Month: October 2009

Where would a do-gooder do the most good?

A loyal reader writes:

I am sitting down on a rainy night to try and dream up a future career… I am a humanities guy with a hobby in economics (not a engineer or coder.)  I want to seek wisdom, not riches; I want to do good, not become wealthy. I want to go where others aren't.

So here is the main question:

1) What would be on your list of unsolved problems that public governments or private enterprise are not addressing adequately? Which of these could be addressed by 1 person or by $1,000? By 10 people or $10,000? 100 people or $100k? 1,000 people or $1MM? 10k or $10M? 100k or $100MM. Where can I have a lot of impact even if I won't find fabulous wealth?

And here is my meta-question.  The problem is that market prices do not correctly signal the relative value of public goods or charitable goods.  So what signals should someone use if they want to allocate their labor (in the charitable sector) to the highest value product?

Refuting this post helps confirm it

Chess players who train with computers are much stronger for it.  They test their intuitions and receive rapid feedback as to what works, simply by running their program.  People who learn economics through the blogosphere also receive feedback, especially if they sample dialogue across a number of blogs of differing perspectives.  The feedback comes from which arguments other people found convincing.  Do the points you wanted to hold firm on, or cede, correspond to the evolution of the dialogue?  This feedback is not as accurate as Rybka but it's an ongoing test of your fluid intelligence and your ability to revise your opinion. 

Not many outsiders understand what a powerful learning mechanism the blogosphere has set in place.

Three tweets for the web

Here is my article in the Wilson Quarterly, in their latest issue on "The Death of the Book."  Excerpt:

Sometimes it does appear I am impatient. I’ll discard a half-read book that 20 years ago I might have finished. But once I put down the book, I will likely turn my attention to one of the long-running stories I follow online. I’ve been listening to the music of Paul McCartney for more than 30 years, for example, and if there is some new piece of music or development in his career, I see it first on the Internet. If our Web surfing is sometimes frantic or pulled in many directions, that is because we care so much about so many long-running stories. It could be said, a bit paradoxically, that we are impatient to return to our chosen programs of patience.

Another way the Web has affected the human attention span is by allowing greater specialization of knowledge. It has never been easier to wrap yourself up in a long-term intellectual project without at the same time losing touch with the world around you. Some critics don’t see this possibility, charging that the Web is destroying a shared cultural experience by enabling us to follow only the specialized stories that pique our individual interests. But there are also those who argue that the Web is doing just the opposite–that we dabble in an endless variety of topics but never commit to a deeper pursuit of a specific interest. These two criticisms contradict each other. The reality is that the Internet both aids in knowledge specialization and helps specialists keep in touch with general trends.

They also asked me for the Twitter version of the article, and it is this:

“Smart people are doing wonderful things.”

Political extortion

Harry Reid is telling the Senate Judiciary Committee that the real
reason health insurance is so expensive is that they're evil monopolists…

There is talk of repealing the antitrust exemption enjoyed by the insurance industry.  Whether the exemption is a good idea or not, I do not know.  The relevant event is that the insurance industry seems to have turned against Obama's health care reform.  Everyone who cares about American democracy and rule of law should be complaining about Harry Reid, Patrick Leahy and their allies in this move.  So far I don't hear the outcry.

My favorite movie watching season

I always love the Fall, not for the changing leaves, not for the weather, and not for the chance to show off my sweater collection.  I love the Fall because it's the best movie season of the year.  The months from September to December is when all the distributors bring out their smart, adult, critically favored, award season films.  The summer is left to the kids and the action blockbusters, but over the next few months is when all the Oscar contenders will be released.  UP IN THE AIR, WHERE THE WILD THINGS ARE, MEN WHO STARE AT GOATS, THE IMAGINARIUM OF DR PARNASSUS are just a very few of the smart, cool, quality looking pictures that I'm looking forward to seeing over the next few weeks.

I have always assumed, and I believe it's conventional wisdom in the industry, that these kinds of films come out at the tail end of the year in order to remain in voters minds come Oscar ballot time, which is immediately in the new year.  The thinking is that any film that comes out in the early part of the year will be forgotten and overlooked compared to the more recent offering, regardless of it's artistic merit.  Aside from it being a sad commentary on the shortness of our memories I'm wondering if this is entirley true.  I'm taking a leap here and turning to the educted readers of MR for their feedback, but I wonder if like the proven business observation that when a second carpet shop opens beside the first it's competition, when a third opens it becomes the carpet district and is good for all of them.  Is there something about a grouping of similarly aimed films coming out all at once, even from competing distributors, that increases the box office for all as opposed to having them spread out evenly throughout the year?  I know I'm drawing a parellel between geography and the calendar, and perhaps that's a classic apples and orange mix, but I can't help but wonder if creating a film 'season' is not conferring a benefit to all the films that are released in this period.

The economics of local forest management (or another lesson in Elinor Ostrom)

Here are some recent results:

In the first study of its kind, Chhatre and Arun Agrawal of the University of Michigan
in Ann Arbor compared forest ownership with data on carbon
sequestration, which is estimated from the size and number of trees in
a forest. Hectare-for-hectare, they found that tropical forest under
local management stored more carbon than government-owned forests.
There are exceptions, says Chhatre, "but our findings show that we can
increase carbon sequestration simply by transferring ownership of
forests from governments to communities".

