Thursday assorted links

by on January 19, 2017 at 11:04 am in Uncategorized | Permalink

That is the topic of my latest Bloomberg column, here is one excerpt:

At a further margin, government’s contribution to the health care, retirement and education sectors will also seem inadequate, because at such high prices a government really cannot pay for everything. A heated political debate will ensue. Progressives will argue that significant human needs are being neglected, and they will be able to point to numerous supportive anecdotes. Conservatives will argue that the fiscal path behind such policies is unsustainable, and they will be right, too. Because it will feel to voters that government isn’t doing a good job in these high-cost areas, the conservative view will get further traction. Libertarians may promote radical spending cuts, hoping for much higher productivity growth, but the government interventions are built in so thickly that that strategy could take a long time to pay off, and in the meantime it won’t look like a political winner.

All of the various sides may be correct in their major claims, but none will have a workable solution. This actually isn’t so far from where the health-care debate stands now, and where the retirement and nursing home debate is headed as America ages.

Do read the whole thing.

As a simple rule, reject any argument that asserts “my opponent X is leaving a health care need unfilled” because indeed that is always the case.  Within Obamacare, for instance, do you favor expanding the scope of the mandate at every margin?  Probably not.  The trick is to have a good argument for why yours is the Goldilocks position, not to note that those who subsidize health care less are…doing less.  There is always someone who wants to subsidize more than you do, so fight Parfit’s “war on two fronts.”

Wednesday assorted links

by on January 18, 2017 at 11:39 am in Uncategorized | Permalink

The editor of this truly excellent book is Timothy N. Ogden, the subtitle is Perspectives on Randomized Trials in Development Economics, and the contributors include Angus Deaton, Dean Karlan, Lant Pritchett, David McKenzie, Judy Gueron, Rachel Glennerster, Chris Blattman, and yours truly, with a focus on randomized control trials and other experiment-related methods.  Here is one bit from the interview with me:

I would say that just about every reputable RCT has shifted my priors.  Literally every one.  That’s what’s wonderful about them, but it’s also the trick.  You might ask, “why do they shift your priors?”  They shift your priors because on the questions that are chosen, and ones that ought to be chosen, theory doesn’t tell us so much.  “How good is microcredit?” or “What’s the elasticity of demand for mosquito nets?”  Because theory doesn’t tell you much about questions like that, of course an RCT should shift your priors.  But at the same time, because theory hasn’t told you much, you don’t know how generalizable the results of those studies are.  So each one should shift your priors, and that’s the great strength and weakness of the method.

Now, you asked if any of the results surprised me.  I think the same reasoning applies.  No, none of them have surprised me because I saw the main RCT topics to date as not resolvable by theory.  So they’ve altered my priors but in a sense that can’t shake you up that much.  If you offer a mother a bag of lentils to bring her child in to be vaccinated, how much will that help?  Turns out, at least in one part of India, that helps a lot.  I believe that result.  But 10 years ago did I really think that if you offered a mother in some parts of India a bag of lentils to induce them to bring in their kids to vaccination that it wouldn’t work so well?  Of course not.  So in that sense, I’m never really surprised.

And this:

One of my worries is RCTs that surprise some people.  Take the RAND study from the 1970s that healthcare doesn’t actually make people much healthier.  You replicate that, more or less, in the recent Oregon Medicaid study.  When you have something that surprises people, they often don’t want to listen to it.  So it gets dismissed.  It seems to me that’s quite wrong.  We ought to work much more carefully on the cases where RCTs are surprising many of us, but we don’t want to do that.  So we kind of go RCT-lite.  We’re willing to soak up whatever we learn about mothers and lentils and vaccinations, but when it comes to our core being under attack, we get defensive.

I very much recommend the book, which you can purchase here.  Interviews are so often so much better than just letting everyone be a blowhard, and Ogden did a great job.

