Current Research on the Gig Economy – Koustas

Joy Buchanan1 Comment

Dmitri Koustas of U. Chicago has a forthcoming paper “Is New Platform Work Different than Other Freelancing?”

Abstract: The rise of freelance work in the online platform economy (OPE) has received considerable media and policy attention in recent years, but freelance work is by no means a new phenomenon. In this paper, we draw on I.R.S. tax records to identify instances when workers begin doing online platform work versus other freelance/independent contractor “gig” work for firms. We find gig work occurs around major reductions in outside income, and document usage over the lifecycle. Our results provide suggestive evidence on motivations for entering into each type of work. (emphasis mine)

His work was cited in the LA Times last year

people take on this work primarily because they’ve lost a job or some of their income — and particularly for younger workers, app-based services have been significantly more lucrative than more traditional side hustles.

I got to (virtually) talk to Dmitri Koustas, who is now a leading expert on gig work, this week. He became interested in the gig economy when he was thinking through a more traditional econ. question of generally how people modulate their labor supply in response to income shocks.

He also has a working paper “Is Gig Work Replacing Traditional Employment? Evidence from Two Decades of Tax Returns”

First half of the Abstract: We examine the universe of tax returns in order to reconcile seemingly contradictory facts about the rise of alternative work arrangements in the United States. Focusing on workers in the “1099 workforce,” we document the share of the workforce with income from alternative, non-employee work arrangements has grown by 1.9 percentage points of the workforce from 2000 to 2016. More than half of this increase occurred over 2013 to 2016 and can be attributed almost entirely to dramatic growth among gigs mediated through online labor platforms. We find that the rise in online platform work for labor is driven by earnings that are secondary and supplemental sources of income. Many of these jobs do not show up in self-employment tax records… (emphasis mine)

Singing IPUMS Praises

Zachary Bartsch2 Comments

This is a late post, but I just want to sing the praises of IPUMS.

I first encountered IPUMs data in Sacerdote’s paper on intergenerational human capital transfers in which he showed literacy rates by birth cohort throughout the 19th century (figure 4 is downright beautiful). I’ve since dug-in myself concerning school attendance and human capital.

In the papers that students write in our econ elective classes, it’s not unusual for them to contain FRED data. Given that we don’t teach time-series, the papers are usually empirically weak. But this semester in my Wester Economic History course, I’ve encouraged student to utilize IPUMS. There are 4 students who are using it whose ideas I will surely publicize in the future:

  • Historical patterns of deaf employment, education, human capital, & income
  • The economic impact of the Brooklyn bridge
  • The composition of US interstate migrants relative to their host state
  • Patterns compulsory schooling

IPUMS is so darn rich. I strongly recommend it if you haven’t yet taken advantage of it.

Old Lives Matter

Jeremy Horpedahl3 Comments

Bryan Caplan has kindly responded to my latest blog post, which was in turn a response to his blog post on the relative value of human lives by age. Caplan has always been kind in his responses, even when responding to pesky graduate students — kind in both his approach and the time he dedicates to responding thoughtfully. So I appreciate his taking the time to respond to me, and I will offer a few more thoughts on the matter.

To briefly summarize: Caplan believes that young lives (10 year olds) are worth 100-1,000 as much as old lives (80 year olds). I contend that they are closer to roughly equally valued. My disagreement with Caplan can be broken down into two categories:

  • A. Caplan’s three reasons why young lives are worth more (a lot more!) than old lives. I didn’t respond to that directly, but I will do so here. I think Caplan is narrowing the goalposts.
  • B. A disagreement over the shape of the VSL curve over the lifetime, specifically whether an inverted-U-shaped curve makes sense. I’ll say more about this too, but Caplan doesn’t just have a beef with me, but with almost everyone in the VSL literature!

Let’s start with Caplan’s three reasons, which he calls “iron-clad”: young people have more years to live, those years are generally healthier, and young people will be missed more when they are gone. The first in undeniably true on average, the second is probably true almost all the time, and I’m not sure on the third, but I’m willing to admit it’s not a slam dunk either way.

