A Critical Review: Do Public Program Benefits Crowd Out Private Transfers in Developing Countries?

A new GLO Discussion Paper reviews recent literature on public program benefits to conclude that there may well be net social gains.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 505, 2020

Do Public Program Benefits Crowd Out Private Transfers in Developing Countries? A Critical Review of Recent EvidenceDownload PDF
by
Nikolov, Plamen & Bonci, Matthew

GLO Fellow Plamen Nikolov

Author Abstract: Precipitated by rapid globalization, rising inequality, population growth, and longevity gains, social protection programs have been on the rise in low- and middle-income countries (LMICs) in the last three decades. However, the introduction of public benefits could displace informal mechanisms for riskprotection, which are especially prevalent in LMICs. If the displacement of private transfers is considerably large, the expansion of social protection programs could even lead to social welfare loss. In this paper, we critically survey the recent empirical literature on crowd-out effects in response to public policies, specifically in the context of LMICs. We review and synthesize patterns from the behavioral response to various types of social protection programs. Furthermore, we specifically examine for heterogeneous treatment effects by important socioeconomic characteristics. We conclude by drawing on lessons from our synthesis of studies. If poverty reduction objectives are considered, along with careful program targeting that accounts for potential crowd-out effects, there may well be a net social gain.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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Evaluating a Large Public-Works Program for India: Why Guarantee Employment?

A new GLO Discussion Paper reveals the positive effects of a large Indian public works program showing that there is little evidence of a crowding out of private-sector jobs and that it functions as a safety net and encourages risk-taking.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 504, 2020

Why Guarantee Employment? Evidence from a Large Indian Public-Works Program – Download PDF
by
Zimmermann, Laura

GLO Fellow Laura Zimmermann

Related papers of the author:

Author Abstract: Most countries around the world implement some form of a safety net program for poor households. A widespread concern is that such programs crowd out private-sector jobs. But they could also improve workers’ welfare by allowing them to take on more risk, for example through self-employment. This paper analyzes the employment impacts of the world’s largest public-works program using a novel regression-discontinuity design. The analysis exploits detailed institutional information to describe the allocation formula of the program and to construct a benefit calculator that predicts early and late treatment of districts. The results show that there is little evidence of a crowding out of private-sector jobs. Instead, the scheme functions as a safety net after a bad rainfall shock. Male workers also take on more risk by moving into family employment. This self-revealed preference for a different type of job suggests other potential benefits of safety net programs which so far have received little attention in the literature.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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#Happiness in real-time in the #coronavirus crisis in Australia, New Zealand and South Africa. New research from the GLO network.

Will happiness levels return to normal before the end of 2020? Talita Greyling and Stephanié Rossouw of GLO analyze the situation, as it happens – real-time happiness levels and emotions (www.gnh.today) during the evolution of the Coronavirus Crisis. The Gross National Happiness data set used (a real-time Happiness Index) is an ongoing project, the two researchers launched in April 2019 in South-Africa, New-Zealand and Australia. The project is presented below and documents the development of real-time happiness in Australia, New Zealand and South Africa in the periods of the outbreak of the Coronacrisis in those countries.

The authors

Talita Greyling: School of Economics, University of Johannesburg, South Africa, and GLO; email: talitag@uj.ac.za
Stephanié Rossouw: Faculty of Business, Economics and Law, Auckland University of Technology, Auckland, New Zealand,and GLO; email: stephanie.rossouw@aut.ac.nz

The analysis

Traditionally, economists measured the well-being of people or a nation by using objective economic indicators such as gross domestic product (GDP). We know that these indicators do not measure well-being per se, but merely specific conditions, which is believed to lead to a good life. What we should be measuring is whether people’s lives are getting better? In general, when people are happy and satisfied with their life, it signals that they have a higher level of well-being.

