A new research project launched today by a partnership including the University of Warwick will explore how shoppers can be encouraged to make more sustainable food choices while they do their online shopping.

The online shopping project is part of the SALIENT food trials, a consortium of eight universities and two research institutes looking at ways to support healthier eating and reduce the impact of food on the planet, funded by the UK government through the ESRC.

The trial is facilitated by a web browser extension for the online grocery platform of a major UK supermarket, which will pull information from a database of over 14,000 ‘life cycle assessments’ for the available products compiled by food sustainability experts Sustained.

Up to 2750 UK shoppers will be recruited to take part in up to five waves. They will be invited to download a plug-in for their internet browser which will provide two sorts of nudges to help guide their purchases:-

• Eco-labelling: these will inform online shoppers about the environmental footprint of their food choices, using an A (least impact) to G (most impact) rating system.
• Product Swaps: shoppers may be shown products with a lower environmental impact and equal or better nutritional profile, in place of their initial choices. These may also be made available at a discount to test the effect of lower prices on purchase decisions.

The researchers will evaluate the impact of these interventions on the environmental rating of consumers’ shopping baskets, to understand whether either intervention results in more sustainable shopping habits and by how much.

Professor Thijs van Rens, co-lead of the Sustained trial, said: “Offering swaps and price discounts are promising ways to get people to buy more sustainable foods, which are often better for their health too. But we have very little evidence for how effective these interventions are, particularly for online grocery shopping.

“Previous research has mostly focused on physical supermarkets or on simulated online supermarkets. But we know that people often make quite different choices in real life than in simulated environments.

“Our collaboration with Sustained will provide a great opportunity to generate real life data which we can analyse in order to recommend policies with the best chance of changing behaviour in a positive way.”

Professor Oyinlola Oyebode, also co-lead of the research trial, said: “Climate change and environmental degradation are important and serious challenges for human health. Changing the food we produce, buy and eat can help to address this, and more sustainable food often offers direct benefits for health too.”

Carl Oliver, Sustained CEO, said: “Empowering more sustainable purchasing choices is part of the journey to reducing the massive impact the global food system has on the environment.

“This trial is also about understanding how industry and policy makers can utilise technology partners like Sustained to shape a food system that supports the health of us and our planet.

“This is an exciting partnership for Sustained as we work towards our vision of helping consumers and businesses reduce their environmental impact through actionable intelligence and collaboration.”

About SALIENT: SALIENT is a team of researchers working with the public, partners from local and national government, food charities, community support teams, and the food industry, with the goal of designing interventions to support healthier eating and reduce the impact of food on the planet. The SALIENT consortium is drawn from eight universities (Oxford, Cambridge, Warwick, Birmingham, Hertfordshire, Liverpool, London School of Hygiene and Tropical Medicine, and Queen Mary University of London) and two research institutes (Nesta and the Behavioural Insights Team). https://www.salientfoodtrials.uk/

Delegating tax-and-spend powers to local government risks limiting the ability of local authorities to respond to environmental disasters, according to new research published in the Journal of Economic Behavior and Organization.

Dr Jose Rowell Corpuz (University of Warwick), Professor Joseph Capuno (University of the Philippines Diliman) and Dr Samuel Lordemus (University of Lucerne) looked at 10 years of public finance data from the Philippines both before and after a national emergency in 2013, when Typhoon Haiyan struck the islands with 200mph winds, to explore how local public finances respond to natural disasters.

The researchers also looked for evidence of how central government disaster relief funds and international aid affected local revenue raising and spending on essential services – did the external aid compensate for lower local revenues, or was it genuinely additional to existing resources?

While these questions have been studied in better-off countries, it is believed that this study substantially adds to the analysis of the local fiscal response to natural disasters in a country with more limited financial resources.

The Philippines is in a high-risk typhoon area, and Typhoon Haiyan was one of the strongest ever recorded and caused unprecedented damage as it crossed the country. Official government sources estimate that about 6,300 people died, more than 28,000 were injured and 4 million left homeless.

It displaced communities and affected the regions' infrastructure, roads, hospitals, schools, and public services. The severity of the impact on the areas it ravaged was unanticipated and unprecedented, with its effects felt during and after the disaster.

