9/15/2012 3:01:31 PM By
E.J. Reedy
The National Bureau of Economics Research hosted a conference on new data sources for tracking economic activity this past week which has
many relevant and important papers for consideration. As I have said before, we can do better and should do better at developing new relevant and timely measures. BLS offers some ideas and insights on high-growth firms here and Erika McEntarfer's work on job-to-job flows are all quite interesting, just to choose two!
8/16/2012 2:40:20 PM By
E.J. Reedy
One of the richest surveys of business owners in the United States is the Survey of Business Owners from the Census Bureau. Now researchers looking to use microdata can access a
new public-use data set from their desktops from the 2007 collection. Many other
public reports are now available on this collection as well.
12/2/2011 2:30:58 PM By
E.J. Reedy
In this corner we have:
“If you were laid-off, how would you find a job?” [“by starting your own business” being one of the choices]
Coming in as a follow-up question (just in case), we have:
“Would you consider starting your own business if your were to lose your job?”
If you were interested in studying entrepreneurship, which question would you ask? I deal with this all the time but have rarely been given such a perfect example of how question form and timing can impact response. For today’s example, we’ll be drawing from a
new poll out from the European Commission.
The European Commission has an ongoing set of public opinion polling surveys that it completes on different topics called the Eurobarometer. This particular poll was looking at household level opinions using a sample of about 26,700. It is topically interesting and of timely importance as it is dealing with employment and social policy in the EU. Given the crisis of confidence that continues to engulf the continent, it is amazing to me how optimistic most of the respondents come across. But I will let readers examine that topic themselves.
I am going to focus on the two questions raised at the top of my post, both trying to get at how people in the EU view starting a business as a hypothetical choice if laid-off. These questions should be seen as a compliment to some of the other
more in-depth Eurobarometers on this subject. The authors of the survey must have felt strongly on the topic as they asked about the subject in two very different ways.
The first ask of currently employed respondents was: “If you were laid-off, how would you find a job?” Here about 15 percent of respondents who were currently employed reported they would start a business (with or without employees). This comes in near the bottom of options given with predictably high numbers of people applying for a similar job in their same locations (48 percent).
So while respondents were free to choose up to two directions of what they would do if they lost a job, the authors went back to those who had not indicated they would start a business and asked directly: “Would you consider starting your own business if your were to lose your job?” A full 24 percent of those who had not previously indicated they would start a business now include it in their possible reactions to being laid-off. If I am doing my math correctly, this works out to about 20 percent of the overall sample that is currently employed, more than the entire group which chose starting a business in the first question.
So which is it? Fifteen percent or 35 percent (the two added together)? To me, the first question is the more reliable. It gives several choices (including I don’t know) and seems to get more at what people would initially try if laid-off. The second question seems to tease out what people might do if they really had to – the reluctant potential entrepreneurs.
This is a great example of how question format can influence results. By asking the question explicitly and not as a part of a multiple choice response, the rate of possible business start-up if laid-off doubles. This type of choice is made all the time by people designing surveys, but we often don’t know the bias it might introduce. Hopefully in sharing this example others will see (or be able to test) how some of their responses might be influenced by these design issues.
One other thing which is different in this Eurobarometer survey vs. many past is the treatment of starting a business being different from becoming self-employed. These are slightly different concepts and here the European Commission seems to be starting to realize that. That’s a good development for this program and one I hope will spread.
11/28/2011 11:47:57 AM By
E.J. Reedy
For established U.S. scholars doing work that requires microdata access to high-quality information, the
Internal Revenue Service's Research Program is worth a review. The call for proposals was recently issued with deadline of December 15.
11/16/2011 10:03:36 AM By
E.J. Reedy
We can't understand our economy without better firm-level information systems. That's my essential summary of a new report out today, "
Assessing competitiveness: how firm-level data can help," from Brugel, a European think tank. It's a well-crafted and important report as it makes the case for policymakers why the back-end systems are important investments. As the report shows, when we worry about averages and don't look more specifically at elements of the distributions and how those are changing or could be impacted by certain policies, we hurt our chances of driving competitiveness and economic growth.