Gross National Happiness (GNH) refers to the level of happiness for a group of citizens or nations and the best-known surveys that captures cross country data are the Gallup World Poll Survey data and World Value Survey data. In these surveys we find measures of subjective-wellbeing, thus evaluative happiness, which if averaged across a country gives the mean subjective well-being of a specific country. Although these measures of subjective well-being are very useful and informative there are significant time-lags between real-time events and the reporting of this evaluative happiness levels. What is needed is a real-time measure of happiness.

Using social media and the voluntary information sharing structure of Twitter, Greyling and Rossouw (in collaboration with AFSTEREO) have been determining the happiness in real-time (mood) of citizens in Australia, New Zealand and South Africa since April 2019 (http://gnh.today/), and lately also been analyzing the specific emotions of Tweets, distinguishing between eight emotions, anger, anticipation, disgust, fear, joy, sadness and surprise.

They analyze extracted Tweets using sophisticated software to determine the sentiment and the emotions of the Tweets. Sentiment analysis is used to label a ‘live’ stream of tweets of these countries as having either a positive, neutral or negative sentiment after which a sentiment balance algorithm is applied to derive a happiness score. The scale of the happiness scores is between 0 (not happy) and 10 (very happy), with 5 being neutral, thus neither happy nor unhappy. In this manner, they have been tracking the ‘mood’ of these nations and analyzed the impact of various economic (industrial actions), political (national elections), social (death of Kobe Bryant and COVID-19, xenophobia, music concerts) and sport events on happiness levels, as early as one hour after it happened. See Figures 1-3 for a peek into what the happiness index can ascertain.

As can be seen from Figure 1, on 25 January when Australia confirmed its first COVID-19 case, there was very little reaction. Happiness even increased somewhat after the announcement, though the higher levels of happiness were related top sport events. The dip in the happiness on 27 March was due to the death of the American basketball player, Kobe Bryant’. On 17 March when Prime Minister Scott Morrison banned gatherings larger than 100 people, we for the first time saw a significant decrease in the happiness levels. The Australians are not on complete lockdown, but it seems that their happiness levels continue to stay below pre-Corona times. We will be tracking these changes in the coming weeks, to see if the happiness levels return to pre-Corona levels as time goes by.

Coincidentally, until the outbreak of COVID-19, the lowest happiness level in New Zealand was on 27 January (6.43), also signalling New Zealander’s empathy with Kobe Bryant’s death. As can be seen from the Figure 2, on 28 February when New Zealand confirmed its first COVID-19 case, there was very little reaction. On 4 March, New Zealand experienced the ‘Toilet paper apocalypse’, but it wasn’t until 13 March that the lowest level of happiness (6.37) was recorded. People were devastated by all the concert and festival cancellations, because of COVID-19. The first day of complete lockdown was on 26 March. We will be monitoring whether New Zealanders adjust to their new normal over the coming weeks.

As can be seen from Figure 3, on 6 March when South Africa confirmed its first COVID-19 case, the happiness level was above the average for the period preceding the outbreak, as well as the total average. It wasn’t until 16 March when reality set in for most South Africans after President Cyril Ramaphosa declared a national state of disaster, that we saw a decrease in happiness levels. When the announcement came on 23 March, that a complete lockdown of South Africa will commence on 27 March, the index fell to its lowest level yet (5.35). We will be monitoring whether South Africans adjust to their new normal over the coming weeks.

Technical Support by AFSTEREO

Reference
Greyling T. & Rossouw S. 2020. Gross National Happiness Project. Afstereo (IT partner). University of Johannesburg (funding agency). Pretoria, South Africa.  www.gnh.today.

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An Italian view about the challenges of the #coronacrisis.

The world still struggles about a convincing strategy to handle the #coronavirus crisis. Radical alternatives focus around (i) herd immunity and selective social distancing and (ii) a total lockdown of the economy and the entire society. In previous posts the GLO website was reporting about the strategy of lockdown, the societal consequences and the arguments against it, and the alternative Swedish strategy. Today we listen to a feedback from Italy, the country hit hardest first after China. The interview partner is Alessandro Cigno of the University of Florence.