Maybe not, possibly patents were more effective.  Here is some new research from B. Zorina Khan, entitled “Prestige and Profit: The Royal Society of Arts and Incentives for Innovation, 1750-1850”:

Debates have long centered around the relative merits of prizes and other incentives for technological innovation. Some economists have cited the experience of the prestigious Royal Society of Arts (RSA), which offered honorary and cash awards, as proof of the efficacy of innovation prizes. The Society initially was averse to patents and prohibited the award of prizes for patented inventions. This study examines data on several thousand of these inducement prizes, matched with patent records and biographical information about the applicants. The empirical analysis shows that inventors of items that were valuable in the marketplace typically chose to obtain patents and to bypass the prize system. Owing to such adverse selection, prizes were negatively related to subsequent areas of important technological discovery. The RSA ultimately became disillusioned with the prize system, which they recognized had done little to promote technological progress and industrialization. The Society acknowledged that its efforts had been “futile” because of its hostility to patents, and switched from offering inducement prizes towards lobbying for reforms to strengthen the patent system. The findings suggest some skepticism is warranted about claims regarding the role that elites and nonmarket-oriented institutions played in generating technological innovation and long-term economic development.

I consider the origins of modern science to be a still under-studied topic.

Tuesday assorted links

by on January 17, 2017 at 12:50 pm in Uncategorized | Permalink

Mrs May later said the UK would be prepared to leave the EU without an exit agreement, saying: “No deal for Britain is better than a bad deal for Britain.” The government could then strike trade deals with other countries and use “competitive tax rates” to boost the economy, she said.

The prime minister confirmed that both [sic] houses of parliament would have a vote on the final Brexit deal, expected in early 2019. She did not clarify what would happen if either house were to reject the deal.

Here is the FT article, the pound is up again.  And while I do not think the House of Lords would block a democratically-determined Brexit, might this not lead to the end of the House of Lords as we know it?  If they don’t stand up for anything, why bother with them?

The Economist has a useful explainer on why the “WTO option” for Brexit will prove tricky; I would like to see more serious analysis of this issue.  Here is the latest on Northern Ireland, the chance of a hard border with the Republic of Ireland has gone up.

In any case, I suspect this was always the equilibrium.

I strongly favor NATO and I don’t think you can trust the Russians with just about anything, or for that matter make much of a deal with them.  I’m with Mitt Romney on all of this, as I’ve been saying for years.

That said, I feel some of the recent discussions on Trump’s pronouncements have been a bit kontextlos.  I would suggest this wee bit of background history:

1. Not too long ago, Germany did have a national leader, Gerhard Schröder, who in essence ended up as a paid agent of Vladimir Putin.  After leaving office, he has spent much of the rest of his career working for Gazprom.  Try on this bit for size:

Mr Schroeder was Germany’s Social Democrat leader from 1998 until 2005. He is a personal friend of Vladimir Putin and once described the Russian President as a “flawless democrat”. He joined the board of the Russian energy giant Gazprom after losing Germany’s 2005 election and has defended Russia’s response to the crisis in Ukraine on several occasions.

In other words, Germany had its own Trump long before the United States did.  You could call Schröder the Ur-Trump, albeit with a different socioeconomic pose.

2. It was Schröder who made the decision to take Germany off nuclear power and also to make the country energy-dependent on Russia:

As Chancellor, Gerhard Schröder was a strong advocate of the Nord Stream pipeline project, which aims to supply Russian gas directly to Germany, thereby bypassing transit countries. The agreement to build the pipeline was signed two weeks before the German parliamentary election. On 24 October 2005, just a few weeks before Schröder stepped down as Chancellor, the German government guaranteed to cover 1 billion euros of the Nord Stream project cost, should Gazprom default on a loan…Soon after stepping down as chancellor, Schröder accepted Gazprom’s nomination for the post of the head of the shareholders’ committee of Nord Stream AG, raising questions about a potential conflict of interest.

Russia now provides 35% of Germany’s oil imports and 39% of the natural gas imports.

I say NATO as an instrument for opposing Russia (not its only purpose, however) mostly ended with the Russian gas deal, because Putin can turn off the spigot any time he wants.  Germany, the major European power, can no longer stand up to Russia in a pinch and it cannot do so because of the corruption of one of its major leaders.  (Merkel I believe would not have done the same, but it is hard for her to undo this unfortunate situation, though I applaud the toughness she has shown, which at times has been considerable.)  Furthermore, earlier U.S. presidents, most of all Bush, didn’t have the stones or the means to do anything about this.

If you’re looking for icing on the cake, try this:

3. Germans today are some of the most anti-American people in Europe, and that doesn’t help the Atlantic alliance either.  It’s not uncommon for German citizens to suggest they don’t see much difference between Putin and the United States (NYT), or even may be pro-Putin, and I mean that pre-Trump.  So when Trump equates Putin and Merkel, German citizens have been equating American presidents with Putin for a good while now.  That’s not an excuse or rationale for Trump’s behavior, but it is worth keeping in mind when thinking about how to reboot the alliance moving forward.

