a bit of untimely confusion (in eigener Sache)

... just because I (and students/colleagues etc.) got asked: The kindness that the Barcelona GSE has shown me in appointing me to a research professorship doesn't mean I am necessarily going to return from Zurich to UPF. I am currently on leave, as is often the case with senior faculty with a new appointment, and have to make up my mind eventually. The school leadership made sure that if I were to do so, conditions would be nicer (for which I am grateful).

Working hours

The Economist profiles some of my research on working hours in the past...

Highway to Hitler

Germans may remember conversations with their grandparents that ended with the words "at least he built the Autobahn..." It was mostly meant as an explanation for the singular popularity of the Nazi regime. An obvious question to ask is - is it actually true that building the German highway system boosted the regime's popularity?

Nico Voigtlaender and I have a new working paper, available over at SSRN and NBER. The abstract is:

Can infrastructure investment win “hearts and minds”? We analyze a famous case in the early stages of dictatorship – the building of the motorway network in Nazi Germany. The Autobahn was one of the most important projects of the Hitler government. It was intended to reduce unemployment, and was widely used for propaganda purposes. We examine its role in increasing support for the NS regime by analyzing new data on motorway construction and the 1934 plebiscite, which gave Hitler great powers as head of state. Our results suggest that road building was highly effective, reducing opposition to the nascent Nazi regime.

We have a non-technical write-up over at VOX. [coverage over at The Atlantic-Cityscape, Tages-Anzeiger]

Misfits...

I somehow missed this paper when it came out, by Ross Levine and Yona Rubinstein, which argues that misfits make better entrepreneurs. More precisely, they find that teenagers who get into trouble are much better at starting their own firms:

We disaggregate the self-employed into incorporated and unincorporated to separate
between “entrepreneurs” and other business owners. In contrast to much research, we find that
entrepreneurs earn much more per hour and work many more hours than their salaried and
unincorporated counterparts. Moreover, the incorporated self-employed have a distinct combination of cognitive, noncognitive, and family traits: besides tending to come from high-income families with well-educated mothers, the incorporated self-employed are highly educated themselves, and—as teenagers—scored higher on learning aptitude tests, exhibited greater self-esteem, and engaged in more aggressive, illicit, risk-taking activities. The combination of strong labor market skills and “break-the-rules” tendencies accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs.

Who else figured out that kids who get into trouble make great leaders? You guessed it - the German army in the interwar years. Desperate to find a solution to the problem of collapsing morale as evidenced by the 1918 mutinies, the German army ran a program to identify what makes great infantry leaders. Their result? Get guys who are smart, but have to repeat a class in school because of discipline issues. They don't just follow rules blindly; they will focus on getting the job done their way; and because they don't just follow the rules, they tend to earn the respect of their men (this is from one of the best reads in military history - "Fighting Power" by Martin van Creveld).

Anti-Semitism and the Stock Market

Just met two clever PhD students in Berkeley, where I am spending the week. They - Francesco D'Acunto and Michael Weber, together with co-author Marcel Prokopczuk -- are putting Nico Voigtländer's and my data to good use. The abstract is:

We propose historical anti-Jewish sentiment as a proxy for distrust in nancial
markets. Households in German counties where Jews were persecuted the most
as far back as in the Middle Ages are less likely to invest in stocks today. A
one-standard-deviation increase in historical anti-Jewish violence leads to a 7.5% to
12% drop in the average stock market participation. For identi cation, we exploit
the forced migrations of Ashkenazi Jews out of the Rhine Valley after the 11th
century. The distance of a county from the Rhine Valley serves as an instrument
for the existence of a Jewish community during the Black Death (1349) and hence
the early emergence of anti-Jewish sentiment. Results are similar when we use the
votes for the Nazi party as a proxy for anti-Jewish sentiment. The magnitude of
the e ect neither changes from 1984 until 2011 nor across cohorts.

The paper is here. They found some amazing data on Jewish presence in retail finance in the 19th century... I like and believe their result, but I am not quite sure how I should think about it as a causal story. 

The Economist covers "Beliefs and Leverage"

Peter Koudijs and I have a paper that shows how much people change their risk appetite if they almost lost money... and The Economist last week covers it here: 

To say fear alters investors’ and lenders’ behaviour seems self-evident. But the study’s attempt to isolate the effect of personal experience on financial decisions (a subject examined in more detail in our sister column, “Free exchange”, this week) is potentially relevant to those learning not only how markets work but how to apply rigour to financial decisions of other kinds. Clearly, it pays to understand the dynamics of the markets in which a business operates—and recognising the impact of factors not necessarily captured by number-crunching is a part of that. 

Bankia

Swiss Radio (Radio SRF) interviewed me about the recent bond issue of Bankia... bottom line, this is not a turning point. If you hand enough cash to a poorly-managed bank, it can eventually return to the capital markets...