Some core messages of the interview:

  • The course of the contagion is the same everywhere.
  • Italy is on its way out of the crisis.
  • It started in the most populated North with global connections, affecting the most vulnerable.
  • Italy has an efficient public health system which managed the crisis.
  • The radical lockdown had no alternative and saved very many lives.
  • The missing European solidarity may result in the end of European unification.

GLO Fellow Alessandro Cigno is a Professor of Economics at the University of Florence, and Editor of the Journal of Population Economics.

Interview

GLO: The coronacrisis in Italy has become a terrible catastrophe, and there is no end in sight…..

Alessandro Cigno: ….not quite true that there is no end in sight in Italy. The number of contagions has stabilized, and the number of intensive care cases is decreasing , the number cured or dead is larger than the number of new cases…..

GLO: But what can the other countries learn from the Italian experiences? Why was the coronavirus affecting Italy suddenly like a tsunami?

Alessandro Cigno: The course of the contagion is the same everywhere. It just started earlier in Italy.

GLO: Why has the disease largely affected first the North and so much the Old?

Alessandro Cigno: The North is more densely populated and has more intense relations with the rest of the world. The old are more likely to have other pathologies.

GLO: What role played the openness of the country, the strength of the healthcare system and the strong family relationships in the Italian culture? What role played missing data and slow government response?

Alessandro Cigno: Openness facilitated the contagion. Fortunately we have an efficient public health system. But the number of intensive care beds per 1000 inhabitants, while double that of the UK, was initially half of that of France and one third that of Germany. That number has been raised very quickly. Strong family relationships helped the contagion, especially from the young to the old. As Italy was the first to start, the government response was unavoidably tentative (that of other countries who started later had no excuse).

GLO: Italy is strongly related to China through the Belt & Road initiative. Has this played any role?

Alessandro Cigno: The Belt & Road initiative may have played a role.

GLO: Were the radical lockdown measures effective?

Alessandro Cigno: Radical lockdown is estimated to have saved 30 000 lives.

GLO: Did Italy discuss alternatives?

Alessandro Cigno: Alternatives to lockdown were and are discussed, but the scientific and medical consensus is that they are inferior.

GLO: How do Italians react to the missing European solidarity in this crisis?

Alessandro Cigno: Italians are offended by the missing European solidarity and fear that it will be the end of European unification.

*************
With Alessandro Cigno spoke Klaus F. Zimmermann, GLO President.

Related GLO research:
Yun Qiu, Xi Chen & Wei Shi (2020):
Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China
GLO Discussion Paper, No. 494; Discussion Paper of the Month March.
More Information.

Activities and reports of the GLO Research Cluster on the Coronavirus.

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Online Job Vacancy Data to Explore the Wage Setting and Unemployment Trade-off

A new GLO Discussion Paper finds a weak trade-off between aggregated national-level wage inflation and unemployment.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 503, 2020

Wage Setting and Unemployment: Evidence from Online Job Vacancy DataDownload PDF
by
Faryna, Oleksandr & Pham, Tho & Talavera, Oleksandr & Tsapin, Andriy

GLO Fellow Oleksandr Talavera

Author Abstract: This paper examines the relationship between labour market conditions and wage dynamics by exploiting a unique dataset of 0.8 million online job vacancies. We find a weak trade-off between aggregated national-level wage inflation and unemployment. This link becomes more evident when wage inflation is disaggregated at sectoral and occupational levels. Using exogenous variations in local market unemployment as the main identification strategy, a negative correlation between vacancy-level wage and unemployment is also established. The correlation magnitude, however, is different across regions and skill segments. Our findings suggest the importance of micro data’s unique dimensions in examining wage setting – unemployment relationship.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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GLO Discussion Paper of the Month March is about the Coronavirus.

The GLO Discussion Paper of the Month March suggests that the public health measures adopted in China have effectively contained the virus outbreak there already around February 15.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS, EconPapers). Complete list of all GLO DPs downloadable for free.