I don’t at all favor what Trump is saying, or how many Republicans don’t seem to be complaining, but NATO has been on the ropes for some time now.  On the Russia issue, Trumpismus is far more advanced in Germany than here in the United States.  The sorry truth is that some of what Trump is saying is true, though his current rhetoric probably will end up making it worse.

President-elect Donald Trump criticized a cornerstone of House Republicans’ corporate-tax plan, which they had pitched as an alternative to his proposed import tariffs, creating another point of contention between the incoming president and congressional allies.

The measure, known as border adjustment, would tax imports and exempt exports as part of a broader plan to encourage companies to locate jobs and production in the U.S. But Mr. Trump, in his first comments on the subject, called it “too complicated.”

“Anytime I hear border adjustment, I don’t love it,” Mr. Trump said in an interview with The Wall Street Journal on Friday. “Because usually it means we’re going to get adjusted into a bad deal. That’s what happens.”

Here is the WSJ piece.  I am not suggesting, however, that I favor his preferred alternative or for that matter most of his other policy ideas.  By the way, here is Trump on heroes.  A willingness to think things through from scratch is in some ways admirable, but dangerous in matters of foreign policy and nuclear weapons, where predictability is at a premium.

And see some related remarks from Conor Sen.

Monday assorted links

by on January 16, 2017 at 10:08 am in Uncategorized | Permalink

1. Good take on La La Land and nostalgia.

2. Does it work when the coach yells at the ref?

3. Why is the barter market for lovers so imperfect?  My view is that women compartmentalize this kind of thing better than men do, for the most part, at least above age 30.

4. “Could flashing the “peace” sign in photos lead to fingerprint data being stolen?”

5. So maybe hard Brexit it is?

6. The debate over whether it was just subprime.

7. “But the concrete Pantheon? One of the reasons it has survived for so long is because the solid concrete structure is absolutely useless for any other purpose.” Link here.

8. Some economics for Martin Luther King Day.

That is a request from Christina, a loyal MR reader.  It sounds like a huge question, and maybe it is, but my answer is pretty simple, which is not to say the problem is simple to solve.

Let’s say you are in Germany.  People engage in rule-following behavior, and they become quite emotionally stressed if you suggest you might break the rules in especially inappropriate ways.

Alternatively, in Naples there is more garbage in the streets, and flexibility and rigidity across a very different set of social variables.  I call that a difference in “culture,” and I am ready to accept culture as an ill-defined, question-begging term.

Now, how do differences of culture — however defined — interact with traditional economic mechanisms involving prices, incomes, and simple comparative statics?  Are those competing explanations, namely cultural vs. economic?  Ought they to dovetail nicely in some kind of broader explanation?  Or might the cultural factors in some manner be “reduced” to questions of more traditional economics?  Some combination of the above?  Something else altogether?  And, from among these and other options, what principles of differentiation rule how “culture” and “economics” will be related in a particular problem?

That to me is the most important unsolved problem in economics and indeed in social science more broadly.


Sunday assorted links

by on January 15, 2017 at 11:50 am in Uncategorized | Permalink

1. Why is California so closely connected with melancholy?  Here is a smart, critical review of La La Land, but I think it misses the point: the movie is a critique and indeed subtle reflection of what is (supposedly) an all-pervasive mediocrity of contemporary life and art.  Setting the opening musical number in a traffic jam plays up the contrast with the older, “more glorious” musicals quite deliberately.  At the same time, the movie questions whether the past was ever so glorious after all.

2. Librarians report on what is the strangest thing they have found in a library book.

3. Might Peter Thiel run for governor of California?

4. An Arkansas city won’t let them live in a $1500 trailer, minimum legal value there is $7500.

5. Trump, Strauss, and Bingham’s “The Verdict of the People.”  And would you leave Parliament to run the V&A?

What I’ve been reading

by on January 15, 2017 at 12:34 am in Books, Uncategorized | Permalink

1. Ousmane Oumar Kane, Beyond Timbuktu: An Intellectual History of Muslim West Africa.  This excellent book clarified many aspects of West African and also Nigerian history for me, most of all how it connects to the earlier North African civilizations.

