Estimating the loss of economic predictability from aggregating firm-level production networks (preprint)

To estimate the reaction of economies to political interventions or external disturbances, input-output (IO) tables -- constructed by aggregating data into industrial sectors -- are extensively used. However, economic growth, robustness, and resilience crucially depend on the detailed structure of non-aggregated firm-level production networks (FPNs). Due to non-availability of data little is known about how much aggregated sector-based and detailed firm-level-based model-predictions differ. Using a nearly complete nationwide FPN, containing 243,399 Hungarian firms with 1,104,141 supplier-buyer-relations we self-consistently compare production losses on the aggregated industry-level production network (IPN) and the granular FPN. For this we model the propagation of shocks of the same size on both, the IPN and FPN, where the latter captures relevant heterogeneities within industries. In a COVID-19 inspired scenario we model the shock based on detailed firm-level data during the early pandemic. We find that using IPNs instead of FPNs leads to errors up to 37% in the estimation of economic losses, demonstrating a natural limitation of industry-level IO-models in predicting economic outcomes. We ascribe the large discrepancy to the significant heterogeneity of firms within industries: we find that firms within one sector only sell 23.5% to and buy 19.3% from the same industries on average, emphasizing the strong limitations of industrial sectors for representing the firms they include. Similar error-levels are expected when estimating economic growth, CO2 emissions, and the impact of policy interventions with industry-level IO models. Granular data is key for reasonable predictions of dynamical economic systems.

Quantifying firm-level economic systemic risk from nation-wide supply networks (preprint)

Crises like COVID-19 or the Japanese earthquake in 2011 exposed the fragility of corporate supply networks. The production of goods and services is a highly interdependent process and can be severely impacted by the default of critical suppliers or customers. While knowing the impact of individual companies on national economies is a prerequisite for efficient risk management, the quantitative assessment of the involved economic systemic risks (ESR) is hitherto practically non-existent, mainly because of a lack of fine-grained data in combination with coherent methods. Based on a unique value added tax dataset we derive the detailed production network of an entire country and present a novel approach for computing the ESR of all individual firms. We demonstrate that a tiny fraction (0.035%) of companies has extraordinarily high systemic risk impacting about 23% of the national economic production should any of them default. Firm size alone cannot explain the ESR of individual companies; their position in the production networks does matter substantially. If companies are ranked according to their economic systemic risk index (ESRI), firms with a rank above a characteristic value have very similar ESRI values, while for the rest the rank distribution of ESRI decays slowly as a power-law; 99.8% of all companies have an impact on less than 1% of the economy. We show that the assessment of ESR is impossible with aggregate data as used in traditional Input-Output Economics. We discuss how simple policies of introducing supply chain redundancies can reduce ESR of some extremely risky companies.

Quantifying Firm-Level Economic Systemic Risk from Nation-Wide Supply Networks (preprint)

Crises like COVID-19 or the Japanese earthquake in 2011 exposed the fragility of corporate supply networks. The production of goods and services is a highly interdependent process and can be severely impacted by the default of critical suppliers or customers. While knowing the impact of individual companies on national economies is a prerequisite for efficient risk management, the quantitative assessment of the involved economic systemic risks (ESR) is hitherto practically non-existent, mainly because of a lack of fine-grained data in combination with coherent methods. Based on a unique value added tax dataset we derive the detailed production network of an entire country and present a novel approach for computing the ESR of all individual firms. We demonstrate that a tiny fraction (0.035%) of companies has extraordinarily high systemic risk impacting about 23% of the national economic production should any of them default. Firm size alone cannot explain the ESR of individual companies; their position in the production networks does matter substantially. If companies are ranked according to their economic systemic risk index (ESRI), firms with a rank above a characteristic value have very similar ESRI values, while for the rest the rank distribution of ESRI decays slowly as a power-law; 99.8% of all companies have an impact on less than 1% of the economy. We show that the assessment of ESR is impossible with aggregate data as used in traditional Input-Output Economics. We discuss how simple policies of introducing supply chain redundancies can reduce ESR of some extremely risky companies.

Behavioral gender differences are reinforced during the COVID-19 crisis (preprint)

Behavioral gender differences are known to exist for a wide range of human activities including the way people communicate, move, provision themselves, or organize leisure activities. Using mobile phone data from 1.2 million devices in Austria (15% of the population) across the first phase of the COVID-19 crisis, we quantify gender-specific patterns of communication intensity, mobility, and circadian rhythms. We show the resilience of behavioral patterns with respect to the shock imposed by a strict nation-wide lock-down that Austria experienced in the beginning of the crisis with severe implications on public and private life. We find drastic differences in gender-specific responses during the different phases of the pandemic. After the lock-down gender differences in mobility and communication patterns increased massively, while sleeping patterns and circadian rhythms tend to synchronize. In particular, women had fewer but longer phone calls than men during the lock-down. Mobility declined massively for both genders, however, women tend to restrict their movement stronger than men. Women showed a stronger tendency to avoid shopping centers and more men frequented recreational areas. After the lock-down, males returned back to normal quicker than women; young age-cohorts return much quicker. Differences are driven by the young and adolescent population. An age stratification highlights the role of retirement on behavioral differences. We find that the length of a day of men and women is reduced by one hour. We discuss the findings in the light of gender-specific coping strategies in response to stress and crisis.

Country-wide mobility changes observed using mobile phone data during COVID-19 pandemic (preprint)

In March 2020, the Austrian government introduced a widespread lock-down in response to the COVID-19 pandemic. Based on subjective impressions and anecdotal evidence, Austrian public and private life came to a sudden halt. Here we assess the effect of the lock-down quantitatively for all regions in Austria and present an analysis of daily changes of human mobility throughout Austria using near-real-time anonymized mobile phone data. We describe an efficient data aggregation pipeline and analyze the mobility by quantifying mobile-phone traffic at specific point of interest (POI), analyzing individual trajectories and investigating the cluster structure of the origin-destination graph. We found a reduction of commuters at Viennese metro stations of over 80\% and the number of devices with a radius of gyration of less than 500 m almost doubled. The results of studying crowd-movement behavior highlight considerable changes in the structure of mobility networks, revealed by a higher modularity and an increase from 12 to 20 detected communities. We demonstrate the relevance of mobility data for epidemiological studies by showing a significant correlation of the outflow from the town of Ischgl (an early COVID-19 hotspot) and the reported COVID-19 cases with an 8-day time lag. This research indicates that mobile phone usage data permits the moment-by-moment quantification of mobility behavior for a whole country. We emphasize the need to improve the availability of such data in anonymized form to empower rapid response to combat COVID-19 and future pandemics.