One reason why TFR problems are hard to fix

Perhaps much larger birth subsidies would help to raise birth rates.  But the world with much larger birth subsidies might also coincide with a world where the social pressures to have (more) children are higher than under the status quo.  Many women would be worse off with such pressures, or at least they feel they would be.  In principle, these women might prefer a mixed regime of “strong pecuniary incentives, weak social incentives,” but they don’t feel they can get to that mix.  The expressive function of the law is strong, and the social pressures to have more children would become strong too.  These women therefore end up opposed or indifferent to the pecuniary incentives, even though on paper they might appear to be a “free lunch.”

The difficulty of separating pecuniary and social incentives therefore may be one reason why TFR problems are hard to fix.

Poland projection of the day

If the UK continues with the same level of growth it has seen for the last decade,” writes Sam Ashworth-Hayes, “Poland will be richer than Britain in about 12 years’ time”:

It sounds like an absurd idea that in 2040 we might see complaints in the Polish press about a flood of British plumbers undercutting wages, or Brytyjski Skleps lining the rougher areas of Warsaw, but it isn’t beyond the realms of possibility.

This talking point has also appeared in the Telegraph, the Express and the Financial Times. It often comes with a sense of vague alarm and bewilderment. Poland? The post-communist place? Don’t they live entirely off vodka and potatoes? Don’t they have horses clippety-cloppeting down the streets selling women’s underwear pinched off a truck in Germany? Poland?

A lot can change in nine years, in Britain and in Poland

Having lived in Poland for nine years, I can say that I am not at all surprised by these projections. To be clear, that is all they are — projections. A lot can change in nine years, in Britain and in Poland.

Still, I think a lot of British people would be surprised by how much better things can be in the land of Lech Wałęsa and John Paul II.

That is by Ben Sixsmith.  Poland remains a underrated nation.

Friday assorted links

1. Law in the Bahamas.  At least at times.  And impact of the FTX collapse on the Bahamas (FT).  And WSJ on the Bahamas.

2. How physics can improve the urinal.

3. “During the 1920s, the EBR [Eastern Bengal Railway] continued to grow by merger and amalgamation, and also began to convert sections of metre and narrow gauge to eliminate rail bottlenecks.”  Link here.

4. Stewart Brand praises Shantaram, the best bad book ever.

5. Generalized tendency to make extreme trait judgements from faces.  Funny how no one seems to mind this, perhaps it is too hard-wired?  How much is it that this tendency serves the interest of the media class overall?  After all, most stories about people have photos of those same people.

6. Mises and Hayek on federalism, European and otherwise.

7. Hans Magnus Enzensberger, RIP.

More on the nominal strength of the dollar

Adrián Lucardi writes to me, addressing yesterday’s question of why more currencies are not nominally stronger than the USD:

Short answer: costly to implement; few direct (political or macroeconomic) benefits if things go well; but politically costly if things turn sour.

Long answer: Suppose you’re the dictator of a non-serious country who wants a “strong” local currency for propaganda reasons. The dollar is probably more valuable (nominally) than the local currency, so you will have to start with a massive currency reform. This is costly (bad) but will increase the salience of the issue (good, you’re doing it for propaganda reasons). But then, you make the exchange rate focal: you publicly commit to it as a signal of your government’s performance. Since you’re unlikely to keep your currency more “valuable” than the dollar in the medium term, this can be disastrous.

Furthermore, since your commitment to a “strong” exchange rate is not credible, people may use the local currency to buy dollars. This may not be rational in the sense that the local currency is only “strong” in nominal terms, but if everybody believes that everybody will do it, the logic becomes self-fulfilling.

PS. Non-serious governments have long used exchange controls to benefit cronies and politically valuable constituencies. But if you’re doing that, you don’t want the exchange rate to be in the public imagination.

Our own Alex T. writes:

Coins are expensive to mint. Poorer countries are thus more likely to use fiat currency for smaller denominations and so must be “cheaper” than US dollar.

A nice virtue of this story is that it is testable.

Both points are of interest for those who have been paying attention to the difference between real and nominal currency values.

