20 September 2021. Cities | Language
Cities, health, and education—at least in America; the language that CEOs use to talk about their business is a strong guide to business performance
Welcome to Just Two Things, which I try to publish daily, five days a week. Some links may also appear on my blog from time to time. Links to the main articles are in cross-heads as well as the story.
#1: Cities, health, and education—at least in America
The urban economist Ed Glaeser and the public health expert David Cutler have a new book out called The Survival of the City, and Tyler Cowen used the occasion to interview them for his podcast. (There’s also a transcript).
I haven’t read the book, but I did read the transcript. There are some interesting points in there (more on that later) but overall, the conversation was a disappointment, for two reasons.
The first—more minor—is that there’s quite a lot of discussion about the specifics of the US health system without anyone acknowledging that the US is a massive outlier when it comes to health (I don’t know how this plays out in the book, but there’s nothing on the publisher’s site that suggests that they’re just focussed on the US).
The second is that—again judging from the transcript—there’s nothing addressing the question of whether our current city model may have reached its limits in terms of complexity. Their ecological footprints are massively over-extended (in the Global South, urban expansion often builds over land that used to feed the city); housing inflation is pricing out service workers; pressure on time means that cultural innovation is lower.
Instead what we get is a rehash of the “cities vs telecottages” argument which is a bit of a straw person in such discussions, rather than a discussion about what a more localised suburban/exurban city might look like, if the city moved away from the hub and spoke downtown model that evolved over the last 60 years.
Glaeser also seems way over-excited about the short-run prospects for autonomous vehicles to solve transport problems.
(Downtown Philadelphia. Public domain, via Wikipedia)
But as I say, despite this, there are some interesting insights in here.
People who are better educated are in better health, globally. The gap between health outcomes for the better educated and the rest is also growing. But one of the interesting elements of this is that there’s a kind of ‘public good’ effect in cities—that people who are less well educated who live in cities will have better health than their equivalents elsewhere, controlling for other variables.
Rising obesity might be because food preparation is quicker and easier. David Cutler has written about this a lot and thinks there’s a behavioural issue at play:
What I think is happening is that it plays into our inability to delay gratification for periods of time... We could take all the time we’ve saved on food preparation and cleaning. We could devote some of that time to exercising. We could work off the additional calories and still have time left over. As a society, we could do that, but we don’t do that.
City centre schools under-perform. This might be a US phenomenon, and it may be inflected by America’s racialised history, but Edward Glaser points out that if you are from a relatively disadvantaged background, you don’t want to go to a city centre school.
It is amazing how underperforming cities are for providing upward mobility for poor kids. It is the facts that came out of Raj Chetty and Nathan Hendren and John Friedman’s Opportunity Atlas. At the metropolitan area level, density and size are both negatively associated with performance... There’s a huge cliff right at the edge of the central city’s school district, where if you’re out of the central city school district, you do much better economically and you’re much less likely to be incarcerated as an adult.
I’m not sure if his solution—vouchers and competition—is likely to work, but I guess he is an economist. It would be interesting to know if we see the same city centre educational effects in the UK Europe.
City government capacity is more important than policy. Glaeser again:
As academics, we’re very big on what’s the right policy, but in fact, if you’ve got a mayor who has, at most, two people who will do anything that the mayor tells them to do, it doesn’t make any difference what policy you tell him or her because she’s not going to be able to get it done. So understanding the institutional restraints that particular leaders have is a big deal.
Glaeser also talks about hybrid work environments, citing some research which suggests that in hybrid environments, remote workers are less likely to be promoted. His hypothesis is that this is because good performance (e.g. handling a difficult call in a service centre) is less likely to be noticed.
But this might just be a transition effect. I work for a fully remote organisation, and it turns out that we can tell the difference between good work outcomes and poor ones.
Glaeser also suggests that there are benefits in bringing young workers together, for learning and cultural reasons—even if, generally, the office is less central to the work environment.
But in general: I’d recommend spending time on this only if you’re very interested in cities or specifically in the future of the US.
#2: The language that CEOs use to talk about their business is a strong guide to business performance
The Bloomberg columnist John Authers had a great chart in his email column last week. (There’s usually a weblink but I’m having problems finding it). Some Nomura researchers did language analysis on the quarterly earnings calls of the Russell 1000 companies (all 1000 of them, apparently), and compared the complexity of the language used in them to the companies’ results. There’s a strong inverse correlation: if the language was more complicated, the business performance was likely to be worse.
Of course, this makes sense, as Authers points out:
What can lie behind this? In part, it’s because if you have something to hide you will tend to take refuge in longer words and more convoluted sentences. These will help to hide your meaning.
What’s also interesting about the research is that the results are based only on the complexity of the language—they did not take any content into account, as Joseph Mezrich of Nomura underlined:
What’s astonishing about the results based on the language complexity of earnings calls is that they ignore the content of the management’s message. Companies with earnings calls that use simple language produce higher subsequent stock returns than companies with earnings calls that use more complex language, regardless of content. The style in which content is delivered matters.
I suspect most readers are relatively uninterested in quarterly earnings calls or the investment lessons to be drawn from them. But there’s a wider organisational lesson here, I suspect: if someone can’t explain in simple language what they’re doing, and why, they’re probably hiding something—or bullshitting.
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My other discovery from the piece: there’s an index called the Gunning Fog index that allows you to assess the complexity of your own language. Try it here.
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