…note that Solar City’s stock, after jumping up 12% at yesterday’s open, ended the day only up 3%; both are well below the 25%~34% premium offered by Tesla, suggesting the market is very skeptical of this deal happening. The problem, though, is that Tesla dropped 9.2% at open (representing a market cap loss that was double Solar City’s worth), but instead of moving back up in the opposite direction of Solar City’s drop, the stock actually closed down even further for a 10.5% decline. This suggests that a good portion of the drop is not due to the possibility of Solar City being acquired, but a loss of confidence in the company.

That is from Ben Thompson’s Stratechery newsletter, worth paying for or so I find at least.  Here is basic background on the proposed deal.

There is audio, video, and transcript at the link.  I introduced Cass like this:

The Force is strong with this one. Cass is by far the most widely cited legal scholar of his generation. His older book, Nudge, and his new book on Star Wars are both best sellers, and he was head of OIRA [Office of Information and Regulatory Affairs] under President Obama from 2009 to 2013. Powerful, you have become.

So tonight I’d like to start with a survey of Cass’s thought. We’re going to look at legal theory and then go to Nudge and then consider Star Wars, how it all ties together, and then we’re going to talk about everything.

On every point Cass responded clearly and without evasion.  We talked about judicial minimalism, Bob Dylan’s best album, the metaphysics of nudging, Possession, the ideal size of the Supreme Court, the wisdom of Yoda, Hayek, why people should choose their own path, the merits of a banned products store, James Joyce, why the prequels are underrated, and which of the first six movies is the worst of the lot.  Here is one bit:

COWEN: Let’s take a concrete example from real life: Jedi mind tricks. Obi-Wan comes along and says, “These aren’t the droids you’re looking for.” And what does the stormtroooper do? He goes away. Now, is that a nudge?

SUNSTEIN: No, it’s a form of manipulation. So — .

[laughter]

COWEN: OK, but how do you draw the metaphysical categories? It seems like a nudge that just happens to work all the time.

SUNSTEIN: OK. I’ll give you a quick and dirty way of getting at that…

Here is another:

COWEN: If you were to pick one character from Star Wars who would nudge you — you get to elect them; you’re the only vote. Even Samantha doesn’t get a vote, just Cass — not your children — which character would you pick? Whom would you trust with that nudge? It’s a universe full of Jedi here, right?

SUNSTEIN: Yoda.

COWEN: Yoda?

SUNSTEIN: I trust that guy.

COWEN: But I worry about Yoda.

SUNSTEIN: I trust him.

Finally:

SUNSTEIN: Thank God for libertarian paternalism, that Luke has a choice. The Sith, by the way, like the Jedi, respect freedom of choice. In the crucial scene in Episode III where the question is whether Anakin is going to save the person who would be emperor, he says, “You must choose.” And so there’s full respect for freedom of choice. Nudgers have that. Good for them.

COWEN: Bad guys always tell you the deal, and then they say, “Choose evil.” It seems the good guys always mislead you.

There’s this funny tension. Star Wars makes me more nervous about nudge. I’m not like this huge anti-nudge guy, but when I look at Obi-Wan and Yoda lying to Luke — “Ben, Ben, Ben, why didn’t you tell me?” How many times have I heard that in these movies?

SUNSTEIN: It’s fair to ask whether Obi-Wan and Yoda had it right.

There is much, more more…self-recommending!

View story at Medium.com

The old take:

Book superstores such as Barnes & Noble cause risk-averse publishers to double down on celebrity authors and surefire hits.

The new take:

In a world without Barnes & Noble, risk-averse publishers will double down on celebrity authors and surefire hits.

The first of the two is my memory, the latter of the two is a quotation.  I found this claim, by author Alex Shephard, interesting:

Big-name authors, like Malcolm Gladwell or James Patterson, will probably be fine. So too will writers who specialize in romance, science fiction, manga, and commercial fiction—genres with devoted audiences, who have already gravitated to Amazon’s low prices. But Barnes & Noble is essential to publishers of literary fiction—the so-called “serious” works that get nominated for Pulitzers and National Book Awards. Without the initial orders Barnes & Noble places, and the visibility its shelves provide, breakout hits by relative unknowns—books like Anthony Doerr’s All the Light We Cannot See or Emily St. John Mandel’s Station Eleven—will suffer.

Could it be that without book superstores fewer books will be sold, but a higher percentage of those sold will be read?

