Results for “average is over”
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Average is Over, love and romance edition

The dating site Tinder reports that, in 2023, 41 percent of Gen Z users were open to or seeking non-monogamous relationships, and 26 percent were open to ‘hierarchical polyamory’.

Here is the link.  On the AI side, from the London Times:

What all my AI girlfriends have in common is that they foster pseudo-intimacy at lightning speed, they all have extra cost levels and they all “gamify” the experience somehow, whether through collectable badges, gems or levels of achievement which reward interaction with the AI.

Good luck young ones, what is the (partially) offsetting change in norms this will produce?

Predictions from *Average is Over*

My book is from 2013, here are some of the key predictions:

1. Increases in the power and generality of artificial intelligence will prove a major breakthrough within a foreseeable time period.

2. Labor market returns will accrue to individuals capable and willing to work with such services.

3. Resources and land are going to significantly increase in economic value, as they will remain relatively scarce.

4. Marketing will continue to rise in relative importance.

5. Managerial and “soft skills” will continue to increase in importance for earnings.

6. What we now call “quiet quitting” will be a thing.

7. At many corporations it will be possible to dismiss large numbers of workers without any decline in output.

8. Cheating with AI will arise as an issue of major importance, starting with cheating in chess, and the work of Kenneth Regan will turn out to be significant.

9. AI assessments of everything will rise in importance.

10. AI will produce more and more outputs that are so smart we will not be able to evaluate them as humans.

11. Free or near-free effective on-line education soon would become available, though it will remain an open question how many individuals will be interested in learning from it.

12. Good teaching would evolve more toward coaching and mentorship, as information provision will be handled by AI.

13. Intelligent machines soon will become effective producers of science, yet how they arrive at their results will not be legible to us.

14. With the aid of AI, there will be a resurgence of amateur science.

15. Machine learning and its successors will take over economic research.

Of course not all of those predictions have come true, but many have or others are on the verge of realization.  The subtitle of the book is Powering America Beyond the Age of the Great Stagnation.

National Average is Over

This paper considers the implications for developing countries of a new wave of technological change that substitutes pervasively for labor. It makes simple and plausible assumptions: the AI revolution can be modeled as an increase in productivity of a distinct type of capital that substitutes closely with labor; and the only fundamental difference between the advanced and developing country is the level of TFP. This set-up is minimalist, but the resulting conclusions are powerful: improvements in the productivity of “robots” drive divergence, as advanced countries differentially benefit from their initially higher robot intensity, driven by their endogenously higher wages and stock of complementary traditional capital. In addition, capital—if internationally mobile—is pulled “uphill”, resulting in a transitional GDP decline in the developing country. In an extended model where robots substitute only for unskilled labor, the terms of trade, and hence GDP, may decline permanently for the country relatively well-endowed in unskilled labor.

That is from a 2020 IMF working paper by Cristian Alonso, Andrew Berg, Siddharth Kothari, Chris Papageorgiou, and Sidra Rehman.  Via Eric Yu.

Well-being average is over?

Jon Clifton, the head of Gallup, which has been tracking wellbeing around the world for many years, notes a polarisation in people’s life-evaluations. Compared with 15 years ago (before the financial crisis, smartphones and Covid-19) twice as many people now say they have the best possible life they could imagine (10 out of 10); however, four times as many people now say they are living the worst life they can conceive (0 out of 10). About 7.5 per cent of people are now in psychological heaven, and about the same proportion are in psychological hell.

That is from Tim Harford at the FT.  There will be more in Clifton’s forthcoming book Blind Spot.

Average is over

Thirteen-year-olds saw unprecedented declines in both reading and math between 2012 and 2020, according to scores released this morning from the National Assessment of Educational Progress (NAEP). Consistent with several years of previous data, the results point to a clear and widening cleavage between America’s highest- and lowest-performing students and raise urgent questions about how to reverse prolonged academic stagnation.

The scores offer more discouraging evidence from NAEP, often referred to as “the Nation’s Report Card.” Various iterations of the exam, each tracking different subjects and age groups over several years, have now shown flat or falling numbers…

both reading and math results for nine-year-olds have made no headway; scores were flat for every ethnic and gender subgroup of younger children — with the exception of nine-year-old girls, who scored five points worse on math than they had in 2012. Their dip in performance produced a gender gap for the age group that did not exist on the test’s last iteration.

More ominous were the results for 13-year-olds, who experienced statistically significant drops of three and five points in reading and math, respectively. Compared with math performance in 2012, boys overall lost five points, and girls overall lost six points. Black students dropped eight points and Hispanic students four points; both decreases widened their score gap with white students, whose scores were statistically unchanged from 2012.

In keeping with previous NAEP releases, the scores also showed significant drops in performance among low-performing test-takers. Most disturbing: Declines among 13-year-olds scoring at the 10th percentile of reading mean that the group’s literacy performance is not significantly improved compared with 1971, when the test was first administered. In all other age/subject configurations, students placing at all levels of the achievement spectrum have gained ground over the last half-century.

Here is the full story, please note these are pre-Covid test scores, arguably now the problem could be worse.  Via Luke, a concerned human.

American distress (average is over)

The proportion of the US population in extreme distress rose from 3.6% in 1993 to 6.4% in 2019. Among low-education midlife White persons, the percentage more than doubled, from 4.8% to 11.5%. Regression analysis revealed that (1) at the personal level, the strongest statistical predictor of extreme distress was “I am unable to work,” and (2) at the state level, a decline in the share of manufacturing jobs was a predictor of greater distress.

As for the definition, exceptional distress is the percentage who reported major mental and emotional problems in all 30 of the last 30 days.