Detective Wanted

Nat Friedman is seeking a full-time solo technical leader to go on a modern day Indiana Jones-style treasure hunt. You will be responsible for starting and running a crowdsourced effort to crack an archaeological puzzle of great historical significance. Success would be global news, could rewrite large chunks of history, and is guaranteed to be a story you will tell your grandchildren.

This is a full-time position for a 3-6 month period (which is about how long we think it will take to crack the puzzle, or at least to set it on a course to be solved). Pay range is $120-250k/yr. Think of this as an adventurous interlude between your more lucrative commercial gigs.

You will act as a mini-CTO, making appropriate technical decisions, staying responsive, and allocating time and resources effectively. This role will require highly effective communication, the ability to make complex code understandable, the ability to write clear technical documentation, the ability to foster and grow an online community, coupled with solid software engineering knowledge.

The ideal candidate will have experience in creating, managing, maintaining, and contributing to open source software projects. A background in working with custom software and data pipelines for scientific research is desirable. Comfort with PyTorch, C++, and OpenCV is a big plus.

More here.

AI and language learning

Rob asks:

I would love to see you write on how AI changes the value of language learning, at the margin.

Two thoughts:

The value of learning languages in order to “get” a culture more deeply probably doesn’t change much.

On the other hand, international students probably have much less incentive to learn English — they are mostly interacting with other non-native speakers anyway, there is little cultural knowledge to be gleaned from it.

What else?

(I’m thinking of this because I just moved to Paris with my French wife . . . and thinking about the value of improving my French)

Let’s say that soon we have universal translators as good as on Star Trek, except the words are spoken first in the foreign language and then repeated/translated by the AI (i.e., the AI can’t just make “Romulans speak perfect TV English”).  There is then one obvious reason not to learn foreign languages, especially for short interactions and travel interactions.  For short interactions, the doubling time for the verbal exchange isn’t a big deal.  So instead of learning the foreign language, the AI does the work for you.

But under which conditions does this not hold?

Alternatively, let us say you wanted to be “matched” to the most appropriate person in the entire world on some topic.  It could be a marriage match, a friendship match, or simply a “I need to spend many hours discussing Tibetan traditional music with this person” match.  The doubling time for the exchange now is a big deal.  “Yes we are married, but it is not so bad that everything is repeated by the AI — it limits the amount of time we have to talk to each other and it also slows down our arguments” –no, that just doesn’t cut it, perhaps only for Tyrone.

These ideal matches still will provide a robust reason to learn foreign languages, at least provided you know the language you wish to match into, or perhaps you simply wish to match into something.  If the people you wish to match to speak decent English, however, that is again a reason not to learn.

You also might value the “perspectival” benefits of a foreign language more in a world with AI.  Perhaps the humanities and multi-perspectival approaches will rise in value, given the ability of the AI to execute very well on technical tasks.  Under those assumptions, AI increases the returns to learning the appropriate foreign languages.

Plus AI itself will make languages easier to learn — imagine having a companion to practice with, at any level of desired difficulty, all the time.

Since the short, travel-based interactions were never the main reason to learn foreign languages anyway, perhaps the demand to learn other languages will prove more robust than many are expecting?

Why aren’t more currencies more valuable than the U.S. dollar?

The currencies from Kuwait and Bahrain and Grand Cayman are more valuable than the U.S. dollar, the British pound, and the euro usually if not always as of late.  Why aren’t more currencies greater in nominal value?

True, nominal variables should not matter past the short run, but that does not answer the question.  Why don’t some countries denominate above USD, and then boast to their misled citizenries about having created “stronger” currencies?  Is that what a few possibly status-hungry smaller nations have done?  Or is the status quo merely an accident of history?

Or is there some structural reason why the USD is relatively strong?  Was not the Indian rupee once at par?  Maybe part of the mystery is that we Americans have, by global standards, a lower than average inflation rate.  But why is it (currently) about 140 Japanese Yen to the dollar?

Might it be that other countries are wiser, opting for finer gradations in their nominal schemes, just as Fahrenheit is a better temperature system than Centigrade for the same reason?