Using data on local government revenue and spending from before and after Typhoon Haiyan, Dr Corpuz and his co-authors found:

• The typhoon had a small impact on local government revenue raising. In the short term there was a fall in income from taxes and charges on local businesses but these recovered after around two years. This effect was more severe in less-well-off municipalities and highlights the importance of flexible central government support to address economic inequality.
• The typhoon had a small but measurable impact on spending. Local governments spent slightly less on all areas of responsibility except health, housing and labour. They also reduced their debt repayments.
• Local governments which received external aid did not diminish their tax collection efforts and spent more on public services, education, social and economic services, and debt repayments. This result shows that foreign aid has a vital role to play in supporting local government to help citizens in the aftermath of disasters.

Commenting on his research Dr Corpuz said:

“The effects of natural disasters can have a huge impact on a local economy and under decentralisation, local governments are limited in the resources they can mobilise in the aftermath.

“Ordinarily, local tax revenue collection provides a higher rate of local government spending over and above central government transfers. This changes after a natural disaster when there are significant losses in revenues particularly from local businesses and economic enterprise.

“When a typhoon as powerful as Haiyan affects the generating revenue capacity of local governments, central government transfers and foreign aid are crucial to maintaining public expenditures that benefit its people.”

Specifically, the research evidence suggests:

• Local governments exposed to common nationwide shocks such as Typhoon Haiyan have limited capacity to reallocate or provide additional resources that would address the increased demand for local public spending.
• Lack of strong and responsive financial support from central government leaves local governments to fend for themselves. This situation only escalates the impact of external shocks.
• Central government needs to step in with additional sources of funding for disaster relief and ensure a coordinated effort with other funding sources (such as foreign aid) to effectively target the most vulnerable communities.

Dr Corpuz concludes:

“Although we cannot generalize, the Philippine case is a reminder of natural disasters’ debilitating effect on local governments and vulnerable communities. We hope that our study will inspire many in ensuring a well-coordinated disaster risk management by central and local governments, particularly in settings of decentralised local government finance.”

Read the full research paper: Natural disasters and local government finance: Evidence from Typhoon Haiyan

August Küenburg (BSc Economics, Year 2) has released an exciting new podcast Econ Bites, exploring economic public policymaking and its key figures and institutions. In his impressive first episode, August interviews Jonathan Haskel, member of the Monetary Policy Committee of the Bank of England, to discuss central bank independence and inflation targeting. We caught up with August about his fascinating new project.

Hi August! Why did you decide to start creating and publishing your own podcast?

Having my own podcast gives me the opportunity to talk to inspiring people in the field of economics about all kinds of interesting topics and share these conversations with other interested people. Preparing a podcast episode is a fun learning experience and an excellent way to deepen my own understanding about certain topics that we begin to cover as undergraduate economics students.

Your first episode has a very exciting guest – Jonathan Haskel. Can you explain who he is and why you’ve chosen to interview him?

Jonathan Haskel is a Professor of Economics at Imperial College Business School and is currently serving his second term as a member of the Monetary Policy Committee (MPC) at the Bank of England. Jonathan holds one of the nine votes to decide the future of the UK monetary policy. His experience as a central banker and ability to explain complex matters with often simple analogies makes him the perfect guest for my podcast episode.

Why should people listen to this episode with Jonathan?

Listeners will hopefully gain a better understanding of how the MPC operates and why inflation targeting and central bank independence are essential to ensure effective and credible monetary policy. Jonathan makes an excellent point about how economists have too long held a machine-like view of the economy and that a major intellectual breakthrough was needed to start treating the economy much more systematically.

For this episode you’ve done a lot of research into the history of the Bank of England and its policymaking on matters such as inflation. How has your degree in economics equipped you with the skills to complete this research?

One of my optional models, Money and Banking, discusses monetary policy and central bank independence in more detail and this motivated me to do further research into central banks. Most of my preparation goes into reading the literature and gaining a solid understanding of the topic.

Your podcast demonstrates a keen interest in policymaking – are you planning to pursue a career path in this area?