So how can I disagree? These are only three things. There are many other considerations, and we can imagine other reasons that old lives are valued as much or more than younger lives! I’ll call mine 4-6 to go with Caplan’s 1-3:

  1. Old age spending is the largest component of public budgets in developed countries (and this is unlikely mostly due to rent seeking or the self interest of younger generations).
  2. The elderly possess wisdom which is highly valuable and that the young benefit from.
  3. The last years of your life are, on average, worth a lot more — you are usually very wealthy, have no employment obligations, you have grandchildren you love (without the responsibilities of parenting), and are (until the very end) generally healthy too.

Taken as a whole, I think these three reasons present a strong counterargument to Caplan’s three reasons. And I think we could certainly come up with more! My point being that Caplan has picked three areas where clearly young lives have the advantage, but ignored all the good reasons why old lives are more valuable. These is what I mean by we shouldn’t rely on our intuitions. Neither of our lists are exhaustive, but let me elaborate on a few of these.

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Stoned Age Cave Paintings

Scott Buchanan1 Comment

It has long been argued that many of the artists drawing on cave walls were not merely trying to draw the external world as accurately as possible. Rather cave art was:

A deliberate mix of rituals inducing altered states for participants, coupled with brain chemistry that elicits certain visual patterns for humanity’s early chroniclers.

The cave painters had rituals that involved taking drugs (undoubtedly plants) that they consumed in a frenzy to get to this creative state. This behavior and the same results were noted by 1960s-era academics studying the effects of peyote, a hallucinogenic cactus found in North America.

Some drawings which illustrate these patterns are:

There seem to be a number of geometric patterns like honeycombs, tunnels and funnels, cobwebs, and spirals which show up repeatedly across different continents. This has fueled speculation that those prehistorics were tripping out on veggies like peyote and magic mushrooms. In his “Stoned Ape” theory, the late Terrence McKenna proposed that consumption of shrooms gave the earliest humans higher energy and group cohesion and helped humanity to evolve the use of language.

A more recent study by Tel Aviv University researchers suggests that another way that Stone Age artists got into an altered state was plain oxygen deprivation. Many sites of cave art, particularly in France and Spain, are at the end of long, narrow passages. If a couple of guys got into one of those rooms, with a blazing torch or two, the oxygen level would soon be significantly depleted:

They found that oxygen concentration depended on the height of the passageways, with the shorter passageways having less oxygen. In most of the simulations, oxygen concentrations dropped from the natural atmosphere level of 21% to 18% after being inside the caves for only about 15 minutes. 

Such low levels of oxygen can induce hypoxia in the body, a condition that can cause headache, shortness of breath, confusion and restlessness; but hypoxia also increases the hormone dopamine in the brain, which can sometimes lead to hallucinations and out-of-body experiences, according to the study.

Drawings like the following from the Altimira cave are pretty impressive under those circumstances:

Don’t arbitrage time with friends

mdmakowskyLeave a comment

As you may have already heard, the US suicide rate dropped 6% last year. During a pandemic. During a lockdown. During a time when rates of depression have reportedly increased. This is all quite surprising to many people, myself included. I don’t have a convincing explanation, only a single relevant thought.

I think we’ve rediscovered regular long-distance communication with people that have drifted out of our lives and many of us are better for it. I know I am.

While I think that loneliness and isolation are major force behind a lot of social ills, I also know that the “loneliness epidemic” was always a poorly constructed metaphor at best, and possibly only weakly observed at worst. But I also suspect that loneliness and isolation are phenomena in the tails of the distribution. Isolation doesn’t happen to people with average or even below-average social networks. It happens to people entirely without them, for whom their strongest connections with other humans have dissolved. Such things do not always reveal themselves statistically, at least not without looking really hard.

We have observed the emergence, and now dominance, of asynchronous communication. We text, email, tweet. We post on Instagram, Facebook, Snapchat, or TikTok. These are all means of communication, but (with the possible exception of texting) these forms of communication exist outside of real-time. They don’t command chunks of contiguous time– they arbitrage the fractions of time that previously existed between activities and went uncommitted to a narrowly defined task.

