400

Effective altruism in 1400

A loyal MR reader writes to me:

If you taught the principles of effective altruism to a rich person in (say) 1400, what would they have thought was the most effective thing to do with their money?  What was in fact the most effective thing they could have done?

I say send some money to Henry IV.  On the year 1400 Wikipedia notes:

January – Henry IV of England quells the Epiphany Rising and executes the Earls of Kent, Huntingdon and Salisbury and the Baron le Despencer for their attempt to have Richard II restored as king.

England and the Industrial Revolution seemed to have worked out OK, and besides the Henriad provides some of Shakespeare’s most profound work, Orson Welles too.

I think you can see the problem.

But what would a rational Effective Altruist have thought at the time?  How about revising those early versions of the Poor Laws?

Alternatively, 1400 also was the year Chaucer died, and he was a pretty smart guy.  Since he worked for Henry’s father and was close to him, he might have given good advice, if only for self-interested reasons.  But who in 1400 was the best or most logical representative of Effective Altruism?  The theologian Alan of Lynn?  He might have told you to invest the money in making indexes of books, which seemed to be his main interestJean Gerson, if one looks to France for a thought leader, focused his energies to reconciling the Great Schism in the papacy.  Good idea or bad?  As Zhou Enlai said

The origins of the Forbes 400

Here is another interesting passage from the newly published Kaplan and Rauh paper “It’s the Market: The Broad-Based Rise in the Return to Top Talent“:

…the percent [of the Forbes 400] that grew up wealthy fell from 60 to 32 percent while the percent that grew up with some money in the family rose by a similar amount.  The percent who grew up with little or no wealth remained about flat.

That is from 1982 to 2011, by the way.  The overall tendency is this:

Overall, Figures 5 and 6 show a trend in the Forbes 400 list away from people who grew up wealthy and inherited businesses towards those who grew up with more modest wealth in the family and started their own businesses.  These changes largely occurred between 1982 and 2001…

Access to education also appears to be of increasing importance.  The share of the Forbes 400 who graduated from college rose from 77 to 87 percent between 1982 and 2011.  The share of college dropouts (like Bill Gates and Mark Zuckerberg) also rose from 6 to 8 percent.  At the same time, the share of those without any college dropped markedly from 17 to 5 percent.

I view it this way.  Generational connections now matter less and starting with lots of working capital matters less.  Smarts, drive, and education all matter more.

Scott Alexander and others on mental illness

Here is Scott’s response to Bryan Caplan’s response to Scott’s critique of Bryan’s earlier Szaszian paper on mental illness.  I can’t bring myself to do any serious recap, so I hope you care (or do I hope you don’t care?), in any case Scott serves up the links:

In 2006, Bryan Caplan wrote a critique of psychiatry. In 2015, I responded. Now it’s 2020, and Bryan has a counterargument.

Bryan rejects the concept of mental illness, believing that such individuals can be described using concepts from rational choice theory, most of all preferences and meta-preferences:

…this article argues that most mental illnesses are best modeled as extreme preferences, not constraining diseases.

Most lately, here is a snippet from Scott’s latest post:

Or what about respiratory tract infections that cause coughing? My impression is that, put a gun to my head, and I could keep myself from coughing, even when I really really felt like it. Coughing is a preference, not a constraint, and Bryan, to be consistent, would have to think of respiratory infections as just a preference for coughing…

Bryan’s preference vs. constraint model doesn’t just invalidate mental illness. It invalidates many (maybe most) physical illnesses! Even the ones it doesn’t invalidate may only get saved by some triviality we don’t care about – like how maybe you can lift less weight when you have the flu – and not by the symptoms that actually bother us.

I am fully on Scott’s side here, but I think he is being too literal in responding to Bryan’s arguments, taking on too much of Bryan’s turf.

The biggest problem with Bryan’s argument is this: let’s say you could redescribe say schizophrenia in terms of an unusual preference and other concepts from rational choice theory.  It would not follow that is all schizophrenia is.  For instance, a quick perusal of the literature shows that schizophrenic individuals may suffer from local processing deficits (moving too rapidly and too indiscriminately to global processing), working memory defects, inability to maintain attention, disorganized behavior, hypo- and hyper-excitability, excessive speculative ideation, excess receptivity to information from the right hemisphere of the brain, and delusions.

Of course that account is contested at some margins, as is typically the case in a research literature, but you get the point.  Schizophrenia could be some combination of an extreme preference, whatever else Bryan wishes to toss in, and some version of that list from the paragraph directly above.  Bryan works very hard to “rule in” his redescription of various mental illnesses, but he doesn’t and indeed cannot do much to rule out what are in fact the relevant cognitive or sometimes personality traits of the phenomenon in question.

