evaluation, can show us which programs and policies work and help shed light on the barriers faced by people experiencing poverty.

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Technology
Technology
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How Much Do Cybersecurity Breaches Really Cost and Why Does It Matter?

By ·December 1, 2019
The Fletcher School, Tufts University

The Issue:

Firms making decisions about how much to spend on securing their computer systems and data often struggle with figuring out how much a cybersecurity breach will cost them and what the most cost-effective ways of protecting against such breaches are. In the absence of clear guidelines about how to secure their systems, a growing number of firms are purchasing cyber-insurance policies that offer coverage for a variety of different types of cybersecurity incidents, from data breaches to ransomware.

The Facts:

  • There is very little consensus about how much data breaches and other types of cybersecurity incidents actually cost, making it difficult for firms to subject security controls to any rigorous cost-benefit analysis. 
  • Many of the costs associated with cybersecurity incidents accrue to third parties, including individuals, banks, payment networks, and other firms. This can contribute to under-investment in cybersecurity by firms who feel they have little to lose from having an inadequate security posture. Sometimes, civil lawsuits enable firms to recoup some of their losses from the responsible parties, but these suits are often lengthy and expensive ordeals, which many firms are not willing to take on.
  • For companies that purchase cyber-insurance to help cover the costs of data breaches and other security incidents, those policies can serve a similar role in making them feel protected from the consequences and costs associated with those incidents. Lack of clarity about what baseline level of protections should be required of insured firms contributes to the moral hazard problem by making it harder for insurers to be sure that their customers are doing their due diligence when it comes to security.
  • Firms and local governments relying on their insurers to pay ransom demands has contributed to the profitability and continued proliferation of ransomware, benefiting criminals while doing little to bolster cybersecurity protections. By creating perverse incentives for cities and companies attacked by ransomware to have their insurers pay out ransom demands, cyber-insurance can actually contribute directly to funding cybercrime organizations and preventing organizations from investing in the harder and more expensive work of strengthening their cybersecurity defenses.

What this Means:

To address moral hazard problems associated with cybersecurity spending, we first need to do a better job collecting consistent data about how much cybersecurity incidents actually cost, who those costs accrue to, and what controls are most effective in reducing those costs. The growing cyber-insurance market also plays a significant role in creating incentives for firms to invest in cybersecurity controls and, as it grows, that market may require more oversight and regulation. In the meantime, firms deciding to moderate their cybersecurity spending because they do not fear significant losses from breaches may, in fact, be making very rational decisions based on how insulated they may be from the direct costs of those breaches.

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