That is from Blanchower and Oswald, via the excellent Kevin Lewis.

Average is Over, installment #1437

Over the past few decades, we find that about 80% of the widening residual wage inequality to be within jobs.

Furthermore, performance-pay incidence is the single largest factor behind that, accounting for 42% of those changes.  Of course this brings us back to the least popular explanation for growing income inequality, namely that we measure productivity better than before, and reward it accordingly.

That is all from a new NBER working paper by Rongsheng Tang, Yang Tang, and Ping Wang.

Average is Over: Newspaper Edition

Joshua Benton at the LA Times illustrates average is over for newspapers. On the left the print circulation of major newspapers in 2002. The NYTimes is the leader but other newspapers follow closely behind in a slowly decaying curve likely related to city size. On the right, 2019 digital subscriptions. The NYTimes dominates. Only the Washington Post is even in the same league (The Wall Street Journal, however, should also have made Benton’s list at 1.5 million digital subscribers.) Without classified ads and other local information, for which there are now multiple online substitutes, there isn’t a big demand for local newspapers. News is now national and only a handful of newspapers can survive at national scale. Moreover, the few who can survive at national scale are now so much better than their competitors precisely because they can afford to be better.

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Average is Over, installment #437

Taking logs of computer activity, or even screenshots, and running them through big data analytics programs allows these firms to create detailed reports for executives about productivity, they claim. How employers use the data, they add, is up to them.

According to Gartner, more than half of companies with over $750m in annual sales used “non-traditional” monitoring techniques on staff in 2018, while the workforce analytics industry will be worth nearly $2bn by 2025, according to San Francisco’s Grand Review Research.

Products developed by companies such as Activtrak, which raised $20m in a series A funding round in March 2019, allow employers to track which websites staff visit, how long they spend on sites deemed “unproductive” and set alarms triggered by content considered dangerous.

And:

If combined with personal details, such as someone’s age and sex, the data could allow employers to develop a nuanced picture of ideal employees, choose whom they considered most useful and help with promotion and firing decisions.

Here is more from Camilla Hodgson at the FT.

The great retrogression average is over

White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men’s wages declined more than women’s. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured a one-time asset compensation are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest.

That is from a new NBER working paper by Margherita Borella, Mariacristina De Nardi, and Fang Yang.

Mid-level urban average is over?

Forty years ago, Nashville and Birmingham, Ala., were peers. Two hundred miles apart, the cities anchored metropolitan areas of just under one million people each and had a similar number of jobs paying similar wages.

Not anymore. The population of the Nashville area has roughly doubled, and young people have flocked there, drawn by high-paying jobs as much as its hip “Music City” reputation. Last month, the city won an important consolation prize in the competition for Amazon’s second headquarters: an operations center that will eventually employ 5,000 people at salaries averaging $150,000 a year.

Birmingham, by comparison, has steadily lost population, and while its suburbs have expanded, their growth has lagged the Nashville area’s. Once-narrow gaps in education and income have widened, and important employers like SouthTrust and Saks have moved their headquarters. Birmingham tried to lure Amazon, too, but all it is getting from the online retail giant is a warehouse and a distribution center where many jobs will pay about $15 an hour.

That is from Ben Casselman (NYT), interesting throughout.  Ben is yet another example of just how good the Times is at talent selection…

College average is over

Concord University in West Virginia and Clemson University in South Carolina were both founded shortly after the Civil War. During the 20th century, each grew rapidly. Now, the two public universities that sit just 300 miles apart face very different circumstances.

Clemson, a large research university, enrolled its largest-ever freshman class in 2017 and in December broke ground on an $87 million building for the college of business.

Concord, a midsize liberal-arts school, has seen its freshman enrollment fall 19% in five years. It has burned through all $12 million in its reserves and can’t afford to tear down two mostly empty dormitories…

According to an analysis of 20 years of freshman-enrollment data at 1,040 of the 1,052 schools listed in The Wall Street Journal/Times Higher Education ranking, U.S. not-for-profit colleges and universities are segregating into winners and losers—with winners growing and expanding and losers seeing the first signs of a death spiral.

The Journal ranking, which includes most major public and private colleges with more than 1,000 students, focused on how well a college prepares students for life after graduation. The analysis found that the closer to the bottom of the ranking a school was, the more likely its enrollment was shrinking.

That is from Douglas Belkin at the WSJ, via multiple MR readers, some of them excellent.

Many of you have asked me for further commentary on Bryan Caplan’s education book, which is doing very well.  I’ll be doing a Conversation with Bryan, but for the time being I’ll say this: everyone obsesses over the mood-affiliated “I’m going to lower the status of education signaling argument.”  Hardly anyone has discussed what to me is Bryan’s strangest assumption, namely a sociologically-rooted, actually anti-economics “conformity is stronger than you think” argument, which Bryan uses to assert the status quo will continue more or less indefinitely.  It won’t.  To the extent Bryan is correct (and that you can debate, but at least he is more correct than most people in the educational establishment will let on), competency-based learning and changes in employer behavior will in fact bring about a new equilibrium…not quickly, but certainly in well under two decades.

And what about on-line education?  Well, a lot of students don’t like it because they have to actually work on their own and pay attention.  To the extent education really is just signaling, that should give on-line options a brighter future all the more.  But not in the Caplanian world view, as conformity serves once again as an intervening factor.  For better or worse, Bryan’s book subverts economics as a science at least as much as it does education.  Bryan of course is smart enough to see the trade-offs here, and he knows if the standard model of economic competition were allowed to reign supreme, we would (even with subsidies, relative to those subsidies) tend to see strong moves toward relatively efficient means of signaling, if only through changes in the relative sizes of institutions.