Best business/economics podcast award

by on December 31, 2015 at 9:06 am in Economics, Web/Tech | Permalink

I am pleased that my Conversations with Tyler chat with Jeffrey Sachs won this award from Quartz, here is their description:

Smart economist Tyler Cowen interviews smart economist Jeffrey Sachs in the new and infrequently released series Conversations with Tyler. The conversation is wide-ranging—they discuss China, anthropologists, the Cuban Missile Crisis, and more—but centers around Sachs’ belief that well-intentioned humans can solve even the most difficult problems. Sachs offers:”So I pulled an all-nighter, and I wrote a plan for transforming Poland from a communist, central-planned economy to a market economy.” Arguably, this is the best single podcast episode to listen to if you want to be smarter about economics.

The transcript, audio and video versions are here, the entire series of chats is here; next up is Kareem Abdul-Jabbar.

For the pointer I thank Russ Roberts, who won an award for Excellence in Podcasting Overall, which of course he well deserves.

Addendum: You can help other people discover the podcast by rating it on iTunes and leaving a review.

 As always, you can subscribe to the podcast via iTunes, Stitcher, or your favorite podcast app.

Halfaker, Geiger, Morgan, and Riedl have a new paper on this topic (pdf), here is the abstract:

Open collaboration systems like Wikipedia need to maintain a pool of volunteer contributors in order to remain relevant. Wikipedia was created through a tremendous number of contributions by millions of contributors. However, recent research has shown that the number of active contributors in Wikipedia has been declining steadily for years, and suggests that a sharp decline in the retention of newcomers is the cause. This paper presents data that show that several changes the Wikipedia community made to manage quality and consistency in the face of a massive growth in participation have ironically crippled the very growth they were designed to manage. Specifically, the restrictiveness of the encyclopedia’s primary quality control mechanism and the algorithmic tools used to reject contributions are implicated as key causes of decreased newcomer retention. Further, the community’s formal mechanisms for norm articulation are shown to have calcified against changes – especially changes proposed by newer editors.

This is an interesting paper, but I think it undervalues the hypothesis that potential contributors simply prefer to be in on things which are both new and cool.  Wikipedia, which is no longer new, cannot be so cool.  That is why Beethoven’s 5th does not top the pop charts, though if it were new it might.

For the pointer I thank David Siegel.

Under one model, Tinder teaches you the joys of tussling with those from “the other side of the tracks,” and pulls you away from marrying a fellow Ph.d. — “once you’ve tried Mack, you’ll never go back.”

My intuition differs.  You use Tinder in bars, venues, and neighborhoods you have chosen.  So you end up tussling with, or mating with, or just chatting with, the more attractive members of your own preferred socioeconomic group.  If your group wasn’t on average so sexy to begin with, well at least at the top end it just got a big upgrade in terms of your actual access to attractiveness.  So on net the high socioeconomic groups become sexier, at least for those “at the top” with the most choice.

(I am assuming by the way that male photos can to some extent signal status, income, and education, and not just looks; furthermore the male follow-up can demonstrate this readily.  And many “connection” services post this information in one form or another as part of the profile.  If need be, in general equilibrium bars can adjust their exclusiveness levels to match better to a world-with-Tinder, so that bar patrons are not lured into socioeconomically mistaken “honey pot” marriages.)

Most of all, Tinder gets you out more.  You sample more people, even if you don’t end up meeting them through the Tinder app itself.  Going to a bar or public space is a better way to spend time than before, and that draws others out too.  That’s right, “thick market externalities.”  The resulting extra meetings  tend to favor assortative mating, just compare such plenitude to a corner solution where you meet only one potential spouse your entire life, namely the proverbial girl next door.

Put it this way: George Clooney or a Silicon Valley billionaire can do better — especially better, compared to others — choosing from 500 people than from five.  He (she) has a very good chance of getting his (her) absolute top favorite pick, or close to it.  The local milkman also does better from a larger sample size, if only because of match and compatibility issues, but can’t expect to move up so much and of course the pool as a whole can’t “move up” at all.  (If you wish, break this down into a positive-sum compatibility component and a competitive zero-sum component; unlike Clooney the milkman may not gain on the latter.)