At the moment I want to pursue a career in public policy, being as a central banker or maybe as an economist at the International Monetary Fund or World Bank.

Talking to people in those fields is an exciting opportunity for me to learn more about their jobs and why they matter so much. Policymaking has a real impact on people’s lives, and I believe that coming up with new insights and solutions to various economic issues could be a very interesting and fulfilling career prospect.

I hope to have more central bankers, academics and economists working on public policy on my podcast in the future.

August Küenburg (BSc Economics, year 2)

You can listen to August’s first episode of his podcast Econ Bites on Spotify here.

Professor Giovanni Ricco has received a prestigious American Economic Journal Best Paper 2024 AwardLink opens in a new window for a paper published in the American Economic Journal: Macroeconomics.

The awards are made annually to the best paper published in each of the four American Economic Journals – Applied Economics, Macroeconomics, Economic Policy and Microeconomics - in the previous three years.  The winning papers are chosen by the journals’ Boards of Editors from those nominated by AEA members.

Professor Ricco’s paper was published in 2021 and is co-authored with Professor Silvia Miranda-Agrippino, Research Economist at the Federal Reserve Bank of New York

In The Transmission of Monetary Policy Shocks Silvia Miranda-Agrippino and Giovanni Ricco study widely used instruments for the identification of monetary policy disturbances, show how the use of these instruments is behind the empirical puzzles reported in the literature, and propose a new high-frequency instrument for monetary policy shocks that accounts for informational rigidities.

Commenting on his award, Professor Ricco said it was a complete surprise but a very welcome one.

Head of Department Ben Lockwood said: “On behalf of all in Warwick Economics I’d like to congratulate Giovanni on his ‘best paper’ award. It is a significant achievement for him personally and an important accolade for the Department."

• The Transmission of Monetary Policy Shocks Silvia Miranda-Agrippino and Giovanni Ricco, American Economic Journal: Macroeconomics 2021, 13(3): 74–107. https://doi.org/10.1257/mac.20180124
• Full text versions of the four winning articles are available at https://www.aeaweb.org/about-aea/honors-awards/aej-best-papersLink opens in a new window.

Historical experience of battles fought with physically-demanding weapons created a preference for sons over daughters which persists to the present day, according to new research.

India’s population is disproportionately male compared to global norms. A preference for sons over daughters has resulted in some 63 million women “missing” from the population. While Amartya Sen drew attention to these “missing women” in the early 1990s, this deficit was recognized as early as the 1881 census.

While mechanisms such as sex-selective abortion and prioritising male children over female children can explain the imbalance, what is it that creates the preference for male children in the first place?

In a new Warwick Economics Research Papers (WERP) working paper, Conflict and Gender Norms, Mark Dincecco, James Fenske, Bishnupriya Gupta, and Anil Menon investigate whether exposure to conflict in India’s pre-colonial era, when battles were fought with physically demanding weapons such as bows and swords, created a preference for male children which still endures today.

The team geolocated battles and other conflicts between 1000 CE and 1757, when the Battle of Plassey established the dominance of the British East India Company, to create a measure of a location’s exposure to pre-colonial conflict.

This measure was compared to three measures of male-favouring gender norms: the sex ratio of the population; data on the sex of individual births; and the prevalence of crimes against women in early 21^st century.

The analysis found a robust positive relationship between conflict and male-favouring norms: districts that experienced greater exposure to pre-colonial conflict have more male-based sex ratios in the present-day population; and have a greater number of crimes against women.

But how is it possible for experiences from centuries ago to influence attitudes towards women today?

Folk tales and religious traditions can pass on cultural beliefs around gender norms and hand them down through generations. In Uttar Pradesh, researchers have recorded a number of folk songs denigrating the birth of a girl child and the women who birth them, for example:

“She gave birth to a male child – that’s why she is sitting on the bed: she is giving orders to everyone in the house.

If she had given birth to a female child, she would be sitting on the doorsill; she would have fallen from everyone’s eyes.”

Traditional songs in the eastern and southwestern areas of India are much less negative about women.

The researchers found positive relationships between exposure to conflict and folk tales with negative attitudes to women and exposure to conflict and a higher proportion of male temple gods; and exposure to conflict and a greater chance that women leave their home villages after marriage.