GLO Discussion Paper of the Month: March

GLO Discussion Paper No. 494, 2020

Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China
by Qiu, Yun & Chen, Xi & Shi, Wei
PDF of the GLO Discussion Paper

Related interview: #Coronavirus and now? GLO – Interview with Top #Health Economist Xi Chen of Yale University
Other related GLO activities.

GLO Fellows Yun Qiu & Xi Chen & Wei Shi

  • Yun Qiu & Wei Shi are Professors at the Institute for Economic and Social Research (IESR), Jinan University, China
  • Xi Chen is a Professor at Yale University & President of the China Health Policy and Management Society

Author Abstract: This paper examines the role of various socioeconomic factors in mediating the local and cross-city transmissions of the novel coronavirus 2019 (COVID-19) in China. We implement a machine learning approach to select instrumental variables that strongly predict virus transmission among the rich exogenous weather characteristics. Our 2SLS estimates show that the stringent quarantine, massive lockdown and other public health measures imposed in late January significantly reduced the transmission rate of COVID-19. By early February, the virus spread had been contained. While many socioeconomic factors mediate the virus spread, a robust government response since late January played a determinant role in the containment of the virus. We also demonstrate that the actual population flow from the outbreak source poses a higher risk to the destination than other factors such as geographic proximity and similarity in economic conditions. The results have rich implications for ongoing global efforts in containment of COVID-19.

GLO Discussion Papers of March 2020

506 The Dynamic Electoral Returns of a Large Anti-Poverty Program – Download PDF
by 
Zimmermann, Laura

505 Do Public Program Benefits Crowd Out Private Transfers in Developing Countries? A Critical Review of Recent Evidence – Download PDF
by 
Nikolov, Plamen & Bonci, Matthew

504 Why Guarantee Employment? Evidence from a Large Indian Public-Works Program – Download PDF
by 
Zimmermann, Laura

503 Wage Setting and Unemployment: Evidence from Online Job Vacancy Data – Download PDF
by 
Faryna, Oleksandr & Pham, Tho & Talavera, Oleksandr & Tsapin, Andriy

502 Sentiment, emotions and stock market predictability in developed and emerging markets – Download PDF
by 
Steyn, Dimitri H. W. & Greyling, Talita & Rossouw, Stephanie & Mwamba, John M.

501 Who’s declining the “free lunch”? New evidence from the uptake of public child dental benefits – Download PDF
by 
Nguyen, Ha Trong & Le, Huong Thu & Connelly, Luke B.

500 Paradise Postponed: Future Tense and Religiosity  Download PDF
by 
Mavisakalyan, Astghik & Tarverdi, Yashar & Weber, Clas

499 Game of Prejudice – Experiments at the Extensive and Intensive Margin – Download PDF
by 
Dasgupta, Utteeyo & Mani, Subha & Vecci, Joe & Želinský, Tomáš

498 Welfare Magnets and Internal Migration in China – Download PDF
by 
Jin, Zhangfeng

497 Gender Bias and Intergenerational Educational Mobility: Theory and Evidence from China and India – Download PDF
by 
Emran, M. Shahe & Jiang, Hanchen & Shilpi, Forhad

496 What Do Employers’ Associations Do? – Download PDF
by 
Martins, Pedro S.

495 Does vocational education pay off in China? Instrumental-variable quantile-regression evidence – Download PDF
by 
Dai, Li & Martins, Pedro S.

494 Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China – Download PDF
by  
Qiu, Yun & Chen, Xi & Shi, Wie

493 Flexible Work Arrangements and Precautionary Behavior: Theory and Experimental Evidence  Download PDF
by  
Orland, Andreas & Rostam-Afschar, Davud

492 Life Satisfaction, Subjective Wealth, and Adaptation to Vulnerability in the Russian Federation during 2002-2017 – Download PDF
by  
Dang, Hai-Anh H. & Abanokova, Kseniya & Lokshin, Michael M.