Finally, Tinder may make it easier for married people to find casual sex, again if they have the right qualifications.  Therefore those marrieds may, earlier on, decide to choose a spouse on the grounds of IQ and education, again boosting assortative mating in terms of those features.

In sum, I expect Tinder to boost assortative mating, at least at the top end of the distribution in terms of IQ and education.

And please note, I suspect this increase in assortative mating is a good thing.  The abilities of top achievers have a disproportionate impact on the quality of our lives, due to innovation being a public good.

In any case, file under speculative.


Addendum: An interesting twist on the model is to assume that men have some willingness to marry down in terms of education, in return for beauty or other forms of household production, but women do not.  An increase in the total sampling of potential partners therefore boosts the marriage prospects of very beautiful women, at the expense of less beautiful women of a given level of educational attainment.  In percentage terms, very beautiful women of decent but not extraordinary educational achievement gain the most.  Men who are indifferent to such forms of female beauty end up with the smartest children.

Second addendum: Yesterday brought an ongoing twitter exchange on these issues, you might start with tweets by @ninjaeconomics and @modestproposal.

Mr. Obama also said, “It is our responsibility to reject religious tests on who we admit into this country.” But negative searches about Syrian refugees rose 60 percent. Searches asking how to help Syrian refugees dropped 35 percent. The president asked us to “not forget that freedom is more powerful than fear.” But searches for “kill Muslims” tripled during his speech.

There was one line, however, that did trigger the type of response Mr. Obama might have wanted. He said, “Muslim Americans are our friends and our neighbors, our co-workers, our sports heroes and yes, they are our men and women in uniform, who are willing to die in defense of our country.”

After this line, for the first time in more than a year, the top Googled noun after “Muslim” was not “terrorists,” “extremists” or “refugees.” It was “athletes,” followed by “soldiers.” And, in fact, “athletes” kept the top spot for a full day afterward.

That is from a fascinating new piece by Evan Soltas and Seth Stephens-Davidowitz.

Here is a new and interesting paper by Philip Rogaway at UC Davis (pdf), here is the abstract:

Cryptography rearranges power: it configures who can do what, from what. This makes cryptography an inherently political tool, and it confers on the field an intrinsically moral dimension. The Snowden revelations motivate a reassessment of the political and moral positioning of cryptography. They lead one to ask if our inability to effectively address mass surveillance constitutes a failure of our field. I believe that it does. I call for a community-wide effort to develop more effective means to resist mass surveillance. I plea for a reinvention of our disciplinary culture to attend not only to puzzles and math, but, also, to the societal implications of our work.

Recommended, the paper has a good deal of substance, via Vitorino Ramos and Will Wilkinson.

Is he (they?) Satoshi?

by on December 9, 2015 at 7:29 pm in Current Affairs, Web/Tech | Permalink

Just wondering…

I’ve been saying “no, not really” for a while now. Here is a good Philip Stafford FT story on the question, excerpt:

With an internal blockchain “all you’ve done is set up an interbank liability”, says Peter Randall, chief executive of Setl, a UK blockchain start-up, and the former head of the Chi-X Europe share trading venue. “True settlement is where you never have to see the other party again. Settlement can only take place in central bank money.”

Any such system would have to be grafted on to banks’ existing IT and payment systems, some of which have been in place for decades, and meet the requirements of market watchdogs. Regulatory issues include anti-money laundering and trade reporting laws.

“In theory it could bring benefits,” says Mr Swanson. “But if we’re not rigorous in issues like switching costs and all the ‘boring stuff’, it won’t go anywhere.”

Many in the industry say expectations are too high, and favour a long-term, phased approach to putting asset classes on the blockchain. It could start with central bank transfers in the payments system and then move on to settlement of various types of security.

And this:

“In terms of total R&D at banks, it’s a drop in the ocean,” says Virginie O’Shea, an analyst at Aite. “They don’t see it as going to revolutionise their business. It’s more speculative than anything. Blockchain is this year’s ‘big data’.”