What other reasons might there be?  Inquiring minds wish to know.

Assorted links

1. Does quantum entanglement enable mechanisms that guarantee PD cooperation?

2. Building the Empire State Building.

3. Enter Inspector Gadget, and Wilkie Collins.

4. FT dialogue with Brad DeLong.

5. The other AEA — Actors’ Equity Association — lifted mask mandates some while ago.  It is not too late for our AEA — American Economics Association — to follow suit and avoid embarrassment.  Isn’t part of science being able to admit you were wrong?  Who exactly is still doing a mask mandate right now?  I’ve been to plenty of events and plenty of other countries.

6. Additional things to be thankful for.  Large and small.

Brussel Sprouts are Good

Have you noticed that Brussel sprouts are enjoying a renaissance? Once scorned they are now showing up at top-notch restaurants.

NPR: Foods go in and out of style. Few of them, though, have gone through as dramatic a renaissance in their reputation as Brussels sprouts.

…Shannan Troncoso remembers hearing, about a decade ago, that celebrity chef David Chang was doing amazing things with Brussels sprouts and bacon at his restaurant Momofuku, in New York. Then she encountered some crispy fried Brussels sprouts at a restaurant in San Francisco. “It was so good, I was like, I can figure this out! And I can introduce this back into my area,” she says.

When she launched her own restaurant — Brookland’s Finest Bar & Kitchen, a neighborhood establishment in Northeast Washington, D.C. — they were on the menu from very beginning.

“We peel the leaves off, each tiny little leaf. That’s like a full-time job for somebody,” she says. The actual cooking takes no time at all. Troncoso drops a basket of leaves into the fryer. Within seconds, they’re turning brown. She pulls them out, lets them drain for a bit, then tosses them with a bit of lemon juice and salt.

Troncoso says that her customers had to be talked into ordering them at first. “People are kind of like, ‘ugh, Brussels sprouts,’ ” she says. But now it’s one of her most popular dishes.

There’s a reason for the renaissance. The Brussel sprouts you remember as a kid did taste bitter and, yes, you can blame that on capitalism and big business. A new variety of Brussel sprouts was developed in the 1960s that was great for mechanized production but it had the side-effect of being bitter. Prices fell but Brussel sprouts got a bad reputation. What the anti-big business people overlook, however, is that this wasn’t the end of the story. Capitalism works to lower prices and increase quality.

IFLScience: By the 1990s, the Big Sprout industrial complex had had enough and started to look into ways to Make Brussels Great Again. A study published in 1999 by scientists from the seed and chemical company Novartis managed to pinpoint the specific compounds that gave Brussel sprouts their undesired bitterness: two glucosinolates called sinigrin and progoitrin.

This helped to prompt a number of seed companies to sift through gene banks to look for old varieties of vegetables that happened to have low levels of the bitter chemicals, according to NPR. These less bitter varieties were then cross-pollinated with modern high-yielding ones, aiming to get the best of both worlds: a better-tasting product that could be cultivated on an industrial scale. After years of patience, they eventually produced a crop that was both tasty and economically viable.

And just like that, the former glory of Brussels sprouts was restored, shifting this vegetable from a culinary pariah to a prized side dish.

So this Thanksgiving, give thanks to science, capitalism and delicious Brussel sprouts!

Addendum: Here’s a good, simple recipe for roasted Brussel sprouts. Enjoy!

In the second chamber of the UK Parliament this last week

Lord Triesman:  I will tell the noble Baroness, Lady Smith, that at Cambridge University, after the faculty of economics was redecorated, I was inveigled into taking part in a debate as to the order in which the portraits of its Nobel prize winners should be rehung and whether it should be Marshall or Keynes in the pre-eminent position. I left that debate after eight hours. No one was an inch further down the line of resolving it and, to my knowledge, the portraits have never been hung, because 20 years later no one is any further down the path of resolving it.


Via Martin.