And if you ask “Ah, what about the ‘normal’ people who claim that God is talking to them?”, well most of them have only a limited number of the features on that above list.  Some of course may in fact be schizophrenic or fall into the broader schizotypic category.  Those supposed reductios about the supposedly wacky religious people just don’t much dent the category of schizophrenia.  There might even be a correlation in the data between religious behavior and schizotypy — why not? — but the two are by no means cognitively identical.

Ask Bryan a simple question: do the individuals diagnosed as schizophrenia in fact have some combination of those traits listed above to an unusual degree?  If he answers “yes,” he has in fact conceded the argument.  If he answers “no,” he needs to counter a huge and established literature with empirics of his own, which of course he has not done.  The broader point is you cannot usually vanquish empirical categories with philosophical and methodological arguments alone.

I do partially side with Bryan only in one regard: I don’t find the term “mental illness” very useful, and very often it is misleading, or even dangerous, or used to restrict the liberties of individuals unjustly.  I very much prefer a more disaggregated approach, citing more exact information about a person’s condition, rather than applying a very general label in a manner that could end up being irresponsible.  It seems to me that a more disaggregated description is almost always possible, maybe always possible.

But you shouldn’t take that brand of skepticism as endorsing the kind of mono-conceptual straitjacket Bryan wishes to impose on this whole problem.

CEO pay in perspective how big is that rip-off anyway?

…the B-ratio I proposed here, measured as the CEO pay over the total payroll of the firm, relates CEO pay to the salary of each employee and may be the most relevant and informative figure on CEO pay as perceived by the firm’s employees themselves. How much a typical employee of the S&P500 firms implicitly “contributes” to the salary of his/her CEO? An amount of $273 on average or 0.5% of one’s salary, that is, one half of one percent on an individual salary basis.

That is from Marcel Boyer, via Alex T. and the mysterious v and Vincent Geloso.

What libertarianism has become and will become — State Capacity Libertarianism

Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow.  One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents.  For one thing, it doesn’t seem that old-style libertarianism can solve or even very well address a number of major problems, most significantly climate change.  For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious.  Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.”  On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women.

There is also the word “classical liberal,” but what is “classical” supposed to mean that is not question-begging?  The classical liberalism of its time focused on 19th century problems — appropriate for the 19th century of course — but from WWII onwards it has been a very different ballgame.

Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.  I define State Capacity Libertarianism in terms of a number of propositions:

1. Markets and capitalism are very powerful, give them their due.

2. Earlier in history, a strong state was necessary to back the formation of capitalism and also to protect individual rights (do read Koyama and Johnson on state capacity).  Strong states remain necessary to maintain and extend capitalism and markets.  This includes keeping China at bay abroad and keeping elections free from foreign interference, as well as developing effective laws and regulations for intangible capital, intellectual property, and the new world of the internet.  (If you’ve read my other works, you will know this is not a call for massive regulation of Big Tech.)

3. A strong state is distinct from a very large or tyrannical state.  A good strong state should see the maintenance and extension of capitalism as one of its primary duties, in many cases its #1 duty.

4. Rapid increases in state capacity can be very dangerous (earlier Japan, Germany), but high levels of state capacity are not inherently tyrannical.  Denmark should in fact have a smaller government, but it is still one of the freer and more secure places in the world, at least for Danish citizens albeit not for everybody.

5. Many of the failures of today’s America are failures of excess regulation, but many others are failures of state capacity.  Our governments cannot address climate change, much improve K-12 education, fix traffic congestion, or improve the quality of their discretionary spending.  Much of our physical infrastructure is stagnant or declining in quality.  I favor much more immigration, nonetheless I think our government needs clear standards for who cannot get in, who will be forced to leave, and a workable court system to back all that up and today we do not have that either.

Those problems require state capacity — albeit to boost markets — in a way that classical libertarianism is poorly suited to deal with.  Furthermore, libertarianism is parasitic upon State Capacity Libertarianism to some degree.  For instance, even if you favor education privatization, in the shorter run we still need to make the current system much better.  That would even make privatization easier, if that is your goal.

6. I will cite again the philosophical framework of my book Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals.

7. The fundamental growth experience of recent decades has been the rise of capitalism, markets, and high living standards in East Asia, and State Capacity Libertarianism has no problem or embarrassment in endorsing those developments.  It remains the case that such progress (or better) could have been made with more markets and less government.  Still, state capacity had to grow in those countries and indeed it did.  Public health improvements are another major success story of our time, and those have relied heavily on state capacity — let’s just admit it.