I’m going to stick with my prediction.

That is the job market paper from Lei Xu, at McGill University, co-authored with Nian and Cabral at NYU’s Stern School.  Here is the abstract:

Many online platforms such as Yahoo! Answers and GitHub rely on users to voluntarily provide content. What motivates users to contribute content for free however is not well understood. In this paper, we use a revealed preference approach to show that career concerns play an important role in user contributions to Stack Overflow, the largest online Q&A community. We investigate how activities that can enhance a user’s reputation vary before and after the user finds a new job. We contrast this with activities that do not help in enhancing a user’s reputation. After finding a new job, users contribute 25% less in reputation-generating activity on Stack Overflow. By contrast, they reduce their non-reputation-generating activity by only 8% after finding a new job. These findings suggest that users contribute to Stack Overflow in part because they perceive this as a way to improve future employment prospects. We provide direct evidence against alternative explanations such as integer constraints, skills mismatch, and dynamic selection effects. The results also suggest that, beyond altruism, career concerns play an important role in explaining voluntary contributions on Stack Overflow.

I think of this as yet another paper on how reputation can (sometimes, not always) enable the private production of public goods.

Another argument against the brain drain hypothesis is that bringing talented workers to the “frontier” countries will boost the supply of global public goods.  Rui Xu, in her job market paper from Stanford (pdf), considers exactly this effect.  Here are her main results:

Science and engineering (S&E) workers are the fundamental inputs into scientific innovation and technology adoption. In the United States, more than 20% of the S&E workers are immigrants from developing countries. In this paper, I evaluate the impact of such brain drain from non-OECD (i.e., developing) countries using a multi-country endogenous growth model. The proposed framework introduces and quantifies a “frontier growth effect” of skilled migration: migrants from developing countries create more frontier knowledge in the U.S., and the non-rivalrous knowledge diffuses to all countries. In particular, each source country is able to adopt technology invented by migrants from other countries, a previously ignored externality of skilled migration. I quantify the model by matching both micro and macro moments, and then consider counterfactuals wherein U.S. immigration policy changes. My results suggest that a policy – which doubles the number of immigrants from every non-OECD country – would boost U.S. productivity growth by 0.1 percentage point per year, and improve average welfare in the U.S. by 3.3%. Such a policy can also benefit the source countries because of the “frontier growth effect”. Taking India as an example source country, I find that the same policy would lead to faster long-run growth and a 0.9% increase in average welfare in India. This welfare gain in India is largely the result of additional non-Indian migrants, indicating the significance of the previously overlooked externality.

In other words, the brain drain argument is overrated.  You might also wish to sample our MRUniversity video on the brain drain argument.

Principles of Macroeconomics, the new course by Tyler and myself, has just launched at MRUniversity. We will be covering unemployment, inflation, business cycles, growth and much more. The first section which is up now covers GDP including

As usual, all the videos are free and will work with any textbook although of course they go best with the best textbook, Modern Principles.

Here is the introduction to GDP:

London Scout poses for her mother, Sai De Silva, in Dumbo for her Instagram account.  The 4-year-old has more than 100,000 followers.

That is the photo caption to this NYT story.  And just so you are not confused, “London Scout” is a name, and “Dumbo” is a part of New York City.

It is going slowly, to say the least:

Heaving under mountains of paperwork, the government has spent more than $1 billion trying to replace its antiquated approach to managing immigration with a system of digitized records, online applications and a full suite of nearly 100 electronic forms.

A decade in, all that officials have to show for the effort is a single form that’s now available for online applications and a single type of fee that immigrants pay electronically. The 94 other forms can be filed only with paper.

This project, run by U.S. Citizenship and Immigration Services, was originally supposed to cost a half-billion dollars and be finished in 2013. Instead, it’s now projected to reach up to $3.1 billion and be done nearly four years from now, putting in jeopardy efforts to overhaul the nation’s immigration policies, handle immigrants already seeking citizenship and detect national security threats, according to documents and interviews with former and current federal officials.

The article is here, hat tip goes to Felix Salmon.