2. Sheelah Kolhatkar, Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street.  I cannot vouch for the contents and allegations, which focus on Steven A. Cohen and his hedge fund career, but this is a highly engaging and better researched than usual look at the legal case against him.

3. Mark R. Patterson, Google, Yelp, LIBOR, and the Control of Information.  Data fraud, data fraud, data fraud, welcome to 2016 yes you should be reading more books on this topic.

4. Kevin Vallier, Liberal Politics and Public Faith: Beyond Separation, “…public reason liberalism, properly understood, realizes foundational liberal values while according religion a prominent and powerful role in public life.  I claim that, in theory and practice, public reason liberalism is far friendlier to religion in public life than both its proponents and opponents believe.”  There is a Straussian reading of this book too.

5. Aurelian Craiutu, Faces of Moderation: The Art of Balance in an Age of Extremes.  A much-needed perspective these days, from a very thoughtful scholar.

6. Gary Taubes, The Case Against Sugar.  My intuitions agree with this argument, plus jelly donuts don’t taste that good anyway.

A philosophically-minded MR reader writes to me:

Tenure ought to be an occasion to explore radically new intellectual paths, ones not pre-approved by one’s field and ones that could, perhaps, do something to bridge the chasm between academic and non-academic intellectual life–and yet as a matter of fact what seems to happen is that people either stop working altogether or continue barreling down the groove they wore themselves into to get tenure.  (You mentioned this issue in a post last year: http://marginalrevolution.com/marginalrevolution/2016/06/does-tenure-encourage-risk-taking.html)  But I want to hear more.

So: why does this happen, how can we prevent it at the University/ departmental level, and, most of all, how can we prevent it at the personal level?  (Keeping in mind that most of us are not cognitively capable of processing information at the speed to go your route!)   The idea that we are incentivized to keep working by the prospect of being promoted to full Professor seems silly, given the increased administrative responsibilities.

Related problem: as one moves up the tenure hierarchy, the administrative responsibilities tend to fall disproportionately on fewer and fewer people,  b/c there are lots of deadbeats. I repeatedly see the few responsible people overwhelmed with administrative tasks which they refuse to delegate to those they know will not take them seriously.  (And I observe these responsible people are disproportionately women, even in a field–like mine–that is disproportionately male.)

I have a few suggestions, all feasible but only a few are practical:

1. All schools should copy the committee obligations policy of the school, within their quality tier, that has the fewest committee assignments for faculty.  Yes this can be done.

2. I don’t know how to operationalize this one, but on average give women half the committee assignments that men have.  That still won’t equalize the total work burden (women on average work harder per committee assignment), but it is a start.

3. Study your lecture preparation, and experiment with cutting parts of it out.  See if that matters.

4. Each year take at least one trip to a place you didn’t think you wanted to visit.

5. Go to some Liberty Fund conferences.

6. Refuse to have colleague lunches based around local politics, politics, small talk, sports (unless of the analytic variety), and campus gossip.  Just don’t do it.  Also avoid lunches with too many people attending.

7. Of the five or so smartest people you hang out with (family aside), try to ensure that no more than half of them are in your department.

8. Change the ratio of foreign-to-domestic TV shows you watch, in favor of the foreign.

9. Hang at least one piece of non-cheery art on your wall that will remind yourself of an ever-pending death.  Change its angle every now and then, or better yet change the picture, so you don’t get too used to it and stop noticing it altogether.  If need be, supplement this with Brahms’s German Requiem.

10. Write a periodic blog post, if only a secret and non-published one.  If you don’t find this process is going well, ask yourself what is wrong.

11. Worry if no one thinks you are crazy.  Supplement this with actually being crazy.

12. What else?

Saturday assorted links

by on January 14, 2017 at 12:33 am in Uncategorized | Permalink

1. How is the Nigerian anti-corruption campaign going?

2. This four-year-old girl knows how to read books fast and with superior comprehension.

3. Bernie Madoff dominates the hot chocolate market in prison.

4. What happens when algorithms design a concert hall?

5. David Brooks on markets in health care (NYT).

6. “As superlow rates reduce loan revenue, a Japanese lender branches out into farming, pinball, broadcasting, rice cultivation and blueberry jam; ‘If you’re going to go to the bank, it should be fun’”, WSJ link here.  And Basil Halperin on market monetarism.

7. “The ‘Krispy Kreme Familia’ and the black market doughnuts of Juarez.”