8. The major problem areas of our time have been Africa and South Asia.  They are both lacking in markets and also in state capacity.

9. State Capacity Libertarians are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats.  Modern Democrats often claim to favor those items, and sincerely in my view, but de facto they are very willing to sacrifice them for redistribution, egalitarian and fairness concerns, mood affiliation, and serving traditional Democratic interest groups.  For instance, modern Democrats have run New York for some time now, and they’ve done a terrible job building and fixing things.  Nor are Democrats doing much to boost nuclear power as a partial solution to climate change, if anything the contrary.

10. State Capacity Libertarianism has no problem endorsing higher quality government and governance, whereas traditional libertarianism is more likely to embrace or at least be wishy-washy toward small, corrupt regimes, due to some of the residual liberties they leave behind.

11. State Capacity Libertarianism is not non-interventionist in foreign policy, as it believes in strong alliances with other relatively free nations, when feasible.  That said, the usual libertarian “problems of intervention because government makes a lot of mistakes” bar still should be applied to specific military actions.  But the alliances can be hugely beneficial, as illustrated by much of 20th century foreign policy and today much of Asia — which still relies on Pax Americana.

It is interesting to contrast State Capacity Libertarianism to liberaltarianism, another offshoot of libertarianism.  On most substantive issues, the liberaltarians might be very close to State Capacity Libertarians.  But emphasis and focus really matter, and I would offer this (partial) list of differences:

a. The liberaltarian starts by assuring “the left” that they favor lots of government transfer programs.  The State Capacity Libertarian recognizes that demands of mercy are never ending, that economic growth can benefit people more than transfers, and, within the governmental sphere, it is willing to emphasize an analytical, “cold-hearted” comparison between government discretionary spending and transfer spending.  Discretionary spending might well win out at many margins.

b. The “polarizing Left” is explicitly opposed to a lot of capitalism, and de facto standing in opposition to state capacity, due to the polarization, which tends to thwart problem-solving.  The polarizing Left is thus a bigger villain for State Capacity Libertarianism than it is for liberaltarianism.  For the liberaltarians, temporary alliances with the polarizing Left are possible because both oppose Trump and other bad elements of the right wing.  It is easy — maybe too easy — to market liberaltarianism to the Left as a critique and revision of libertarians and conservatives.

c. Liberaltarian Will Wilkinson made the mistake of expressing enthusiasm for Elizabeth Warren.  It is hard to imagine a State Capacity Libertarian making this same mistake, since so much of Warren’s energy is directed toward tearing down American business.  Ban fracking? Really?  Send money to Russia, Saudi Arabia, lose American jobs, and make climate change worse, all at the same time?  Nope.

d. State Capacity Libertarianism is more likely to make a mistake of say endorsing high-speed rail from LA to Sf (if indeed that is a mistake), and decrying the ability of U.S. governments to get such a thing done.  “Which mistakes they are most likely to commit” is an underrated way of assessing political philosophies.

You will note the influence of Peter Thiel on State Capacity Libertarianism, though I have never heard him frame the issues in this way.

Furthermore, “which ideas survive well in internet debate” has been an important filter on the evolution of the doctrine.  That point is under-discussed, for all sorts of issues, and it may get a blog post of its own.

Here is my earlier essay on the paradox of libertarianism, relevant for background.

Happy New Year everyone!

*Capital and Ideology*, by Thomas Piketty

This book is more than 1000 pp., here are my impressions:

1. About 600 pp. of this book is a carefully done history of the accumulation and sometimes dissipation of wealth and property.  You can evaluate that material without reference to any particular set of political views.

2. At some point the book veers into partisan issues such as the wealth tax.  Many of those parts remain interesting, but it also becomes clear that Piketty is “out to lunch,” to wit (p.591):

To return to the Soviet attitude toward poverty, it is important to try to understand why the government took such a radical stance against all forms of private ownership of the means of production, no matter how small.  Criminalizing carters and food peddlers to the point of incarcerating them may seem absurd, but there was a certain logic to the policy.  Most important was the fear of not knowing where to stop.  If one began by authorizing private ownership of small businesses, would one be able to set limits?

I can think of a less naive explanation of Soviet attitudes toward the private sector.  Piketty also calls for “participatory socialism” (p.592), a dubious doctrine not to be confused with say Nordic social democracy.  For instance, Sweden (among other countries) seems to have fairly extreme wealth inequality.