Wednesday assorted links

by on June 22, 2016 at 1:23 pm in Uncategorized | Permalink

In Utah v. Strieff, the Supreme Court has again weakened Fourth Amendment rights. The Sotomayor and Kagan (joined by Ginsburg) dissents are excellent and important. Sotomayor summarizes the basic issue in the case:

The Court today holds that the discovery of a warrant for an unpaid parking ticket will forgive a police officer’s violation of your Fourth Amendment rights. Do not be soothed by the opinion’s technical language: This case allows the police to stop you on the street, demand your identification, and check it for outstanding traffic warrants—even if you are doing nothing wrong. If the officer discovers a warrant for a fine you forgot to pay, courts will now excuse his illegal stop and will admit into evidence anything he happens to find by searching you after arresting you on the warrant. Because the Fourth Amendment should prohibit, not permit, such misconduct, I dissent.

If outstanding warrants were few and far between and distributed more or less randomly the case would have been wrongly decided but of little practical importance. Outstanding warrants, however, are common and much more common in some communities than others. As I wrote in 2014, in Ferguson, MO a majority of the population had outstanding warrants and not because of high crime:

You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”

Sotomayor and Kagan understand all this and the incentives the case now creates for bad policing. Here’s Kagan (who cites some of my work):

…far from a Barney Fife-type mishap, Fackrell’s seizure of Strieff was a calculated decision…As Fackrell testified, checking for outstanding warrants during a stop is the “normal” practice of South Salt Lake City police….And find them they will, given the staggering number of such warrants on the books.

…The majority’s misapplication of Brown’s three-part inquiry creates unfortunate incentives for the police— indeed, practically invites them to do what Fackrell did here….Now the officer knows that the stop may well yield admissible evidence: So long as the target is one of the many millions of people in this country with an outstanding arrest warrant, anything the officer finds in a search is fair game for use in a criminal prosecution. The officer’s incentive to violate the Constitution thus increases: From here on, he sees potential advantage in stopping individuals without reasonable suspicion—exactly the temptation the exclusionary rule is supposed to remove.

Sotomayor is at her most scathing in explaining the indignity and serious consequences of an arrest even without a conviction (citations removed for clarity):

The indignity of the stop is not limited to an officer telling you that you look like a criminal. The officer may next ask for your “consent” to inspect your bag or purse without telling you that you can decline. Regardless of your answer, he may order you to stand “helpless, perhaps facing a wall with [your] hands raised.” If the officer thinks you might be dangerous, he may then “frisk” you for weapons. This involves more than just a pat down. As onlookers pass by, the officer may “‘feel with sensitive fingers every portion of [your] body. A thorough search [may] be made of [your] arms and armpits, waistline and back, the groin and area about the testicles, and entire surface of the legs down to the feet.’”

The officer’s control over you does not end with the stop. If the officer chooses, he may handcuff you and take you to jail for doing nothing more than speeding, jaywalking, or “driving [your] pickup truck…with [your] 3-year-old son and 5-year-old daughter…without [your] seatbelt fastened.” At the jail, he can fingerprint you, swab DNA from the inside of your mouth, and force you to “shower with a delousing agent” while you “lift [your] tongue, hold out [your] arms, turn around, and lift [your] genitals.” Even if you are innocent, you will now join the 65 million Americans with an arrest record and experience the “civil death” of discrimination by employers, landlords, and whoever else conducts a background check. And, of course, if you fail to pay bail or appear for court, a judge will issue a warrant to render you “arrestable on sight” in the future.

…[all of this, AT] implies that you are not a citizen of a democracy but the subject of a carceral state, just waiting to be cataloged.

Todd, a loyal MR reader, writes to me:

My kids are 11, 8, and 5. They go to the great [redacted] School. So far, they’ve been exposed to zero economic ideas. None. Why is this? Why do they learn about Beowulf, the Underground Railroad, and Spanish, but no basic economics? In fact, looking back at my own primary education, I had no exposure either. What explains the absence of basic economics education in primary education? Wouldn’t giving every kid an intuitive grasp of econ 101 at a very early age work a profound improvement on the state of private and public decision making in this country? Are we just a really good textbook (aimed at maybe 4th – 6th graders) away from big social gains?

I have heard related tales from others, so what are the possible explanations?

1. K-12 teachers do not themselves understand economics.

2. It is much easier to teach and test historical facts and Spanish grammar than economic concepts.  Note that many high school economics classes seem to devote a lot of attention to business taxonomy rather than actually thinking like an economist.