491 Unobserved Worker Quality and Inter-Industry Wage Differentials – Download PDF
by  
Ge, Suqin & Macieira, João

490 Climate Shocks and Teenage Fertility – Download PDF
by  
Dessy, Sylvain & Marchetta, Francesca & Pongou, Roland & Tiberti, Luca

489 Intergenerational Occupational Mobility in Latin American Economies: An Empirical Approach – Download PDF
by  
Doruk, Ömer Tuğsal & Pastore, Francesco & Yavuz, Hasan Bilgehan

488 Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund – Download PDF
by 
Martins, Pedro S.

487 France and Germany Exceed Italy, South Korea and Japan in Temperature-Adjusted Corona Proliferation: A Quick and Dirty Sunday Morning Analysis – Download PDF
by 
Puhani, Patrick A.

486 Business visits, technology transfer and productivity growth – Download PDF
by  
Piva, Mariacristina & Tani, Massimiliano & Vivarelli, Marco

485 A Broken Social Elevator? Employment Outcomes of First- and Second-generation Immigrants in Belgium – Download PDF
by  
Piton, Céline & Rycx, François

484 What Does Someone’s Gender Identity Signal to Employers? – Download PDF
by  
Van Borm, Hannah & Dhoop, Marlot & Van Acker, Allien & Baert, Stijn

483 The Future of Work in Developing Economies: What can we learn from the South? – Download PDF
by  
Egana del Sol, Pablo

482 Performance Feedback and Peer Effects – Download PDF
by  
Villeval, Marie Claire

481 Ethnicity differentials in academic achievements: The role of time investments – Download PDF
by  
Nguyen, Ha Trong & Connelly, Luke B. & Le, Huong Thu & Mitrou, Francis & Taylor, Catherine L. & Zubrick, Stephen R.

480 Conversionary Protestants do not cause democracy – Download PDF
by 
Nikolova, Elena & Polansky, Jakub

GLO DP Managing Editor: Magdalena Ulceluse, University of Groningen. DP@glabor.org

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Does less lockdown work? Insights from the Swedish strategy.

The world still struggles about a convincing strategy to handle the #coronavirus crisis. Radical alternatives focus around (i) herd immunity and selective social distancing and (ii) a total lockdown of the economy and the entire society. In previous posts the GLO website was reporting about the strategy of lockdown, the societal consequences and the arguments against it. Today we investigate a constructive alternative, the Swedish strategy.

Some core messages of the interview:

  • Sweden has clearly focused less on forcing people to increase social distance and more on encouraging people to act responsibly.
  • There’s clearly social pressure to comply with recommendations from the government.
  • Government agencies are more independent from political influence in Sweden.
  • The stated objective has been to “flatten the curve” to avoid overburdening the health care system.
  • A feared “crisis-fatigue” is one major reason why the Swedish Public Health Authority has been reluctant to push social distancing further.
  • Sweden’s great registry data will only in the long-run help to understand the viruscrisis better.
  • Covid-19 will not change the Swedish very positive outlook on globalization.

GLO Fellow Erik Lindqvist is a Professor of Economics at the Swedish Institute for Social Research (SOFI), Stockholm University, and Editor of the Scandinavian Journal of Economics.

Interview

GLO: While most of the European governments have applied very restrictive measures to fight the Coronacrisis, Sweden’s reaction remains more relaxed: What are the key elements of the Swedish strategy?

Erik Lindqvist: The Swedish government has implemented a number of measures similar (though less comprehensive) to those in other countries. Public gatherings larger than 50 people are no longer allowed; almost all education in upper secondary-school and universities is now online; visits to nursery homes are no longer allowed, etc. These sharp measures are combined with pleas to the public to reduce travel; to work from home in case it’s feasible; to avoid public transport during rush hour, etc. High-risk groups (especially people above age 70) are strongly encouraged to self-isolate to the extent possible. Yet unlike most other countries, restaurants, schools, gyms and similar facilities are still open. So, Sweden has clearly focused less on forcing people to increase social distance and more on encouraging people to act responsibly.

GLO: Has the Swedish population more “social discipline” than other nations that allow for such a strategy?