Wednesday assorted links

1. Happy to see that Alexa is losing money.

2. What does an inflation-proof Thanksgiving dinner look like?

3. Ross D. on indigenous America (NYT).

4. Asterisk, a new magazine.

5. Native Land, a service to help map indigenous ownership.

6. Fantasy League for economists?

7. Supreme Court agrees to hear Jack Daniel’s trademark case against dog toy company.

8. The Vitalik hypothesis, about language.

AI Conquers Diplomacy

Diplomacy is a 7-player game in which players must persuade, cajole, coordinate, strategize, bluff and lie to one another in order to take over the world. For the first time, an AI has achieved success in Diplomacy:

Over 40 Diplomacy games with 82 human players involving 5,277 messages over 72 hours of gameplay, CICERO achieved more than double the average score of the other players and ranked in the top 10% of players!

Note that this AI isn’t just a large language model, it’s a strategic engine connected to a language model–thus it figures out what it wants to do and then it convinces others, including gaining sympathy, bluffing and lying, to get others to do what it wants to do.

Here’s some correspondence from one game. Can you tell which is the AI?

CaptainMeme, a professional Diplomacy player, runs through an entire blitz game here. What’s interesting is that he hardly comments on the AI aspect and just treats it as a game with 6 other very good players.

Paper and more discussion here. Keep in mind that since the game is zero-sum to do well the AI must convince humans to do what is NOT in their interest. We really do need to invest more in the alignment problem.

Addendum: Austria and France were the AI.

Best non-fiction books of 2022

Behind the links are sometimes but not always my longer reviews.  The list is (mostly) in the order I read them.  Here goes:

Markus Friedrich, The Jesuits: A History.

Barbara Bloemink, Florine Stettheimer: A Biography.

Anna Keay, The Restless Republic: Britain Without a Crown.

Caroline Elkins, Legacy of Violence: A History of the British Empire.

Richard Overy, Blood and Ruins: The Last Imperial War, 1931-1945.

Mark Bergen, Like, Comment, Subscribe: How YouTube Conquered the World.

Julie Phillips, The Baby on the Fire Escape: Creativity, Motherhood, and the Mind-Baby Problem.

Mancur Olson, reprinted new edition of The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities.

The Malcolm Gladwell audiobook Miracle and Wonder: Conversations with Paul Simon.

Tyler Cowen and Daniel Gross, Talent: How to Identify Energizers, Creators, and Winners Around the World.

Mark Koyama and Jared Rubin, How the World Became Rich: The Historical Origins of Economic Growth.

Katherine Rundell, Super-Infinite: The Transformations of John Donne.

Anthony Beevor, Russia: Revolution and Civil War, 1917-1921.

William C. Kirby, Empires of Ideas: Creating the Modern University from Germany to America to China.

Peter Loftus, The Messenger: Moderna, the Vaccine, and the Business Gamble That Changed the World.

Kevin Kelly, Vanishing Asia, three volumes, expensive, mostly photos, worth it.

Richard R. Reeves, Of Boys and Men.  One of America’s biggest problems.

Andrea Wulf, Magnificent Rebels: The First Romantics and the Invention of the Self.  A+ academic gossip, so to speak.

Pekka Hämäläinen, Indigenous Continent: The Epic Contest for North America.

Johann Peter Eckermann, Conversations with Goethe.  The new translation, much better than the old.

Julia Voss, Hilma af Klint: A Biography.

Hayek: A Life, 1899-1950, by Bruce Caldwell & Hansjoerg Klausinger.

John Higgs, Love and Let Die: Bond, the Beatles, and the British Psyche.

Garett Jones, The Culture Transplant: How Migrants Make the Economies They Move to a Lot Like the Ones They Left.

I don’t think I can pick a favorite this year!  But maybe the Kevin Kelly and the Catherine Rundell books, if I had to say?  And please keep in mind this is a meritocratic list, not based on any quotas or any attempt at “balance.”  These were the best books!

I will be issuing an addendum at the very end of the year, since I will be reading more between now and 2023.

What determines graduate admissions for economics?

We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.

That is from a new paper by Jessica Bai, Matthew Esche, W. Bentley MacLeod & Yifan Shi.