In the appendix to the report the authors reference some of the international experiences related to firm-level data sets. I think their summary there was restrained in its criticisms. Indeed, I recently sat through a meeting of leading experts on measuring firm-level innovation and growth at the OECD and was appalled at some of the compromises that were going to have to be made in order to fulfill a European Commission mandate for immediate data. It was clear why the compromises had to be made - national statistical offices have not received the investments they need to develop their infrastructures but more importantly they are only just beginning to realize they need to find ways to encourage firm-level research with their data. However, even with the signs of change I've seen afoot in terms of determination from these offices, they have no legal, political, or practical systems in place to meet this challenge. Indeed, at a time when most countries are undergoing significant public sector cuts, I am worried that the clear needs here will not be met with dollars. I've seen many bodies, including the OECD which I had always thought of as the true champion of international analyses using government data moving towards more instances in which their reports rely more heavily on private data sources instead of government data. While private sources should have their place, they cannot be a replacement for official data. That said, if national statistical offices don't get behind some of the important issues Brugel outlined here, I fear that many nations may become more and more satisfied with substandard official statistics. Indeed, some of the current crises in Europe have been driven by lacking regulatory mechanisms on national statistics (see
articles on Greece).
11/14/2011 12:03:21 PM By
E.J. Reedy
The OECD has a new version of their
timely indicators on entrepreneurship available today at the national level for 10 countries.
These data show that new business formation continues to operate in most countries at the new levels which were reached after the 2008 recession (Australia stands out for its continued positive performance). These are the most timely indicators available internationally and seem to show anemic start-up rates continue in most countries although the rates haven't worsened for the most part.
This release is timed around the start of
Global Entrepreneurship Week. I would just note that there is much more data available from the OECD on more complicated and nuanced views of entrepreneurship. Most of that data is current through 2007 or 2008.
11/8/2011 2:32:30 PM By
E.J. Reedy
11/8/2011 1:59:06 PM By
E.J. Reedy
The
Washington Post has a nice piece online today examining some of the claims and counter-claims about how small business owners would be impacted by tax increases on those earning more than a million dollars. The Post is correct in its suggestion that the more narrow interpretation of the data is the better one. Indeed, it's not surprising that if one is looking at millionaires that the vast majority have some ownership in a business of some sort. When you have that much money you have to park it somewhere to make a return and owning a business seems a natural place (in the given data it's impossible to make attributions about how the millionaires made their money as none of the analysis is really longitudinal). If you aren't looking at where they are also investing their time in running a business then you would be creating a group of people who is dominated by investors and not business operators. While this might be something which is helpful in talking about angel investors, it's probably not a good characterization of the question being posed.
One piece we released last year is relevant to this discussion but has not been picked up by many in the mainstream discussion.
Business Owners, Financial Risk, and Wealth uses the Survey of Consumer Finance to examine how business owners appears similar and different to other groups in their wealth and risk preferences. It shows that in most ways business owners (defined even more conservatively than the
Post article suggests) are conservative in many of their borrowing and savings patterns but more likely to assume risk for return. The study concludes: "The results suggest that policies aimed at increasing business ownership should focus on helping households identify high-value business opportunities through transparent tax, legal, and regulatory systems. Efforts to reduce risk should focus on the business venture, such as full loss offsets, rather than focusing on reductions in other financial risks." Worth a read for those following this debate.
10/17/2011 4:40:27 AM By
E.J. Reedy
The Numbers Guy, Carl Bialik, over at the
Wall Street Journal has a
piece in today's edition looking at some of the claims about small business job creation occurring in the political debate. It is an important topic, and I was glad to see him tackle it. That said, I was disappointed in his treatment of the question. I have a lot of respect for his columns and how he brings focus to important elements of the discussion that involve numbers. With his treatment of small businesses and jobs, he talked to most of the people I would have talked to but ultimately didn't get into any of the depth that I would have expected. Specifically, I don't think he looked at several important elements closely enough for readers:
I've written about
job statistics over the years and most recently focused on them in our
Starting Smaller; Staying Smaller piece. And while I haven't jumped directly into the debate about small businesses job creation vs. new business job creation, that seems to be what Carl was starting to do but didn't really. Most of the job creation (and a lot of the destruction) seen when looking at questions about small business job creation comes from small,
new businesses. These are businesses which are both very small and also happen to be young but which statisticians historically have not been able to disentagle because the data wasn't stored to look at firm dynamics over time. A lot of what we have worked on these past several years has been trying to bring this element of firm age into the discussion about how jobs are created and destroyed. And while the column today talks some about this issue near the conclusion, I wasn't impressed with it's treatment of the topic. I recommend the piece by
Haltiwanger, Jarmin, and Mirinda on this topic. When looking at jobs every lens you observe through has advantages and disadvantages. I wouldn't claim looking through the added element of firm age is perfect, but to me it's still more helpful than just looking at firms smaller than 500 employees.