To test whether gender norms endure even if people migrate, the authors repeated the analysis using individuals’ mother tongue rather than geographic location, as the major languages of India typically reflect ancestry in specific regions. This analysis showed that male-favouring gender norms persist even after migration to areas that do not have historic exposure to conflict.

Commenting on the findings Professor Gupta said:

“Male-favouring gender norms are prevalent in many parts of the world today. They persist in India despite its recent economic growth, which is generally regarded as something which leads to more positive outcomes for women.

Our study provides new insights into the origins of these attitudes, focusing on the role of inter-state military rivalry and warfare.

The relationship which we have documented between exposure to conflict in pre-colonial times and cultural norms that favour men helps to explain why there is such variation in the proportion of missing women between different parts of India.

The evidence which we have found on the historical persistence of these attitudes also suggests that economic development alone may not resolve India’s gender inequality challenges.”

ENDS

· Mark Dincecco, James Fenske, Bishnupriya Gupta and Anil Menon (2024) Conflict and Gender NormsLink opens in a new window Warwick Economics Research Papers No. 1491

Advice given by Professor Dennis Novy to the London Assembly Economy Committee has been reflected in the Committee’s formal recommendations to Mayor of London Sadiq Khan.

Professor Novy was invited to appear before the Committee on 11 Jan to answer questions and give informed insight into the impact of Brexit on London’s economy.

The Committee held the hearing in order to better understand the impact that leaving the EU has had on London’s economy to date, including asking whether sufficient time has elapsed to understand this impact and whether it is possible to separate the impact of Brexit from other challenges such as the pandemic and Russia’s full-scale invasion of Ukraine.

Among other topics, in his evidence Professor Novy highlighted the risks to businesses of all sizes created by post-Brexit regulatory divergence, and the need to develop a cohesive strategy for trade in services.

In her letter to the Mayor, Committee Chair Marina Ahmad quoted Professor Novy’s remarks on regulatory divergence and uncertainty, saying: “we believe this is a policy area the Mayor should take interest in and work proactively with the Government on. The review of the TCA in 2026 presents an opportunity to do this.”

The letter goes on to make a formal recommendation to the Mayor on this issue.

Recommendation 2: Ahead of the 2026 review of the EU-UK Trade Cooperation Agreement, the Mayor should work with London & Partners to build the evidence base for the effects of regulatory divergence on London-based businesses. He should use this evidence to lobby the Government to ensure that London-based businesses are not negatively impacted by regulatory divergence from the EU.

Professor Novy said: “I am very pleased to see that the evidence session, which was wide-ranging and thorough, has led to specific recommendations to the Mayor of London based on the research evidence which I and the other guests shared with the Committee.

“During my evidence I called on politicians to work in a cross-party way to develop a strategy that reflects the strengths of the UK and the London economy.

“I hope that the Mayor picks up this challenge.”

• Read the letter.

There are substantial psychological gains from having a strong welfare state, finds new research done jointly by the University of Warwick and City University. Social spending acts to reduce citizens’ worries about the future.

The report uses data on 280,000 randomly sampled citizens in Western Europe between the years 2005 and 2022. Approximately 40% of citizens in Western Europe now report high levels of worry, and over time there has been a continuing upward trend in ‘national worry’. The proportion of individuals experiencing extreme worry has increased at an underlying rate of 10 percentage points in the West European population over the last decade.

A rising trend in national worry levels was visible in the data, the researchers show, well before COVID, the invasion of Ukraine, and the conflict in Gaza. “In that sense, we find that something foundational, and currently not understood, appears to be going wrong within western society. It is true even beyond Western Europe.” said Lucia Macchia of City University London, one of the two authors. The authors also examined data on the whole OECD.

Her co-author, Andrew Oswald, professor of economics and behavioural science at the University of Warwick, said “This research, on what determines the level of worry within a society, seems to be the first of its kind. One finding is that social spending by a government apparently acts as a protective mental buffer against worry. Social spending reduces people’s fears. The welfare state appears to have remarkable psychological value -- including for those who do not use it -- in a way that I suspect is not completely understood, although I am prepared to bet that William Beveridge understood it.”

