What is an ATAR and what does this have to do with income?

Cross-post from Substack.

Look I’m from New Zealand – so when everyone around me started talking about ATARs I just smiled and nodded.

In fact I probably couldn’t talk to most people in New Zealand about education. I’m from the “pre-NCEA” era – where a single end of year exam for five courses, scaled to fit a within-course normal distribution, determined most of anything. As a result, these more complex design criteria are well outside of my lived experience.

But it turns out ATARs are a very important part of an individuals assessment in Australia – providing a measure of how well a student performed relative to their peers, and determining their university admission.

This raises a question – how is a good performance on your ATARs associated with future earnings? Luckily for us Elyse Dwyer and Silvia Griselda at e61 decided to find out.

tl;dr a higher ATAR is associated with higher average earnings – but there is significant variability in income by ATAR. As a result, even though we’d expect the type of person who receives a higher ATAR to end up with higher earnings at 30, there is a lot more going on under the hood.

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Pandemic preferences – the case of housing

Cross-post from Substack.

COVID was a pretty big life shock for all of us – with uncertainty about the virus, and the magnitude of government interventions associated with it, leading people to change their way of doing things across a number of dimensions of their life.

One of the clearest changes was the decision of where to live. In a fascinating note from e61’s Aaron Wong from mid-2023 he shows people did change their behaviour regarding renting property following COVID – and that this shows up clearly in the rental premium paid for living in cities between 2020 and 2022.

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New Year, New Steam Sale

Cross post from Substack

I keep receiving emails that Star Wars Squadron is only $2.50. Wild! I love Star Wars, and when I was a kid I loved flying around all the planes and stuff.

But why such a big special? And why are lots of computer games on a big sale now?

I mean surely this is the time when demand is high (a lot of people are on holiday) and computer games are a durable good (you pay up front, and then consume them over time).

As a result, this must be the time when people are most willing to pay for it – and the incentive to discount must be pretty weak because if you sell a game to someone now, you can’t sell it to them again in the future.

So let’s have a think about why this may be going on – and I promise not to talk about tacit collusion this time. Instead lets talk price discrimination.

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How did our 2023 forecasts go?

Cross posted on Substack.

At the close of 2022, Gulnara and I thought it would be fun to pop up some forecasts for 2023. So what were they and how did we do?

The forecasts

It appears we made four forecasts:

  1. That the “rebalancing towards consumption” in China would dominate the discussion post-COVID economic adjustment – making it harder to bring inflation down in a low cost manner and keeping tradable inflation high.
  2. Automation would be a major theme – with a clear visual number of worker tasks across a number of jobs now being clearly automated.
  3. Industry policy would be the go to policy lever pointed at given the two above economic themes.
  4. However, there would also be increasing discussion of unemployment benefits – and the importance of the safety net for supporting these transitions.

Right, nice consistent story – two changes in the underlying economy, two policy responses.

How did we do? I’m going to self-evaluate – but super keen for everyone elses thoughts in the comments!

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Where have all the good Boxing Day sales gone

Cross post from Substack.

It’s Boxing Day – and I’ve already used up the idea of discussing the now largely missing Boxing Day sales. And the idea that Boxing Day is increasingly lame is common across years.

So instead the focus of today will be on a different industrial economics topic – the state of competition in Australia. Specifically, does the lack of Boxing Day sales tell us something about the level of competition in Aussie?

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Unrealised losses, high interest rates, and financial market distress

Cross-posted from substack.

I’ve been seeing a lot of the following around the place:

Looks pretty scary right – red columns go lower than during the Global Financial Crisis :O

However, these big red columns are a bit misleading. The data is true – financial institutions holding government bonds have made large unrealised losses on government bonds due to the surge in interest rates. But there is a reason that financial regulations don’t make banks recognise these losses.

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