3. The sentence “Real wages are much higher in America than in Western Europe” does not come easily to his pen.  Nor does “The United States is a remarkably successful innovator, let’s see what we can learn from that.”  Or even “Raising wages is more important than merely limiting inequality.”  Those seems to be banished thoughts in the Piketty intellectual universe.

4. The sections on Soviet and socialist experience can only be called “delusional.”  In his account, if only a few political decisions had gone the other way, the USSR might have ended up on a path similar to that of Norway (p.603 and thereabouts).

You know, maybe you think that the inequalities of the current day are much worse than people had been expecting.  but that should not revise your view of socialism and the Soviet Union, two matters fairly well settled by historical research.

5. Give these lenses, it is impossible for Piketty to offer any commentary on recent events (about the last 400 pp. of the book) that is anything other than distorted and unreliable.  There is massive distrust of the wealthy in this book, and virtually no distrust of concentrated state power.

6. There is a considerable sum of useful and valuable material in this book, and I would not try to dissuade anyone inclined from reading it.  Nonetheless I suspect its main import is as another sign of the growing compartmentalization of academic discourse — good work intermingled with highly questionable partisan material — and how so many academics, if the mood affiliation tilts in the right direction, will tolerate or even encourage that.

You can pre-order the book here.

Taliban markets in everything

Nearly 400 people who were either wounded while serving in the U.S. military in Afghanistan or are family members of service members who died in the conflict sued a group of companies on Friday they say helped fund attacks against Americans by making protection payments to the Taliban.

“Defendants supported the Taliban for a simple reason: Defendants were all large Western companies with lucrative businesses in post-9/11 Afghanistan, and they all paid the Taliban to refrain from attacking their business interests,” the 288-page complaint filed in federal court in Washington, D.C. on Friday states. “Those protection payments aided and abetted terrorism by directly funding an al-Qaeda-backed Taliban insurgency that killed and injured thousands of Americans.”

Relying on confidential witnesses, internal documents and publicly available information from journalists, government watchdogs and congressional hearings, the complaint alleges companies that worked in war-torn Afghanistan commonly acceded to the Taliban’s mob-style demands for payment in exchange for the guarantee that their businesses interests would not be attacked.

One unnamed American executive who worked in Afghanistan is quoted in the complaint as saying “We don’t need any security if the payments are made. Nobody f—s with us.”

The payments allegedly climbed as high as 40% of the value of the company’s project and were often facilitated through subcontractors. The subcontractors, such as private security firms that were known to pay off the Taliban, would sometimes send money through Afghanistan’s traditional money transfer network, which can be hard to trace. Other times, the companies would simply hire Taliban operatives to work as guards.

Here is the full story.

Charles Murray’s *Human Diversity*

His new book is coming out in January, and the subtitle is The Biology of Gender, Race, and Class. I will get to the details shortly, but my bottom-line review is “Not as controversial as you might think,” but do note the normalization at the end of that phrase.

Here is one bit from p.294 toward the end of the book:

Nothing we are going to learn will diminish our common humanity.  Nothing we learn will justify rank-ordering human groups from superior to inferior — the bundles of qualities that make us human are far too complicated for that.  Nothing we learn will lend itself to genetic determinism.  We live our lives with an abundance of unpredictability, both genetic and environmental.

Most of the book defends ten key propositions, laid out on pp.7-8.  The first four of those propositions concern differences between men and women (“Sex differences in personality are consistent worldwide…”) and I do not find those controversial, so I will not cover them.  The chapters on those propositions provide a good survey of the evidence, and a good answer to the denialists, though I doubt if Murray is the right person to win them over.  Let’s now turn to the other propositions, with my commentary along the way:

5. Human populations are genetically distinctive in ways that correspond to self-identified race and ethnicity.

True, but Murray’s analysis did not push me beyond the usual citations of lactose intolerance, sickle cell anemia, adaptation to high altitudes, and the like.  That said, pp.190-195 offer a very dense discussion of target alleles for various traits, such as schizophrenia, and how those target alleles vary across different groups.  I found those pages difficult to follow, and also wished that discussion had been fifty pages rather than five.  Toward the end of that discussion, Murray does write (p.194): “…proof of the role of natural selection for many genetic differences will remain unobservable without methodological breakthroughs.”  With that I definitely agree.

On p.195 he adds “It is implausible to expect that none of the imbalances will yield evidence of significant genetic differences related to phenotypic differences across continental populations.”  That returns to my core point about this book not shifting my priors.  You could agree with that sentence (noting the ambiguity in the word “significant”) and still have a quite modest vision of what those differences might mean.  In any case, nothing in the book pushes me beyond that sentence in the direction of the geneticists.