I don’t know what causes loneliness, but I do know that its much easier to not feel lonely when you are spending fully committed time, and not arbitraged fractions, communicating with another human being. If you’re under the age of 40, its almost socially illegal to voice call a friend to talk. For many it would be viewed as an act of emotional aggression, an imposition of social need, if not anxiety, on another. The irony of this millennial norm I’ve unfairly placed on them through nothing but my own unreliable observations is that it strikes me as an accelerated path to friendless boomer sad-dad suburban isolation.

The pandemic hit and many of us had to start Zooming in to work. And we had to explain Zoom and Google Meetings to our parents so we could talk to them. But I think a lot of us started catching up with old school buddies, too. Folks you sent Christmas cards to or caught up with at a cookout the Sunday after Thanksgiving. It became completely normal to schedule a call in advance – to put it on a calendar and reserve that time. And I think a lot of people who moved for work or relationships, who after 10 years changed to a new office where they didn’t know anyone, who maybe had simply fallen out of step with friends after the first four years of trying to keep triplets fed — I think a lot of people really enjoyed the pandemic-driven need for reserving time for contiguous social interaction in a manner entirely unconstrained by geography. And maybe they ended up feeling less lonely for it.

Keep Zooming your friends far away. Keep putting it on the calendar. Do it forever.

R.I.P. Borders

Joy BuchananLeave a comment

An analytics textbook is usually full of success stories (i.e. XYZ Corp. invested in a data warehouse and everything got better). I decided that my students needed to hear a downer for balance. What better example than Borders?

Borders was a fixture of suburban New Jersey in the 90’s. You could browse books or media and get coffee there. When I asked undergraduates in 2018 if they remember Borders, I learned how far south Borders had expanded (to Nashville, but not to Birmingham).

Never fear. All of my students knew the Kanye West song “All of the Lights”. The lyrics are:

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Blood Clots for You and Me

Joy BuchananLeave a comment

On April 13, 2021, CDC and FDA recommended a pause in the use of Johnson & Johnson’s Janssen COVID-19 Vaccine. When I first heard that the FDA was pausing the J&J vaccine because of less than 10 blood clots out of millions of patients, I thought I’d really get to the bottom of blood clots and blog about it. Other people (some of them are the kind of doctor that helps people) have already done a pretty good job in the past few days.

First, it is a tragedy that the vaccine is not being give to every male over 50 who wants it. Doing so would free up many thousands of other types of vaccines for young women.

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The Tall and Short of Student Experience

Zachary BartschLeave a comment

Every semester in my intro STAT course I have my students create a variety of survey questions. After I combine their questions into a single survey, they collect responses from the student body at Ave Maria University. Most of the questions are vanilla. Other are not. They typically get in excess of 100 responses from the ~1,100 person student body.

While exploring the data, I found a really beautiful example for the week that we spend on multiple regression and dummy variables.  The survey results illustrate a clear, linear association between student height (inches) and their student experience at AMU (scored 1-10).

So strange! Why might this be? Except for that solitary 7 ft+ student on the basketball team, how in the world might height matter for student experience?

As it turns out a separate relationship holds the key.

Confirmed with a simple unpaired t-test (unequal variances), women rank their student experience much more highly. For this, students have multiple explanations at the ready.

  • Our school is in a rural location and women are more socially satisfied.
  • Men are less happy generally.
  • Men are less studious or have lower grades.
  • Men get less sleep and stay up later

The list goes on and I don’t know what the reasoning is or which ones actually play a role. But what I do know, is how to make fun scatterplots in Stata. As it turns out, if you control for sex, height loses all of its effects on student experience. Men are taller on average and they aren’t happy students relative to women (apparently). We can see in the figure below that all of the action in the two fitted lines occurs in the intercept. The slopes are practically flat for both men and women. In other words, height neither adds nor subtracts from a student’s experience rating.

What’s going on is that neither men’s nor women’s experience is affected by being taller. But, what’s actually going on here – you know – statistically? The simple version is that the bar chart above dominates the scatter plot. If we subtract the mean male experience score from the male values and do the same for the females, then we’re left with what is practically white-noise. How do all those other students of a different height experience the world? Well, as students, not so differently from you.

