Inventor CEOs

One in five U.S. high-technology firms are led by CEOs with hands-on innovation experience as inventors. Firms led by “Inventor CEOs” are associated with higher quality innovation, especially when the CEO is a high-impact inventor. During an Inventor CEO’s tenure, firms file a greater number of patents and more valuable patents in technology classes where the CEO’s hands-on experience lies. Utilizing plausibly exogenous CEO turnovers to address the matching of CEOs to firms suggests these effects are causal. The results can be explained by an Inventor CEO’s superior ability to evaluate, select, and execute innovative investment projects related to their own hands-on experience.

That is from Emdad Islam & Jason Zein, forthcoming in the Journal of Financial Economics, via the excellent Kevin Lewis.

Which of these claims is false?

The Democratic-controlled House just voted to abolish the “Cadillac tax” on employer-supplied health plans.

The Independent Payments Advisory Board no longer exists, having been abolished with support from both parties.

In the public option for Democratic-controlled Washington State, reimbursement rates were set at up to 160 percent of Medicare levels.

Single-payer health care will save America a great amount of money.

Should Alaska cut state university funding by 41 percent?

That is what they have done, in order to boost the Permanent Fund Dividend payments to the citizenry.  Here is the closing segment from my Bloomberg column:

I see Alaska’s decision as reflecting two broader trends in the U.S. First, a lot of small educational institutions are closing, consolidating or drastically cutting back, most of all in out-of-the-way places. Second, regions are diverging, both economically and culturally. More and more educated people are moving to the major cities.

You may have mixed or negative feelings about these two developments. Taken together, however, they could lead to a bunch of state schools on the chopping block. I suppose it’s fine to complain about this outcome, but far better would be to address the underlying trends.

There are things government could do if it were bold enough. How about a series of state-specific visas to foreigners, designed to encourage them to settle in Alaska and other underpopulated states? Alaska’s population could well rise to more than a million, and then the benefits of a good state university system would be more obvious, including for cultural assimilation. In fact, how about a plan to boost the population of Alaska to two or three million people? What would it take to get there?

That’s my biggest worry in all this: that that the diminution of the University of Alaska amounts to a kind of giving up. Alaska is supposed to be the American frontier, a place for taking chances. It is a sign of defeatism if the state has now decided that its main task should be mailing out dividends to its residents. The animating spirit should be one of science and exploration, as might be enabled by a well-functioning university system.

The University of Alaska in Fairbanks is rated among the world’s top science institutions for studying the Arctic, a region that might well grow considerably in importance, in part due to climate change. A well-developed and well-educated Alaska is a kind of option on future Arctic development and also on geopolitical influence. If new frontiers are opening up, then Alaska — and America — should want to be ready for them.

We really do need dynamism to keep our institutions going.  Allison Schraeger put it well on Twitter: “a preview of our UBI future.”

Rhino bond markets in everything

Conservationists have started marketing a five-year rhino bond, which bankers say will be the world’s first financial instrument dedicated to protecting a species.

Investors in the $50m bond will be paid back their capital and a coupon if African black rhino populations in five sites across Kenya and South Africa increase over five years. The yield will vary depending on changes in the rhino population, which has fallen rapidly since the 1970s.

The bond is likely to have different categories of investment, with some investors taking a “first loss” position. If rhino numbers drop, those investors will lose their money depending on the scale of the decline and the terms of their investment, while investors in other categories will be repaid.

That is from John Aglionby at the FT.

Thursday assorted links

Bryan Caplan on Spain

He spent a bunch of weeks there, there are many good observations, here is one of them:

17. Big question: Why is Spain so much richer now than almost any country in Spanish America?  Before you answer with great confidence, ponder this: According to Angus Maddison’s data on per-capita GDP in 1950, Spain was poorer than Argentina, Chile, Mexico, Peru, Uruguay, and Venezuela, and roughly equal to Colombia, Bolivia, Costa Rica, Cuba, Ecuador, Guatemala, and Panama.  This is 11 years after the end of the Spanish Civil War, and Spain of course stayed out of World War II.

And this:

The worst grocery store I saw in Spain offered higher quality, more variety, and lower prices than the best grocery store I saw in Denmark, Sweden, or Norway.

Do read the whole thing.