And here the contrast with the chapters on men and women becomes (unintentionally?) glaring: those biological differences are relatively easy to demonstrate, so perhaps hard-to-demonstrate biological differences are not so significant.  That too is just a conjecture, but there are multiple ways to play the “absence of evidence” and “how to interpret the residuals” cards, and I wish those had received a more extensive philosophy of science-like discussion.

Now let’s move to the next proposition:

6. Evolutionary selection pressure since humans left Africa has been extensive and mostly local.

That one strikes me as a miswording or misstatement, though I do not see that it corresponds to any actual mistakes in the broader text.  You might think that general, non-local evolutionary selection for all humans has been quite large over the millennia, relative to local selection.  I genuinely do not know the ratio here, but Murray does not seem to address the actual comparison of “across all human groups” vs. “local” as loci of selection pressures.

Next up:

7. Continental population differences in variants associated with personality, abilities, and social behavior are common.

Clearly true, but note this proposition does not claim biological roots for those differences.  The real question comes in the next proposition:

8. The shared environment usually plays a minor role in explaining personalities, abilities, and social behavior.

Here I have what I think is a major disagreement with Murray.  If he means the term “shared environment” in the narrow sense used by say twin studies, he is probably correct.  But in the more literal, Webster-derived conception of “shared environment” I very much disagree.  Culture is a truly major shaper of our personalities, abilities, and social behavior, and self-evidently so. For my taste the book did not contain nearly enough discussion of culture and in fact there is virtually no discussion of the concept or its power, as a look at the index will verify.  The real lesson of “twins studies plus anthropology” is that you have to control almost all of a person’s environment to have a major impact, but a major impact indeed can be had.  I behave very differently than my Irish potato famine ancestors, and not because I am genetically 1/8 from the Madeira Islands.  That said, within the narrower range of environmental variation measured in twins studies…well those studies seem to be fairly accurate.

9. Class structure is importantly based on differences in abilities that have a substantial genetic component.

Correct as stated, but I see those differences as much less genetic than Murray does.  For instance, IQ is to some extent heritable, but how much does that shape economic outcomes?  It is worth turning to Murray’s discussion on p.232 and the associated footnote 17 (pp.428-429).  His main source is what is to me a flawed meta-study on IQ and job performance (Murray to his credit does also cite the best-known critique of such studies).  I would opt more directly for the labor market literature on IQ and individual earnings, based on actual measured wages, which shows fairly modest correlations between IQ and earnings (read here, here and here).  So, at the very least, the inherited IQ-based permanent stratification version of The Bell Curve argument is much more compelling to Murray than it is to me.

10. Outside interventions are inherently constrained in the effects they can have on personality, abilities, and social behavior.

Clearly this is literally true, if only because of the meaning of “constrained.”  But mostly I would repeat my remarks on culture from #8.  Cultures change, and over time they are likely to change a great deal.  For instance, early in the 20th century, Korea, Japan, and China often were described as low work ethic cultures.  As cultures change, in turn those cultures can shape the personalities, abilities, and social behaviors of subsequent generations, in significant ways albeit constrained.  So while Murray is correct as stated, I believe I would disagree with his intended substantive point about the weight of relative forces.

Overall this is a serious and well-written book that presents a great deal of scientific evidence very effectively.  Anyone reading it will learn a lot.  But it didn’t change my mind on much, least of all the most controversial questions in this area.  If anything, in the Bayesian sense it probably nudged me away from geneticist-based arguments, simply because it did not push me any further towards them.

Murray of course will write the book he wants to, but my personal wish list was two-fold: a) a book leaving most of the normal science behind, and focusing only on the uncertain and controversial frontier issues, in great detail, and b) much more discussion of the import of culture.

Most of all, I am happy that America’s culture of achievement is inducing Murray to continue to produce major works at the age of 76, soon to be 77.

You can pre-order here.

Work on these things

Here are some projects I’d like to see funded, some through my own ventures, or others through alternative mechanisms. On these issues, the right person could have an enormous impact, whether through the research side or directly coming up with actionable ideas, including of course creating and building companies.

More studies of super-effective people. Either individually or collectively. If you take the outliers in any domain, what should our intuitions be for understanding the underlying processes determining how many people could have ended up in those positions? How many people had the right genes but had the wrong upbringing? How many people had the right genes and the right upbringing but the wrong luck, or perhaps society failed them in some other manner? The answers to these questions have significant policy implications.