Erik Lindqvist: There’s clearly social pressure to comply with recommendations from the government and my impression is many (though not all) do. But whether this pressure is stronger in Sweden than in other countries I really don’t know.

GLO: While the decisive actors in most countries are policymakers, who use the moment to strengthen their profile as conflict managers which ends in what has been called “availability cascades”, Sweden’s policy seems to be more designed by the Swedish Public Health Authority than by the government.

Erik Lindqvist: Compared to most other countries, government agencies are more independent from political influence in Sweden. But I also think the Swedish government has deliberately chosen to rely on advice of the Swedish Public Health Authority regarding the public health-side of the crisis.

GLO: Are there outlined objectives of the Swedish policy, and how do the Swedish authorities measure success?

Erik Lindqvist: The stated objective has been to “flatten the curve” to avoid overburdening the health care system. My impression is that this is the key factor guiding policy. I am unaware of any explicit quantitative targets beyond that.

GLO: How important is it that an initial response is in line with a long-term consistent policy?

Erik Lindqvist: From what I gather, I think a fear “crisis-fatigue” is one major reason for why the Swedish Public Health Authority has been reluctant to push as far ahead with social distancing as other countries have done. My personal hope is that Sweden (and other countries) might be able to implement somewhat less restrictive measures in the long-term by ramping up testing for Covid-19. This also seems to be underway, though perhaps not yet quite as forcefully as I personally would have hoped for.

GLO: What is the data situation in Sweden, which typically has excellent individual-level data. Can those data be used to handle the situation effectively, by connecting them with good measures of infections, deaths and those recovered?

Erik Lindqvist: Sweden indeed has great registry data which in time will allow researchers to learn a lot about Covid-19. Yet because there is a lag of, say, 3-6 months before the relevant registries are updated, such analyses are not yet possible. I think this is unfortunate – analyses using real-time data could help inform policy as the crisis unfolds – but I also understand and respect the fact that updating the data is non-trivial and that the people responsible for it have many other pressing matters to attend to at this moment.

GLO: Will Swedes consider globalization as a burden after this crisis?

Erik Lindqvist: The effect of Covid-19 on globalization is, I think, one of the major issues for the years to come after the crisis. Swedes in general have a very positive outlook on globalization – we are, after all, a small, export-dependent country. My guess is Covid-19 will not change this. But a somewhat soberer view on the extent to which we can rely on global supply chains in times of crisis is inevitable, I think. There seems to be general agreement in Swedish policy circles that we need to increase our storage of basic medical supplies, for instance.

*************
With Erik Lindqvist spoke Klaus F. Zimmermann, GLO President.

Related GLO research:
Yun Qiu, Xi Chen & Wei Shi (2020):
Impacts of Social and Economic Factors on the Transmission of Coronavirus Disease 2019 (COVID-19) in China
GLO Discussion Paper, No. 494. Introduction.

Activities and reports of the GLO Research Cluster on the Coronavirus.

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How Twitter Tweets Relate to Stock Market Movements in Developed and Emerging Markets

A new GLO Discussion Paper provides evidence that investor sentiments and emotions derived from stock market-related Twitter tweets are significant predictors of stock market movements in developed and emerging markets.

The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.

GLO Discussion Paper No. 502, 2020

Sentiment, emotions and stock market predictability in developed and emerging markets Download PDF
by
Steyn, Dimitri H. W. & Greyling, Talita & Rossouw, Stephanie & Mwamba, John M.

GLO Fellow Talita Greyling

Author Abstract: This paper investigates the predictability of stock market movements using text data extracted from the social media platform, Twitter. We analyze text data to determine the sentiment and the emotion embedded in the tweets and use them as explanatory variables to predict stock market movements. The study contributes to the literature by analyzing high-frequency data and comparing the results obtained from analyzing emerging and developed markets, respectively. To this end, the study uses three different Machine Learning Classification Algorithms, the Naïve Bayes, K-Nearest Neighbors and the Support Vector Machine algorithm. Furthermore, we use several evaluation metrics such as the Precision, Recall, Specificity and the F-1 score to test and compare the performance of these algorithms. Lastly, we use the K-Fold Cross-Validation technique to validate the results of our machine learning models and the Variable Importance Analysis to show which variables play an important role in the prediction of our models. The predictability of the market movements is estimated by first including sentiment only and then sentiment with emotions. Our results indicate that investor sentiment and emotions derived from stock market-related Tweets are significant predictors of stock market movements, not only in developed markets but also in emerging markets.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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Global Insights – eine Meinung: Coronavirus und das Elend des “Lockdowns”.

