Noah Stoffman asks me two questions
I have two pretty random questions about which I would love to see a discussion on MR:
What
will applied economics research be like in 50 years? I spend a huge
amount of time gathering, cleaning, and organizing data. I spend a
lot of time writing code to do analysis. Will this become unnecessary?
Will I just be able to say to my computer "Check if this relationship
exists in the data"? If that happens, what will be special about people
with PhDs?
Suppose you were given a large amount of money (say $10
million) and you wanted to make sure that you would remain (relatively)
wealthy in as many future states of the world as possible. Where would
you invest it? Remote arable land? Organizing a cult of followers?
The lesson, of course, is that "pretty random" questions rarely are. Usually it is someone asking the same question twice.
I believe with p = 0.6 that the world is in for a "great disruption." It has come to MSM first but it will not end there. In the longer run I am optimistic about the results of this change — computers will free up lots of human labor — but in the meantime it will have drastic implications for income redistribution, across both individuals and across economic sectors. For a core metaphor, the internet displacing paid journalism and classified ads is a good place to start. The value of newspapers has been sucked into Google.
Later, we'll be much better at measuring which research Ph.d's are contributing value and which ones are not, or at least we'll think we are. Since academic achievements follow a Power Law, that will mean a huge ouch for many would-be academicians. The new professor will need to be skilled in assembling collages of information, raising money, and communicating to broader public audiences. Either that or his research should be very obviously of the top order. The distribution of income across professors will become radically less equal as indeed the trend has been for well over a decade now.
If you have $10 million, the safest thing to do is to diversify across currencies, buy government securities of various kinds, hold $1.5 million in gold, and otherwise not invest at all. Oh yes, invest in some cheap hobbies. In a real crunch remote land is worthless — transport costs — and your cult followers are as likely to betray you as not. Trying to become a professor is no longer such a safe path.
Once The Great Disruption becomes more evident, entertainment will be very very cheap. Medical treatments will become either much more expensive or again very cheap. If you get the wrong ailment, you're going to need the $10 million.
Robin Hanson believes we are headed back toward a Malthusian equilibrium; in contrast I believe that machines will never outcompete humans across the board and so the scenario will more closely resemble Baumol and Bowen's "cost disease." The variance of real wages will continue to rise.
I predict the equity premium will go up.