A comprehensive analysis and critique of the NIH and NSF. The US funds more science research than any other country — about $35 billion per year on the NIH and $8 billion per year on the NSF. How exactly do these institutions work? How have they changed over time and have these changes been for good or bad? Based on what we now know, how might we better structure the NIH and NSF? What experiments should we run or what kind of studies should we perform?

Why is life expectancy so long in Hong Kong? Life expectancy in Hong Kong is 84.23 years, more than five years longer than the US and the highest in the world. Hong Kong is not that wealthy (median household income is $38,000 USD); it’s somewhat polluted; people don’t obviously eat what seems like a healthy diet; and they don’t seem to exercise a great deal. What should we learn from this?

Bloomberg Terminal for everything. This might be a nonprofit, a company, or a government project. To state the obvious, many analyses hinge on having the right data. If you’re in finance, getting the right data is often easy: just pull it up on your Bloomberg terminal. But there is no practical way to ask “what most correlates with life expectancy in Hong Kong?” (See above on that topic.) Figure out a way to build a growing corpus of structured data across the broadest variety of domains.

A comprehensive guide to the American healthcare system. The American healthcare system is by far the world’s biggest and also by a considerable margin the world’s most influential. Yet there is no comprehensive, dispassionate, and analytical disaggregation of how it all works. Who are the actors and what are their incentives? To the degree that the relationships between different entities are in equilibrium, what are the forces ensuring they stay there? What is the Sankey diagram of fund flows within the U.S. healthcare system?

Better answers for how to quantify worker productivity. In most knowledge industries, companies have nothing better than highly subjective measures (i.e., supervisors’ assessments) of worker productivity. In theory, it seems significant improvements should be possible. In the short term, is it possible to measure the productivity or efficacy of individual managers, software engineers, educators, scientists? How about teams, and what size of team? And can we do so without creating Goodhart’s Law problems?

What should Widodo do? Indonesia is a large, populous middle-income country. It faces no major near-term security threats. It has a small manufacturing base and no major non-commodity export sectors. What is the best non-bureaucratic 10 page economic development briefing document and set of prescriptions that one could write for Indonesia’s president? For Indonesia, substitute Philippines, Chile, or Morocco. 

A comparative study of foundations and their efficacy. Philanthropic foundations are behind a lot of important work. But how does a foundation decide what it wants and how the resulting grants should be structured? How effective are the programs of that foundation? In practice, how have its institutional mechanisms evolved? Imagine some kind of resource that answered these questions for the major American foundations.

Institutional critiques. More broadly, there is no discipline of institutional criticism. There is a very rich literature of policy criticism in economics, journalism, and non-fiction books. There is also a rich literature of “corporate criticism”: there are thousands of articles about how Facebook (budget: $20 billion) works and how it might be good or bad. But there is relatively little analysis of the most important institutions in our society: government departments. How is the Department of Agriculture (budget: $150 billion) organized and how effective or not is it? How about the Department of Energy (budget: $32 billion)? And why are not those questions paramount in the minds of policymakers?

Cultures of excellence. If you ask informed Filipinos why the street food is mediocre, they will tell you that Philippines lacks a “culture of excellence”. It seems that some kind of “culture of doing things really well” has very persistent and generalizable effects. South Korea and Japan have developed much more rapidly than many Asian countries, despite many others adopting relatively free “Washington Consensus”-style trade policies. Russia still has higher GDP per capita than Mexico despite Mexico’s economic policies having been much better than Russia’s for many, many decades at this point. How should we think about cultures of excellence?

Regeneration at the government layer. Herbert Kaufman (unsurprisingly) concludes in an empirical study that government organizations don’t die. While we might all agree that this is a problem, actionable solutions are in short supply. What can or should we do about this?

IQ paradox. Ron Unz points out that intergenerational variation of IQ may be much higher than is often assumed, citing Ireland and Croatia as examples. For instance, not long ago Ireland had sub-par measured IQ and now that figure is much higher, following growth and prosperity. The policy implications of IQ disparities across nations may therefore be different to what might otherwise obviously follow: perhaps environment matters much more than is assumed. If so, what should we be doing more or less of?

Credible plans for new top-tier universities. 7 of the best 25 universities in the world (Times ranking) were started in the US between 1861 and 1891 by ambitious reformers. It’s probably harder in many ways to start an impactful new university today… but it’s likely not impossible and the returns to doing so successfully might be very high. What might be a good plan? Why have so few of these plans come to fruition? 