Bhagwan Chowdhry, a professor of finance at UCLA, has nominated Satoshi Nakamoto, the creator of Bitcoin, for a Nobel prize in economics. It’s an excellent choice. Nakamoto made a fundamental breakthrough that combined cryptography and a distributed database to create the first decentralized cryptocurrency. Moreover, Nakamoto implemented his theoretical breakthrough to create a working cryptocurrency with real benefits to potentially billions of consumers.

Chowdry writes:

The invention of bitcoin — a digital currency — is nothing short of revolutionary….It offers many advantages over both physical and paper currencies. It is secure, relying on almost unbreakable cryptographic code, can be divided into millions of smaller sub-units, and can be transferred securely and nearly instantaneously from one person to any other person in the world with access to internet bypassing governments, central banks and financial intermediaries such as Visa, Mastercard, Paypal or commercial banks eliminating time delays and transactions costs.

But beyond demonstrating the possibility of creating a reliable digital currency, Satoshi Nakamoto’s Bitcoin Protocol has spawned exciting innovations in the FinTech space by showing how many financial contracts — not just currencies — can be digitized, securely verified and stored, and transferred instantaneously from one party to another.

…Not only will Satoshi Nakamoto’s contribution change the way we think about money, it is likely to upend the role central banks play in conducting monetary policy, destroy high-cost money transfer services such as Western Union, eliminate the 2-4% transactions tax imposed by intermediaries such as Visa, MasterCard and Paypal, eliminate the time-consuming and expensive notary and escrow services and indeed transform the landscape of legal contracts completely. Many industries such as Banking, Finance, Law will see a big upheaval. The consumers will be big beneficiaries and indeed the poor and marginal sections of the society will reap the benefits of financial and social inclusion in the coming decades. I can barely think of another innovation in Economic and Finance in the last several decades whose influence surpasses the welfare increases that will be engendered by Satoshi Nakamoto’s brilliant, path-breaking invention. That is why I am nominating him for the Nobel Prize in Economics.

Since no one knows who Nakamoto is it might seem difficult to award him a prize but Chowdry notes that bitcoin itself provides a solution:

The Nobel committee can easily buy bitcoins for the award money from any reputed online Bitcoin exchange and transfer it to him instantaneously. A very early bitcoin transaction suggests that the bitcoin address 1HLoD9E4SDFFPDiYfNYnkBLQ85Y51J3Zb1 likely belongs to him. Of course, he could easily and verifiably let the committee know which address he wants the money to be transferred to.

The Amazon bookstore (hi, future!)

by on November 5, 2015 at 10:21 am in Books, Web/Tech | Permalink

Every book is tagged with a custom label featuring its aggregate rating on Amazon.com, along with a review from the website. There are no prices. To get a book’s price, you must use the Amazon app on your smartphone to scan the barcode. This act will provide you with the product listing, all the title’s reviews on Amazon.com, and the price. If you don’t have a smartphone or the app handy, associates are on hand to assist.

An associate at the store also confirmed what many news reports about Amazon Books have stated, that the store only stocks books with Amazon.com ratings of four stars and above [TC: is this really wise?]. The associate also confirmed that prices for books in the store are identical to those of the books sold online. And, since book prices on Amazon.com can fluctuate regularly, so can prices in the store. The associate said one thing they are vigilant about in the store is ensuring customers don’t get confused by receiving different price quotes at different times.

The store, which aims to seamlessly transition the online shopping experience to a real world scenario, allows you to use credits associated with your account at the register. However, you cannot order merchandise online and have it delivered to the store.

There is more here, interesting throughout, via M.  Can anyone from Seattle report on this?

A man dubbed the Drone Slayer for shooting a miniature aircraft out of the sky has had a criminal case against him thrown out.

William Meredith drew his shotgun and took out a Phantom 3 drone after spotting it above his home in Hillview, Kentucky, this summer – landing him in jail and prompting legal proceedings.

Mr Meredith was charged with criminal mischief and wanton endangerment for destroying the $900 drone in July – but this week had both of them thrown out by a judge.

There is more here, via the excellent Mark Thorson.  And here is a previous installment in the series.