*The Body: A Guide for Occupants*

That is the title of the new Bill Bryson book, and it delivers in all the ways you would expect a Bryson book to do.  Here is one sample paragraph:

Before penicillin, the closest thing to a wonder drug that existed was Salvarsan, developed by the German immunologist Paul Ehrlich in 1910, but Salvarsan was effective against only a few things, principally syphilis, and had a lot of drawbacks.  For a start, it was made from arsenic, so was toxic, and treatment consisted in injecting roughly a pint of solution into the patient’s arm once a week for fifty weeks or more.  If it wasn’t administered exactly right, fluid could seep into muscle, causing painful and sometimes serious side effects, including the need for amputation.  Doctors who could administer it safely became celebrated.  Ironically, one of the most highly regarded was Alexander Fleming.

By the way:

…the average grave is visited for only about fifteen years…

You can pre-order the book here, I would be interested to read more about Bryson’s work, writing, and research habits.

EU markets in everything?

I had never heard about this before:

The controversial practice of picking corporate sponsors for the European Union‘s rotating presidency is to continue, despite an outcry from MEPs.

EU countries have been raising eyebrows by doing deals with increasingly controversial multinational corporations during their stints overseeing debates at the EU council.

Romania’s presidency in the first half of 2019 was sponsored by Coca-Cola, with the US drinks giant’s logo plastered over banners and signs at meetings. One council summit in Bucharest featured Coca-Cola branded bean bag chairs, and a fridge of free drinks plastered with statistics about the company’s contribution to the economy.

Other sponsors of the council presidency have included car manufacturers, software companies, and other firms with vested interests in influencing EU policy.

But hopes that the incoming Finnish presidency, which took the helm this summer, might end the practice, were dashed after it picked German car manufacturer BMW as a sponsor – despite the firm being hit with a fine over its cars’ diesel emissions earlier this year.

Here is the full story, via Jon Stone.

Profile of Raj Chetty

By Gareth Cook, interesting and excellent throughout, here is one good bit of many:

For example, the strongest correlation is the number of intact families. The explanation seems obvious: A second parent usually means higher family income as well as more stability, a broader social network, additional emotional support, and many other intangibles. Yet children’s upward mobility was strongly correlated with two-parent families only in the neighborhood, not necessarily in their home. There are so many things the data might be trying to say. Maybe fathers in a neighborhood serve as mentors and role models? Or maybe there is no causal connection at all. Perhaps, for example, places with strong church communities help kids while also fostering strong marriages. The same kinds of questions flow from every correlation; each one may mean many things. What is cause, what is effect, and what are we missing? Chetty’s microscope has revealed a new world, but not what animates it—or how to change it.

Here is the full piece.

My Conversation with Neal Stephenson

Here is the transcript and audio, and here is the CWT summary:

If you want to speculate on the development of tech, no one has a better brain to pick than Neal Stephenson. Across more than a dozen books, he’s created vast story worlds driven by futuristic technologies that have both prophesied and even provoked real-world progress in crypto, social networks, and the creation of the web itself. Though Stephenson insists he’s more often wrong than right, his technical sharpness has even led to a half-joking suggestion that he might be Satoshi Nakamoto, the shadowy creator of bitcoin. His latest novel, Fall; or, Dodge in Hell, involves a more literal sort of brain-picking, exploring what might happen when digitized brains can find a second existence in a virtual afterlife.

So what’s the implicit theology of a simulated world? Might we be living in one, and does it even matter? Stephenson joins Tyler to discuss the book and more, including the future of physical surveillance, how clothing will evolve, the kind of freedom you could expect on a Mars colony, whether today’s media fragmentation is trending us towards dystopia, why the Apollo moon landings were communism’s greatest triumph, whether we’re in a permanent secular innovation starvation, Leibniz as a philosopher, Dickens and Heinlein as writers, and what storytelling has to do with giving good driving directions.

Here is one excerpt:

COWEN: If we had a Mars colony, how politically free do you think it would be? Or would it just be like perpetual martial law? Like living on a nuclear submarine?

STEPHENSON: I think it would be a lot like living on a nuclear submarine because you can’t — being in space is almost like being in an intensive care unit in a hospital, in the sense that you’re completely dependent on a whole bunch of machines working in order to keep you alive. A lot of what we associate with freedom, with personal freedom, becomes too dangerous to contemplate in that kind of environment.

COWEN: Is there any Heinlein-esque-like scenario — Moon is a Harsh Mistress, where there’s a rebellion? People break free from the constraints of planet Earth. They chart their own institutions. It becomes like the settlements in the New World were.

STEPHENSON: Well, the settlements in the New World, I don’t think are a very good analogy because there it was possible — if you’re a white person in the New World and you have some basic skills, you can go anywhere you want.

An unheralded part of what happened there is that, when those people got into trouble, a lot of times, they were helped out by the indigenous peoples who were already there and who knew how to do stuff. None of those things are true in a space colony kind of environment. You don’t have indigenous people who know how to get food and how to get shelter. You don’t have that ability to just freely pick up stakes and move about.