Summaries of the state of knowledge in different fields. As a general matter, a lot of oral knowledge in the world is still not readily available, and reflection on this fact might lead one in many interesting directions. One obvious application is helping people more readily understand the present state of affairs in different domains. If I want to know “how we’re doing” in, say, antiviral drug development, I could spend a few hours hunting for top researchers, email a few, and perhaps get on calls to obtain their candid assessments. Are we making good progress? What are the most important open problems? What’s holding things back? And so on. How can we make all of this knowledge publicly available across all fields?

Mechanisms for better matching. One of the single interventions that could do the most to improve global welfare would be to improve the efficiency of the partner/marriage matching ecosystem. Online dating demonstrates that significant change (and maybe even improvement?) is possible, with some figures suggesting that up to two thirds of relationships in the US may now be initiated through online dating services. Accomplished people often seem to struggle with this challenge. Good solutions would be important.

What should Durkan do? Jenny Durkan is the current mayor of Seattle. As cities become more important loci of economic activity in the world, the importance of effective city governance will increase. As with the Widodo challenge, what is the best 10 page briefing document and set of prescriptions that one could write for her? What about Baltimore and St. Louis?

Sunday assorted links

1. Explodingtopics.com

2. Beatles data from Spotify (“Here Comes the Sun” is the most popular song, and Abbey Road the most popular album, both by considerable margins).  And how Strawberry Fields was made.

3. Does the United States or China have more bargaining power?  “Beijing also failed in the demand it most wanted – for the US to relax the restrictions and bans imposed on Chinese technology, such as is blacklisting of Chinese telecommunications giant Huawei.”  While I don’t agree with their economic analysis of the trade deficit, the above-linked piece is a very useful corrective to most of what you read from the Anglo press on the trade deal.  I just don’t get Scott Sumner’s unwillingness — expressed here — to frame the trade deal in national security terms.  That changes everything, and it is obviously true.

4. David Gerrold tech predictions from 1999.

5. The culture that is a German Santa shortage: “In the past, she says, the Santas under her watch didn’t ask for much. “But now, supply and demand regulate the market, and that’s a very dangerous development,” she says. “One agency has chosen to keep prices at 45 euros per Santa visit, but I’ve had to go up to 66. Others are asking for up to 120 euros.””

Transparent erasers markets in everything there is no great stagnation

To many, Japan seems like a technological wonderland that’s at least a couple of decades ahead of the rest of the world when it comes to innovation. That even applies to something as seemingly mundane as office supplies, as is evident by this new see-through eraser that enhances precision by providing an unobstructed view of what’s actually being erased.

…And with a price tag of around $1.40 for a large version of the Clear Radar, and around 90 cents for a smaller one, Seed isn’t charging an inflated premium for this innovation, so why wouldn’t you upgrade?

Here is the full story, via Samuel Brenner.

My Conversation with Esther Duflo

Self-recommending if there ever was such a thing, here is the audio and transcript.  In addition to all of the expected topics, including gender in the economics profession, we even got around to Indian classical music and Bach cantatas (she prefers the latter).  Excerpt:

COWEN: Do you worry much that the RCT method — it centralizes authority in too few institutions? You need a certain amount of money. You need some managerial ability. You need connections abroad. It’s not like running regressions — everyone can do it on their PC. Is that, in some way, going to slow down science? You get more reliable results, but there’s much less competition of ideas, it seems.

DUFLO: I think it would be the case if we had not been mindful of this problem from the beginning. And it might still be the case to some extent. But I actually think that we’ve put a lot of effort in avoiding it to be the case.

When you take an organization like J-PAL, just in India we have 200 staff members. And we have, at any given time, 1,000 people running surveys. I say we, but these people are not running my project. These people are running the projects of dozens and dozens of researchers. When I started, I couldn’t have started without having the backing of my team because it was such a risky proposition that you needed to be able to easy risk capital kind of things.

But at this point, because of the infrastructure, it’s much more normal sense. People can get in with no funding of their own, in part because one of the things we are doing as a network is raising a lot of money to redistribute to other people widely. J-PAL has 400 researchers that are affiliated to it, or invited researchers, many of them quite, quite junior.

So that sort of mixture — it was very important to us, and I think we’ve been quite successful at making the tool marginally available. It’s never going to be like running a regression from your computer. But my philosophy is that if you have the drive and you’re willing to put in your own sweat equity, you can do it. And our students and many other students who are not at top institutions are doing it.

And:

COWEN: On the internet, there’s a photo of a teenage Esther Duflo — at least it looks like you — protesting against fascism in Russia on top of a tank, is it?