3. K-12 administrators may be hostile to economic reasoning, since said reasoning may paint some of them in a less than flattering light.

Anything else?  That all said, AP economics seems to be growing at a decent clip over the last twenty years, and in some states such as Texas senior-level economics is now required.  But at lower levels?  The progress is much less evident.

Here are some not always so useful discussion threads on this query.

It can be incredibly frustrating when a virtual assistant repeatedly misunderstands what you’re saying. Soon, though, some of them might at least be able to hear the irritation in your voice, and offer an apology.

Amazon is working on significant updates to Alexa, the virtual helper that lives inside the company’s voice-controlled home appliance, called Amazon Echo. These will include better language skills and perhaps the ability to recognize the emotional tenor of your voice.

Researchers have long predicted that emotional cues could make machine interfaces much smarter, but so far such technology has not been incorporated into any consumer technology.

Rosalind Picard, a professor at MIT’s Media Lab, says adding emotion sensing to personal electronics could improve them: “Yes, definitely, this is spot on.” In a 1997 book, Affective Computing, Picard first mentioned the idea of changing the voice of a virtual helper in response to a user’s emotional state. She notes that research has shown how matching a computer’s voice to that of a person can make communication more efficient and effective. “There are lots of ways it could help,” she says.

The software needed to detect the emotional state in a person’s voice exists already. For some time, telephone support companies have used such technology to detect when a customer is becoming irritated while dealing with an automated system. In recent years, new machine-learning techniques have improved the state of the art, making it possible to detect more emotional states with greater accuracy, although the approach is far from perfect.

Here is the full story.  Here is my recent New Yorker piece on how talking bots will affect us.

Rates of marijuana use among Colorado’s teenagers are essentially unchanged in the years since the state’s voters legalized marijuana in 2012, new survey data from the Colorado Department of Public Health and Environment shows.

In 2015, 21 percent of Colorado youths had used marijuana in the past 30 days. That rate is slightly lower than the national average and down slightly from the 25 percent who used marijuana in 2009, before legalization. The survey was based on a random sample of 17,000 middle and high school students in Colorado.

That is from Christopher Ingraham at Wonkblog.  Those are surveys, yes, but even the continuing feeling that one needs to lie and say no should count for something.

From a new Economic Journal article by Kim Oosterlinck:

During World War II, artworks significantly outperformed all alternative investments in Occupied France. With the surge in demand for portable and easy-to-hide (discreet) assets such as artworks and collectible stamps, prices boomed. This suggests that discreet assets may be viewed as crypto-currencies, demand for which varies depending on the environment and the need to hide value. Regarding art market valuation, this paper argues that while some economic actors derive significant utility from conspicuous consumption, others value the discretion offered by artworks. Motives for purchasing art may thus vary over time.

The pointer is from Kevin Lewis.  And via Samir Varma, here is a new piece on how the returns to fine art have been overestimated.

Newspaper headlines trumpeted that the middle class is shrinking but to a large extent that is because people are moving into the upper middle class not because they are getting poorer. By one measure, the middle class has shrunk from 38% of the US population in 1980 to 32% today but at the same time the upper middle class has grown from 12% to 30% of the population today.

Josh Zumbrun at the WSJ has an excellent piece on new research from the (liberal-leaning) Urban Institute and elsewhere:

upper middle

There is no standard definition of the upper middle class. Many researchers have defined the group as households or families with incomes in the top 20%, excluding the top 1% or 2%. Mr. Rose, by contrast, uses a more dynamic method similar to how researchers calculate the poverty rate, which allows for growth or shrinkage over time, and adjusts for family size.

Using Census Bureau data available through 2014, he defines the upper middle class as any household earning $100,000 to $350,000 for a family of three: at least double the U.S. median household income and about five times the poverty level. At the same time, they are quite distinct from the richest households. Instead of inheritors of dynastic wealth or the chief executives of large companies, they are likely middle-managers or professionals in business, law or medicine with bachelors and especially advanced degrees.

Smaller households can earn somewhat less to be classified as upper middle-class; larger households need to earn somewhat more.

Mr. Rose adjusts these thresholds for inflation back to 1979 and finds the population earning this much money has never been so large. One could quibble with his exact thresholds or with the adjustment that he uses for inflation. But using different measures of inflation, or using higher income thresholds for the upper-middle class, produces the same result: substantial growth among this group since the 1970s.