Wie die Prognostiker in der Finanzmarktkrise können heute die Virologen noch nicht viel über das neue Virus wissen. Deshalb ist nicht überraschend, daß nach einer Periode des Zögerns der Herdeneffekt des Handelns einsetzt. Sobald der/die Erste losrennt, weil sie/er glaubt, etwas zu wissen, finden sich andere, die folgen. Das verstehen alle als Wissen und rennen hinterher. Wir haben ja nicht viel dazugelernt. Deshalb bleiben bereits heute alle zuhause; und alle tragen morgen Gesichtsmasken.

Gerade wer die Gefahr sehr Ernst nimmt, muß sorgfältig abwägen. Warum gab es keinen frühzeitig organisierten internationalen Erfahrungsaustausch über die Ansteckungsprozesse, Erhebung von Individualdaten im laufenden Prozeß und flächendeckende Surveys mit Tests zur Verfolgung des Ausmaßes der Ansteckung? So ist die Datenlage für Regierungshandeln außerordentlich dünn, sie wäre noch dünner, gäbe es nicht die Johns Hopkins University. Die psychischen, sozialen und wirtschaftlichen Konsequenzen der inzwischen vollzogenen globalen “Lockdowns” sind dramatisch; es ist nicht unwahrscheinlich, daß sie die direkten Kosten des Virus bei weitem überschreiten. Langfristig wird es immer wahrscheinlicher, daß das Virus die bereits erfolgte Einschränkung der Globalisierung mit den negativen Konsequenzen für die Weltwohlfahrt dauerhaft verstärkt.

Nun ist der Fehler gemacht und wir müssen zunächst sehen, was aus den jetzigen “Lockdowns” gelernt werden kann. Natürlich müssen die medizinischen Kapazitäten unbedingt massiv hochgefahren werden. Aus den Erfahrungen alternativer Strategien wie in Südkorea und Schweden sind Schlüsse zu ziehen. Entscheidend ist aber zu verstehen, wie unter der zunächst weiteren Abwesenheit eines Impfstoffes wirtschaftliche Produktion mit der Identifizierung und Sicherung der Problemgruppen und ihrer Betreuer raschmöglichst kombiniert werden kann. Zu registrieren, wer die Virusinfektion erfolgreich hinter sich hat und welche Jobs bei grundlegenden Verhaltensregeln relativ ansteckungsungefährlich sind, kommt entscheidende Bedeutung zu. Das Virus wird uns so schnell nicht verlassen. (KFZ)

Klaus F. Zimmermann, Wirtschaftsprofessor und Präsident der Global Labor Organization (GLO), äußert hier seine Meinung.

Referenzen
1. Debattenbeiträge aus dem GLO Netzwerk.
2. Gespräch mit Xi Chen von der Yale University über den Erfolg des chinesischen Lockdowns.
3. Gespräch mit Robert Sauer, Royal Halloway, University of London, über seine Forderung nach dem sofortigen Ausstieg aus den globalen Lockdowns.
4. Gespräch mit Erik Lindqvist, Stockholm University, über die schwedische Coronavirus-Strategie. Medienreferenz.
5. Gespräch von Markus Lanz mit dem Virologen der Universität Bonn, Hendrik Streeck. ZDF-Sendung. Medienreferenz.

Ends;

Posted in News, Policy | Comments Off on Global Insights – eine Meinung: Coronavirus und das Elend des “Lockdowns”.