The Value of Life, Again

Jeremy Horpedahl5 Comments

Bryan Caplan argues that the life of a 10-year-old is worth 100-1,000 times that of an 80-year-old. But he suggests the modal answer people would give is that the two lives are equally valued.

I’m not sure if he is right about what the modal answer would be that they are exactly equal (though see below for an attempt to answer this question). Surprisingly, though, roughly equally valuing all lives is actually the answer that a normal economic calculation, willingness-to-pay for risk reduction, would give you! Or at least roughly. I haven’t seen an estimate for a 10-year-old, but estimates of the Value of a Statistical Life for 20-year-old is roughly equal to an 80-year-old. I’ve written about this before, and here’s a summary of a working paper by Aldy and Smyth that I am drawing on. Middle age lives are worth more, using this method, though perhaps just 2-3 times more.

Caplan doesn’t directly connect his hypothetical to the COVID pandemic, but in the comments Don Boudreaux does make that connection and says that “surely the correct level of precaution to take against a disease that kills X number of old people is lower [than a disease that kills the same number of young people].” I find this a very interesting statement because Don Boudreaux, and many others, have been against just about any precaution (other than asking the elderly to isolate) in the current pandemic. Would he and others support more caution if they believed the VSL estimate to be true?

So who is right? Caplan’s intuition? Or the modeled VSL calculations? For surely these are miles apart, and they can not both be correct.

As an economist, I have a strong preference in favor of willingness-to-pay over our intuitions. Indeed, Caplan himself as defended the VSL approach quite forcefully!

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Facebook Disrupts a Phishing Spy Campaign

Joy BuchananLeave a comment

Written by Braden Murray, a Samford business school student:

Facebook is a social media platform, with more than one billion users (GCFGlobal.org). Facebook is also a data warehouse, and an analytics powerhouse. The company uses its technology to track user activity and obtain information on preferences. Information is used to update its newsfeed algorithm or sell advertising. Because Facebook monitors users, analysts know how many accounts are inactive or have suspicious activity. The WSJ reports a phishing attempt recently caught by Facebook.

Facebook has reported a security issue affecting the Uyghurs population. The social media company has just taken down multiple accounts connected to China being used online to “spy on journalists and dissidents in the overseas Uyghur Muslim community” (Horwitz). Facebook did not blame the Chinese government. It pinned the hacking on a network that used infected apps created by Chinese companies. Facebook also said the hacking activity happened outside of its social media platform, although the hackers did use Facebook accounts pretending to be members of the Uyghur community. They would send their victims links to the infected apps over Facebook, which is known as social media phishing. However, the only way the malware would download and corrupt the device is if it met the criteria of using Uyghur-language settings. 

Phishing is a crime committed on the internet that causes malware to corrupt a computer system and personal information to be stolen. It is usually conducted through email, text, or over the phone in some cases. A link is sent to the victim from a random source that seems like it could be reliable. If the link is clicked, the hack occurs and corrupts their technological device. The results of phishing include identity theft, financial fraud, and malware. The FBI said phishing was the most popular cybercrime of 2020 and doubled in cases from 114,702 to 241,324 (Tessian). Phishing is a very common occurrence that people need to be aware of in order to avoid consequences. 

Mike Dvilyanski is a Facebook employee who handles cyber threat intelligence. He said he “saw attackers injecting malicious code into the website pages” and how it would “then infect them with specific malware if they met criteria that attackers set up.” After noticing the hacking efforts, Dvilyanski and other coworkers would shut down the accounts. The hacker group was identified by a joint effort of several companies working along with Facebook. The Chinese hacker group called Earth Empuse or Evil Eye posed as journalists in the Uyghur community and other nearby places.

The effort was to shut down as many fraudulent accounts as possible to disrupt the network and decrease the number of successful phishing attacks. This is just one example of the security issues that Facebook encounters and combats using data analytics.

Note by Joy Buchanan: I encounter fraud and phishing attempts regularly on the internet, and usually it doesn’t faze me. Twice in the past year, I have gotten an email to my work address from someone pretending to be the dean of my school. I wasn’t tricked successfully either time, but I found those attacks to be particularly creepy.