The authors show that of all the OECD nations the United Kingdom had the fastest growth in worry levels between 2010 and 2019 (before the special COVID years in which data comparisons become less reliable). Costa Rica had the next-highest growth in worry.

The UK had the strongest decline in social spending across the European nations studied by the authors, and one of the strongest in the OECD. All social spending levels in the authors’ report were calculated relative to GDP.

• NATIONAL WORRY AND THE PSYCHOLOGICAL VALUE OF THE WELFARE STATE is available as pdf by request and downloadable at www.andrewoswald.com and www.luciamacchia.com

Many factors contribute to the persistence of pay disparities between women and men in the workplace, from unequal responsibility for caring for children to occupational segregation and the glass ceiling. There is also a growing body of evidence that women, as a group, are hesitant to compete against men, which affects promotion prospects and salary negotiations.

A new study by Dr Lory Barile and Professor Michalis Drouvelis explores this phenomenon using a laboratory experiment which tests the effect of an intervention known as “priming.” Priming theorises that exposing a person to a stimulus, such as a poem, article or word puzzle, can affect how that person responds to a later prompt, without them being conscious of the influence.

In the experiment, participants were asked to complete as many sums as possible in three minutes, correctly totalling four randomly-generated two-digit numbers each time. They were paired with another participant but it was not a collaborative task.

• In the first round, each correct sum was rewarded with a payment of £0.50.
• The second round introduced an element of competition – the participant in the pair with the most correct answers got £1.00 per answer while their opposite number got nothing.
• For the third round, participants could choose whether to accept the flat rate or to compete against their partner.

Between rounds two and three, some of the participants were assigned a priming task. One task involved unscrambling neutral sentences, while the other asked participants to unscramble sentences with themes of winning, competing and scoring.

Analysis of the results showed that in both of the groups which experienced priming, more women chose to compete in the third round, thus closing the gender gap.

• In the group which was not primed, 36 per of women chose to compete in round three compared to 59 per cent of men.
• In the group which did the neutral priming task, 48 per cent of women and 56 per cent of men chose to compete in round three.
• In the group which did the competitive priming task, 47 per cent of women and 64 per cent of men chose to compete in round three.

One interesting aspect of the findings was that the neutral sentences actually closed the gap more than the sentences themed around competitiveness. The researchers concluded that this was because the sentences triggered negative associations, possibly triggering anger, which is known to increase competitive behaviour.

Dr Barile said “Our paper shows that the reactions and feelings which the priming task triggers matter, and that a neutral priming is more effective in reducing the gender competition gap.

“In order to effect change, more research is needed in this area, but this easy-to-implement intervention may have significant potential in reducing the gender gap in female representation in male stereotyped high-competitive, high-reward positions.”

Professor Drouvelis added: "Gender differences in labour market outcomes constitute one of the fundamental policymaking concerns in economics. Our work uses psychological techniques that can offer valuable insights how gender disparities in competitiveness - a measure used to predict career choices and prospects - can be mitigated."

• Priming and the gender gap in competitiveness. Dr Lory Barile and Professor Michalis Drouvelis. Warwick Economics Research Papers No 1490 February 2024

We are proud to report that four of the best Warwick Economics student dissertations have been published in the sixth round of the Warwick Monash Economics Student Papers (WM-ESP) series.

The WM-ESP portal showcases the top innovative and original research papers written by Warwick and Monash undergraduate and postgraduate students. Over 74 papers have been published since its launch in 2021, covering the most significant topics for young economists in todays climate, including the housing market, climate change, gender inequality and healthcare.

We congratulate our four students for this fantastic achievement and for the fascinating research that they have conducted; we wish them all the best for their future endeavours.

You can find out more about their research papers below:

Relevant Links

Top Economics student research showcased on Warwick Monash portal in it's fifth release 9 October 2023

Fourth Suite of student research papers showcased on Warwick Monash portal 9 March 2023

Total capital gains have almost tripled over the last decade, to £65bn by 2019/20. Despite this, most people never receive any capital gains, with less than 3% of adults paying capital gains tax over a ten-year period. In any given year just 0.5% of adults receive any gains, less than the number of additional rate (“45p”) income tax payers.