And:

COWEN: What will people wear in the future? Say a hundred years from now, will clothing evolve at all?

STEPHENSON: I think clothing is pretty highly evolved, right? If you look at, yeah, at any garment, say, a shirt — I was ironing a shirt today in my hotel room, and it is a frickin’ complicated object. We take it for granted, but you think about the fabric, the way the seams are laid out.

That’s just one example, of course, but you take any — shirts, shoes, any kind of specific item of clothing you want to talk about — once you take it apart and look at all the little decisions and innovations that have gone into it, it’s obvious that people have been optimizing this thing for hundreds or thousands of years.

New materials come along that enable people to do new kinds of things with clothing, but overall, I don’t think that a lot is going to change.

COWEN: Is there anything you would want smart clothing to do for you that, say, a better iPad could not?

STEPHENSON: The thing about clothing is that you change your clothes all the time. So if you become dependent on a particular technology that’s built into your shirt, that’s great as long as you’re wearing that shirt, but then as soon as you change to a different shirt, you don’t have it.

So what are you going to do? Are you going to make sure that every single one of your shirts has that same technology built into it? It seems easier to have it separate from the clothing that you wear, so that you don’t have to think about all those complications.

There is much more at the link, including discussions of some of his best-known novels…

The AEA’s New Data Policy

The AEA has long had a data repository but no one was responsible for examining the data or replicating a paper’s results and confidential data was treated as an exception. All that is about to change. The AEA has hired a Data Editor, Lars Vilhuber. Vilhuber will be responsible for verifying that the author’s code produces the claimed results from the given data. In some cases Vilhuber will even verify results from raw data all the way to table output.

The new data policy is a significant increase in the requirements to publish in an AEA journal. It takes an immense amount of work to document in a replicable way every step of the empirical process. It’s all to the good, of course, but it is remarkable how little economists train our students in these techniques and make no mistake writing code to be replicable from day one is an art and a science and it needs to be part of the econometrics sequence. All hail Gentzkow and Shapiro!

Here’s more information:

On July 10, 2019, the Association adopted an updated Data and Code Availability Policy, which can be found at https://www.aeaweb.org/journals/policies/data-code. The goal of the new policy is to improve the reproducibility and transparency of materials supporting research published in the AEA journals by providing improved guidance on the types of materials required, increased quality control, and more review earlier in the publication process.

What’s new in the policy? Several items of note:

  • A central role for the AEA Data Editor. The inaugural Data Editor was appointed in January 2018 and will oversee the implementation of the new policy.

  • The policy now clearly applies to code as well as data and explains how to proceed when data cannot be shared by an author. The Data Editor will regularly ask for the raw data associated with a paper, not just the analysis files, and for all programs that transform raw data into those from which the paper’s results are computed. Replication archives will now be requested prior to acceptance, rather than during the publication process after acceptance, providing more time for the Data Editor to review materials.

  • Will the Data Editor’s team run authors’ code prior to acceptance? Yes, to the extent that it is feasible. The code will need to produce the reported results, given the data provided. Authors can consult a generic checklist, as well as the template used by the replicating teams.

  • Will code be run even when the data cannot be posted? This was once an exemption, but the Data Editor will now attempt to conduct a reproducibility check of these materials through a third party who has access to the (confidential or restricted) data.  Such checks have already been successfully conducted using the protocol outlined here.

Pessoa, *Philosophical Essays*

The half-sceptic speaks like Socrates, I know only that I know nothing.  The whole sceptic speaks like Francisco Sanches: Haud scio me nihil scire, I do not even know if I know nothing.

And:

The end of reason is a weariness of thinking.  Yet reason is so strong that even its weariness is a part of its strength and we dream rationally if we have learnt reason.

Those bits are from this (uneven) volume.

That was then, this is now

The data came from Facebook:

During Obama’s initial 2008 bid for office, his team had already embraced technology in a greater capacity than any before it, assembling massive email lists and other targeted initiatives that earned Obama historic fundraising tallies. But for 2012, campaign manager Jim Messina wanted to take things even further.

To get there, his staff needed to link what had previously been disjointed databases of voter information (collected by volunteers, pollsters, and other campaign workers) into a single, comprehensive pool unrivaled in detail and scope. Whereas most voter logs used by campaigns often list only names and telephone numbers, Obama’s advanced tool dove into specifics like age, race, district, and voting history: it allowed field workers to rank voters intelligently and not waste time chasing unlikely votes.

Here is the article from The Verge, via the excellent Ben Thompson.  I recall similarly glowing coverage from The New York Times.