One reason may be that locals protect forests best if
they own them, because they have a long-term interest in ensuring the
forests' survival. While governments, whatever their intentions,
usually license destructive logging, or preside over a free-for-all in
which everyone grabs what they can because nobody believes the forest
will last (Proceedings of the National Academy of Sciences, DOI: 10.1073/pnas.0905308106).

The authors suggest that locals would also make a better job
of managing common pastures, coastal fisheries and water supplies. They
argue that their findings contradict a long-standing environmental
idea, called the "tragedy of the commons", which says that natural
resources left to communal control get trashed. In fact, says Agrawal,
"communities are perfectly capable of managing their resources

If you turn to the first page of the paper itself, the header reads:

Edited by Elinor Ostrom, Indiana University, Bloomington, IN, and approved September 4, 2009 (received for review July 22,

Of course this sort of result is inspired by her work as well.  For the pointer I thank Andrew Grant.

The Argentine national identity

Yet, unlike the Italian, the Spanish settler transition was incomplete.  Indeed, counterintuitively, the Spanish "actually assimilated to the new land more slowly and more reluctantly than did the "alien" Italians", who were not quick.  The Spanish rate of return was lower than the Italian, but still high at 46 percent by 1930, and in-marriage and voluntary segregation was high in both groups.  Above all, both Spanish and Italian immigrants avoided Argentine citizenship like the plague.  Fewer than 4 per cent of Spanish took citizenship, and the Italian rate was below 2 per cent.  Immigrants received most legal rights without citizenship, with the important exception of voting in national elections.  Aliens were also not liable for military service.  There was therefore "no incentive to become a citizen", and a considerable disincentive.  Nativist fears among the lower classes, and the fear of political competition among the elite, led Argentines to accept this situation.  Immigrants dominated the Argentine lower middle classes…The incomplete settler transition therefore meant that booming Argentina's middle class was much less committed to it, much less politically powerful, and much more prone to send or take its money home, than in the Anglo newlands.  The power and novelty of Spanish settler transitions helps explain Argentina's relative success to the 1920s.  But the incomplete nature of the settler transition also helps explain Argentina's relative failure from the 1920s.

That is from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo World, 1783-1939.

Elinor Ostrom on climate change

You'll find a two-part transcript here, or the podcast version.  One recurring theme of her remarks is that we will need a great diversity of adjustment plans and that a "one size fits all" approach is bound to fail.  In this dialog Elinor occasionally speaks in a personal manner:

To some extent I’m kind of worried that there are many, many more people who are apart from the Earth in their everyday life. How do we get more kids involved in research on nature earlier? And there are some very exciting programs where they’re getting kids, in terms of bird observation days, training kids how to take measurements of birds and be involved in the counts. How to get them involved in measuring stream flow. There’s just lots of things that kids can do— all the way up to college kids. I’m not talking about just five year olds…But, five year olds can start. [Clears throat] If we take self-consciously the recognition that if we’re going to understand ecological processes, we have to understand them in a deeper way than the experience the last twenty-five to fifty years has been leading people.

Vernon Smith on Elinor Ostrom

Vernon, of course, knows Ostrom's work well:

Relentlessly, Ostrom has pursued answers to two questions:

(1) Since "everybody's property is nobody's property," how is it that there are so many cases where collectives of ordinary people with no education and with none of the economists' knowledge of "the tragedy of the commons," in fact discover ingenious rules (institutions) for taking the "tragedy" out of a productive resource they hold in common? If you read her book you will find among the diversity of examples a Swiss village whose people have private property in the plots they plant and harvest, but also have a communal summer meadow for grazing their cows. One rule, still enforced, dating back to 1517 states that "no citizen could send more cows to the alp than he could feed during the winter." Wintering a cow is costly, and this rule rations access to the commons by tying it to private property rights….

(2) As a distinguished political-economic scientist she will be the first to tell you that there are also plenty of commons problems that represent institutional failures and fragilities; she has asked why, and what makes the difference between success and failure? The fragilities include inshore fisheries and groundwater basins with continuing commons problems; failures include salt water fisheries and irrigation systems hamstrung by the complexity of the rules.

Success is associated with clarity in the definition of and bounds on individual rights (and opportunities) to take action, and the geography of the commons; details for monitoring, operations, sanctions and mechanisms for conflict resolution emerge from within the collective and out of motivated people's direct experience with environmental context and each other. When too many of these problem-solving elements fail, the governance systems fail or require continuing attention to their fragility characteristics. A fatal source of disintegration is the inappropriate application of uninformed external authority, including intervention to prevent application of efficacious rules to political favorites. Also detrimental to good solutions is the OPM (other people's money) problem.

…Ostrom brings a distinct style in applying her skill in different methodologies. She blends field and laboratory empirical methods, economic and game theory, the really important ingredient of scientific common sense, and she constantly challenges her own understanding by looking at new potentially contrary evidence and designing new experiments to challenge her understanding of the emergent historical rules and the theory used to explicate them.

Assorted links