Instead, capital gains are incredibly concentrated:

· Three in every seven pounds of gains in the UK go to people earning more than £150k. By contrast the same group receives one in every seven pounds in income.

· More than half (52.2%) of all taxable gains in 2020 went to just 5,000 people, who received an average of over £6.8m per person in gains.

· Gains are strongly concentrated in southern England, with more gains in the parliamentary constituency of Kensington than in all of Wales. One neighbourhood of Kensington, comprising just 6400 people, had more gains than three major cities combined: Liverpool, Manchester and Newcastle.

· Even within London there are large disparities: someone living in Kensington is more than 50 times as likely to receive gains as someone in Barking.

These findings come from new research which gained unprecedented access to the anonymised tax records of capital gains tax payers. The study, by researchers from the University of Warwick and The London School of Economics and Political Science (LSE), analysed the anonymised personal tax returns of everyone who received taxable capital gains between 1997 and 2020.

A capital gain is the money received from selling an investment for more than the purchase price. Capital gains face a separate tax regime to income, with rates varying between 10 and 28% depending on the taxpayer’s income level and the type of asset sold. Capital gains tax rates are always lower than income tax rates for the same person, with reliefs in place that allow up to £10million to be received at a 10% tax rate even for the highest rate taxpayers.

These preferential rates benefit few people, who are largely well-off. Just 0.3% of people with income under £50,000 had taxable gains in an average year, but this rises to almost 40% of taxpayers with incomes over £5m receiving some gains. The median gainer in the latter group received £372,000 in gains in an average year, benefiting substantially from the gap between capital gains tax and income tax rates.

Ranking people by gains received, the top 50,000 gainers – who make up about 0.1% of UK adults – received 86.4% of gains, worth £56 billion in total, with each person receiving at least £143,000.

Before reforms in 1998, capital gains tax was progressive: those with the highest gains paid a higher share in capital gains tax. Since the early 2000s, by when the 1998 reforms had fully taken effect, capital gains tax has largely been neutral among top gainers. Under the ‘taper relief’ regime in the 2000s it was in some years regressive.

Arun Advani, Associate Professor at the University of Warwick’s Economics Department and CAGE Research Centre, said: “Capital gains are absurdly concentrated, with half the gains in the entire country going to as many people as could fit in the Albert Hall. Less than one in thirty people have any gains at all over the course of a decade.”

Andrew Lonsdale, Research Officer at LSE’s International Inequalities Institute (III), said: “There are more capital gains in Kensington than the whole of Wales, and more in Hampstead and Kilburn than the North East of England. Continuing to tax these gains at a lower rate than earnings from work is the complete opposite of ‘levelling up’.”

Andy Summers, Associate Professor at LSE Law School and III, said: “Although not common in the wider population, capital gains are a standard way to receive remuneration for the super-rich. This makes the tax break for capital gains particularly regressive.”

ENDS

Notes to editors

1. CAGE Policy Brief Who would be affected by Capital Gains Tax reform by Arun Advani, Andrew Lonsdale, and Andy Summers is available here: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/bn40.2024.pdf
2. A taxpayer realises a capital gain when they sell (or otherwise dispose of) an asset that has increased in value from the price at which they acquired it. Capital Gains Tax typically applies if the assets sold were held for investment.
3. The report used access to anonymised confidential data from the tax records of everyone who received taxable capital gains at any point over the period 1997­–2020, accessed via the HMRC Datalab.
4. Mandatory disclaimer: This work contains statistical data from HM Revenue and Customs (HMRC) which are Crown Copyright. The research data sets used may not exactly reproduce HMRC aggregates. The use of HMRC statistical data in this work does not imply the endorsement of HMRC in relation to the interpretation or analysis of the information.
5. This research was funded by the Nuffield Foundation 'Reforming Capital Gains Tax' grant (GE/FR-000024377) grant, the Economic and Social Research Council (ESRC) through the ‘Taxing the Super Rich’ grant (ES/W001683/1) and CAGE Research Centre at Warwick (ES/L011719/1), and by LSE International Inequalities Institute, LSE Law, and Warwick Economics.