Tuesday assorted links

by on June 21, 2016 at 12:12 pm in Uncategorized | Permalink

1. Interfluidity on the blockchain: “Nothing that has already been perfected is very interesting.

2. What Chinese women think of Hillary Clinton:One adjective: Endurance, cleaning up the mess of her husband.”

3. Why do islands induce dwarfism?

4. Physical principles for scalable neural recording.

5. Archaeologists uncover the massive naval bases of the ancient Athenians.

6. India to liberalize foreign investment (NYT).  Since Modi took office, the reforms have not been so significant; in my view it is a mistake to think that the departure of Rajan indicates matters will get worse.  He probably did all he could and in part the regime can allow him to leave for this reason.  For further progress it may be necessary to install someone more “flexible.”

7. Lebron’s block: the stats and physics (HT: Alex T.).

Critics attribute such medical experimentation in China to national ambition, generous state funding, a utilitarian worldview that prioritizes results, and a lack of transparency and accountability to the outside world.

If that is the critics, I wonder what the defenders say!  That concerns transplanting one person’s head onto the body of another.  From that NYT article, the procedure still seems impossible.  Nonetheless I am not sure the NYT’s articulation of the critical charges sounds as damning as many biomedical ethicists might wish to think…

What I’ve been reading

by on June 21, 2016 at 1:03 am in Books | Permalink

1. Andrej Svorencik and Harro Maas, editors, The Making of Experimental Economics: Witness Seminar on the Emergence of a Field.  Transcribed dialogue on the origins and history of a field, including many of the key players including Vernon Smith and Charles Plott, among others.  There should be a book like this — or better yet a web site — for every movement, major debate, new method, and school of thought.

2. Adam Kucharski, The Perfect Bet: How Science and Math are Taking the Luck Out of Gambling.  The subtitle is an exaggeration, nonetheless this is an interesting topic and book.  There is invariably a frustrating element to such an investigation, because the best schemes are hard to uncover or verify.  Nonetheless have you not thought — as I have — that a determined, Big Data-crunching, super smart entity could in fact beat the basketball odds just ever so slightly?

3. Svetlana Alexievich, Secondhand Time: The Last of the Soviets.  A good book, and a good introduction to her writing.  I have to say though, I did not find this incredibly profound or original.  Chernobyl is deeper and more philosophical.

4. Srinath Raghavan, India’s War: World War II and the Making of Modern South Asia.  Consistently well-written and interesting, the title says it all.

Three useful country/topics books on Latin America are:

Lee J. Alston, Marcus Andre Melo, Bernardo Mueller, and Carlos Pereira, Brazil in Transition: Beliefs, Leadership, and Institutional Change.

Richard E. Feinberg, Open for Business: Building the New Cuban Economy.

Dickie Davis, David Kilcullen, Greg Mills, and David Spencer, A Great Perhaps?: Colombia: Conflict and Convergence.  After Uruguay, is Colombia not the longest standing democracy in South America?

Monday assorted links

by on June 20, 2016 at 12:51 pm in Uncategorized | Permalink

1. The economics of Broadway.

2. Them vs. us, but in Brexit demands, who exactly is the “us”?

3. Patrick Blanchfield, The Gun Control We Deserve.  Recommended.  And here is an alternative perspective on why so many people own AR-15s.  Also recommended.

4. “In Guadalajara, Mexico, streets are named after artists, constellations, Aztec history and mythology, rivers, writers and botany. Imagination costs little, yet it remains rare.”  Archaeology of street names.

5. “A political philosophy devoted to the pursuit of what we now consider ideal justice, and which seeks a “well-ordered society” based on this shared ideal, almost certainly will condemn us to a society based on an inferior view of justice. Political philosophy, I argue, has too long labored under the sway of theorists’ pictures of an ideally just society; we ought instead to investigate the characteristics of societies that encourage increasingly just arrangements.” That is from philosopher Gerald Gaus.

6. An explainer on the DAO attack.  And a Reddit explainer.

7. Henry on The Age of Em.  Robin responds, and more from Robin here.

The robot administers a small pin prick at random to certain people of its choosing.

The tiny injury pierces the flesh and draws blood.

Mr Reben has nicknamed it ‘The First Law’ after a set of rules devised by sci-fi author Isaac Asimov.

He created it to generate discussion around our fear of man made machines. He says his latest device shows we need to prepare for the worst

‘Obviously, a needle is a minimum amount of injury, however – now that this class of robot exists, it will have to be confronted,’ Mr Reben said on his website.

Here is more, with pictures of (slightly) injured humans, via the excellent Mark Thorson.