The other piece I would have liked him to get into a bit which he did not is the lens used by
Youreconomy.org. This is a site run by the Edward Lowe Foundation that uses privately-sourced data,
NETS, which is based on D&B records. What Lowe does which I like and I think helps the debate so much is to look at "resident" and "non-resident" companies and job creation. Essentially this just means that they are able to look at jobs which are created by companies headquartered in a particular region vs. those which are not. They add to this a discussion of business size. While I don't think this is the perfect lens I do think it is at least a helpful one for most local communities in understanding job creation. Because big employers, Fortune 500 companies, for example, can be good employment contributors in some cases but the view you take on their employment might be quite different if they are headquartered in your region vs. if they are not.
9/19/2011 7:58:50 AM By
E.J. Reedy
In studying entrepreneurship, one typically has to make a choice of orientations – to study through the business, to study through the household, or to study through an intermediary (like a venture capital fund). Most of the time, I deal with data that comes from the business, like with the
Kauffman Firm Survey, but this week I will be offering three posts on recent data updates that have been looking at entrepreneurship through household surveys. Household surveys as a mechanism for studying entrepreneurship commonly measure self-employment as a means of quantifying individual-level entrepreneurial activities. Self-employment is convenient, although not typically ideal, in that it is somewhat internationally comparable and in most official statistics have included self-employment response options for years. Each household surveys I will focus on this week is extending beyond self-employment to offer new and different means of looking at entrepreneurship, still using household frames.
While I have blogged on the Federal Reserve’s Survey of Consumer Finance before (see summary of
2007 and
2010 changes), I haven’t touched upon their efforts to create a panel of households. While I am sure the Fed has had the idea to do a household panel before (panel data is more helpful to many scholars/analysis), it is amazing what an impetus like the Crisis can do to take a concept and turn it into a reality. Their panel data will consist of 2 points in time as their 2007 respondents were resurveyed in 2009. To date, the Fed has only released a
summary paper analyzing the 2007 SCF panel. In this paper the Fed highlights the important role than changes in business equity, along with values of homes and stock, appear to have on driving household wealth.
The Fed has only done a portion of what could be done in looking into these topics with such rich data. But good news - they know this! From my conversations with the Fed, it appears they are likely to release a public-use data file for the panel data at some point in late 2011 or early 2012. This should be a very interesting file for researchers interested in examining financing activities during this Crisis period and quite unique among data available.
Additionally, I wanted to blog on this anticipated data opportunity as it fits well with a recent call for funding issued by the National Bureau of Economic Research. To my knowledge no other forthcoming data set presents such a ready-made opportunity for studying household financing with a details on business equity included that has a longitudinal component.
NBER Household Finance Working Group
Call for Research Proposals 2011
The Household Finance (HF) Working Group at the National Bureau of Economic Research aims to advance understanding of household financial behavior and to provide a firm foundation for related policy discussions. The working group defines household finance broadly, to include the many financial decisions made by households, including the financial functions of payments, saving and investing/portfolio-choice, borrowing/credit, and risk management, as well as related decisions by businesses and government.
In addition to sponsoring conferences that bring together the various researchers working on household finance, the working group seeks to promote new research in the field, especially by young researchers. To this end, through a generous grant from the Sloan Foundation, we can provide four to five research grants, of $10,000-$20,000 each, directly supporting household finance projects. These grants can be applied only to non-salary costs (e.g., travel, data, research assistants, etc). Applications are especially welcome from untenured faculty members and advanced doctoral students, and for projects that would eventually generate public data that could also be used by other researchers.
Applicants should submit: a research proposal not to exceed 2 pages; a 1-page itemized budget (e.g., travel, data, etc), with brief justification as appropriate; and their curriculum vitae. These
components should be complied into a single pdf file and emailed to Denis Healy at dhealy@nber.org, with "HF research grant" in the subject line.
In cases where a substantial part of a grant goes towards data collection or production, grantees will be encouraged to make the resulting data publicly available to the extent possible, e.g., without violating confidentiality agreements, and to briefly discuss this possibility in the proposal.
Applications from doctoral students should be accompanied by a one-page letter of recommendation from a senior researcher who is knowledgeable about the project (and ideally, but not necessarily, an NBER affiliate). This letter can be emailed separately to the above address, again with "HF research grant" in the subject line (or the letter writer can submit the entire proposal in one email).
The application deadline is October 17, 2011. Applicants will be notified by early December.
Grantees will be required to deliver a preliminary working paper by August 15, 2012, and should be prepared to present the resulting research at a subsequent working group meeting (in Fall 2012 or later), if selected by the conference organizers. A complete working paper will be due by December 1, 2012.