The lockdown strategy on the Coronavirus has negative consequences for emotions and wellbeing of South Africans.

COVID-19 Lockdown plays havoc with emotions and our “Happiness Index” stays under pressure“, GLO Fellows Talita Greyling and Stephanié Rossouw find in a new study. The lockdown strategy shows immediate negative consequences for wellbeing in South Africa. The Gross National Happiness data set used (a real-time Happiness Index) is an ongoing project, the two researchers launched in April 2019 in South- Africa, New-Zealand and Australia. See the detailed analysis below.

The authors

Talita Greyling: School of Economics, University of Johannesburg, South Africa, and GLO; email: talitag@uj.ac.za
Stephanié Rossouw: Faculty of Business, Economics and Law, Auckland University of Technology, Auckland, New Zealand, and GLO; email: stephanie.rossouw@aut.ac.nz

The analysis

South Africans are “angry” after their first weekend under lockdown. COVID-19 has been playing havoc with South African’s emotions over the last month.  We have made 180 degrees turn in our emotional state; from being joyful, anticipating good things to happen and showing trust, to being angry, anticipating the worst and showing disgust and fear.  Over the period, the most significant gainers, among the emotions, were anger, up with almost 10%, followed by disgust (+8%) (see figure 1, indicated by the black arrows). In contrast, the biggest losers were trust (-13%) and joy (-6%) (see figure 1 indicated by grey arrows) (Greyling & Rossouw 2020). 

These are the results of Prof Talita Greyling (University of Johannesburg) and Dr Stephanie Rossouw (Auckland University of Technology) who in collaboration with Afstereo launched South Africa’s Happiness Index in April 2019 and recently expanded their study to include the analysis of the emotions of South Africans.  

Why are South Africans so angry?  From the analyses of the Tweets (see www.gnh.today) the team (Greyling & Rossouw, 2020) found the following:

  • Mad at police and military, because of the aggressive and violent manner the COVID – regulations are enforced.
  • Angry about people being greedy and making money out of COVID-19, when the country is suffering.
  • Angry at government playing politics in a time of fear, and uncertainty about the future.
  • Mad about Moody’s downgrade to junk status, “kicking the country when it is already down”.
  • Angry about being isolated, cut-off and no way to release stress or alleviate depression and anxiety.
  • Concerned about the increase in domestic violence, interesting not only men towards women, but among all members of the household.
  • Mad at not being able to buy alcohol (previously also cigarettes).
  • Being stuck at home and then also having to endure loadshedding
  • Lack of groceries after the rich has bought everything
  • God is mad, this is a sign of His wrath

Is there anything that South Africans are positive about at the moment? Well, it seems that in true South African spirit we cling to the silver lining in this storm that threatens to swallow us. “Family time” seems to be one of the few positives. In this never-ending rat race, being able to spend quality time with our loved ones seems to be our saving grace. Other positives mentioned are “time for self-reflection” and “time to turn to God”.

If we turn to the Happiness Index itself, which measures the sentiment levels of South Africans on a scale from zero to 10 J, with 5 being neutral (neither happy or unhappy) (see www.gnh.today), we note that the index stays under pressure. After the significant lows on the days before-, on- and after the announcement of the lockdown (23 March 2020), there was a short lived increase in happiness levels, as people rushed to shops and their home towns/steads (migrating out of the cities), in anticipation of the lockdown. However, the happiness levels soon returned to the “new lows” we have been experiencing since the announcement of the first COVID-19 patient in South Africa (see figure 2).

As reality sinks in and the health and livelihoods of South Africans’ come under threat, it becomes clear that “Twenty Plenty” has made a 180-degree turnaround to “Twenty Catastrophe”.  

Reference
Greyling T. & Rossouw S. 2020. Gross National Happiness Project. Afstereo (IT partner). University of Johannesburg (funding agency). Pretoria, South Africa. www.gnh.today.

Ends;

Posted in News, Policy | Comments Off on The lockdown strategy on the Coronavirus has negative consequences for emotions and wellbeing of South Africans.