DUFLO: That was a bus, and it was me. It was me. So that was in 1991. This was not when I lived for one year there. I lived one year in ’93–’94. But this was in ’91. I had gone to Russia about every year since I was a teen to learn Russian. I happened to be there the summer where there was this putsch against Gorbachev. That summer…

And someone gave me that fashizm ne poletit placard and asked me to hold it. And I’m like, “Sure, I’m going to hold it.” So I’m holding my placard. We stayed there for a long time when things were happening. Next time I saw in the evening, my parents called me, “What are you doing?” Because it turned out that that image was on all the TVs in the world. [laughs] And that’s how I very briefly became the face of this revolution.

And:

COWEN: Does child-rearing in France strike you as more sensible than child-rearing in the United States?

DUFLO: Oh very much so, very much so.

COWEN: And why?

DUFLO: You know that book, Bringing Up Bébé?

COWEN: Yes.

DUFLO: I think she picked up on something which rings so true to me, which maybe is a marginal point about the US versus France. In France people are reasonably content to just go with the flow and do what everybody does. Every kid eats the same thing at 4:30, has dinner at the same time, has gone through the same experiences, learned the same songs, and everybody thinks they are totally free. But in fact, they are all on this pretty sensible railroad. And also, they don’t agonize about it.

In the US, child-rearing is one more occasion to make a statement about your identity. You’re the kind of mother that carries the baby, or you’re the kind of mother that puts the baby in a stroller. And somehow it almost can predict what you’re going to think about Donald Trump. That’s crazy. Some people are so concerned about what they do. Not only they feel that they have to invest a ton in their children, and they feel inadequate if they are not able to, but also, exactly what they do creates them as people.

In France that’s not there, and I think that makes everybody so much more laid back, children and adults.

Recommended throughout.

Non-cognitive skills and earnings in Canada

This newly published paper (click on the first link here) by McLean, Bouaissa, Rainville, and Auger confirms some more general results, usually taken from American data:

Our results indicate that conscientiousness is positively associated with wages, while agreeableness, extraversion, and neuroticism are associated with negative returns, with higher magnitudes on agreeableness and conscientiousness for females. Cognitive ability has the highest estimated wage return so, while significant, non-cognitive skills do not seem to be the most important wage determinant.

The main difference seems to be that in Canada extraversion is correlated with lower earnings, but in the United States in general it is not.  And note that a one standard deviation increase in agreeableness for women is associated with a 7.4-8.7% income penalty, but no corresponding income penalty for men.  Finally, (p.112) that the rate of return on education is over seven percent, and after adjusting for cognitive level this falls by only 30 percent, relevant for the signaling model of education of course.

Sunday assorted links

Are we undermeasuring productivity gains from the internet?, part II

From my new paper with Ben Southwood on whether the rate of progress in science is diminishing:

Similarly, the tech sector of the American economy still isn’t as big as many people think. The productivity gap has meant that measured GDP is about fifteen percent lower than it would have been under earlier rates of productivity growth. But if you look say about the tech sector in 2004, it is only about 7.7 percent of GDP (since the productivity slowdown is ongoing, picking a more recent and larger number is not actually appropriate here). A mismeasurement of that tech sector just doesn’t seem nearly large enough to fill in for the productivity gap. You might argue in response that “today the whole economy is incorporating tech,” but that doesn’t seem to work either. For one thing, recent tech incorporations typically involve goods and services that are counted in GDP. Furthermore, there is a problem of timing, namely that the U.S. productivity slowdown dates back to 1973, and that is perhaps the single biggest problem for trying to attribute this gap mainly to under-measured innovations in the tech sector.

Other research looks at “worst case” scenarios from the mismeasurement of welfare adjustments in consumer price deflators and finds a similar result: a significant effect that nonetheless does not reverse the judgement that innovation has been slowing. 

The most general point of relevance here is simply that price deflator bias has been with productivity statistics since the beginning, and if anything the ability of those numbers to adjust for quality improvements may have increased with time. For instance, the research papers do not find that the mismeasurement has risen in the relevant period. You might think the introduction of the internet is still undervalued in measured GDP, but arguably the introduction of penicillin earlier in the 20th century was undervalued further yet. The market prices for those doses of penicillin probably did not reflect the value of the very large number of lives saved. So when we are comparing whether rates of progress have slowed down over time, and if we wish to salvage the performance of more recent times, we still need an argument that quality mismeasurement has increased over time. So far that case has not been made, and if you believe that the general science of statistics has made some advances, the opposite is more likely to be true, namely that mismeasurement biases are narrowing to some extent. 

You will find citations and footnotes in the original.  Here is my first post on whether the productivity gains from the internet are understated.