Month: November 2013

Chat with James Pethokoukis on *Average is Over*

Here is one of several interesting bits:

Well the Brynjolfsson and McAffee book, “Race Against the Machine,” that’s a great book.  It’s influenced my thinking.  I just read their second forthcoming book, “The Second Machine Age.”  They focus more on automation than I do and less on inequality and much less on social issues.  But I think of myself as thinking along the same lines as they do.  But they and I, we differ a lot about the past.  So they don’t think the past has been a great stagnation.  I agree with them a lot about the future, but disagree with them a lot about the past.

Gordon, I disagree with him about the future, but agree with him about the past.  So Gordon, like me, sees a great stagnation.  And he thinks it will never ever end.  I think that’s crazy.  Even if it were true, how would you know?  But I see a lot of areas, not only artificial intelligence, but medicine and genomics, where the advances are not on the table now.  But it’s hard to believe there’s not going to be a lot more coming.  Science is very healthy.  There’re new discoveries all the time. The lags are much longer than we’d like to think, but absolutely progress is not over, and we’re about to see a new wave of progress over the lifetimes of our children.

The full dialog is here.

The future of work, and those new service sector jobs

Via Angus, here is a new report on those new service sector jobs:

As AI and globalization chew up good jobs for the non-elites, there is a bright spot on the career horizon. The market for household staff is booming.

According to the WSJ, “A good housekeeper earns $60,000 to $90,000 a year. A lady’s maid can make $75,000 a year. A butler may start at $80,000 a year and can earn as much as $200,000.”

And, there are openings, “Demand for the well-staffed home is on the rise, according to agencies and house managers alike. Clients are calling for live-in couples, live-out housekeepers, flight attendants for private jets, stewards for the yachts and chefs for the summer house. In San Francisco, Town and Country Resources, a staffing agency for domestic help, has seen demand for estate managers and trained housekeepers grow so fast the agency is going to offer its own training programs in subjects like laundry, ironing and spring cleaning starting in 2014. Claudia Kahn, founder of The Help Company, a staffing agency based in Los Angeles, says she used to get one call a month for a butler but has gotten three in the past week alone.”

If your skill set is more exotic, don’t despair:

“She will also be bringing with her the two animal trainers who come seven days a week to care for Prince Mikey, a white-faced capuchin monkey. Prince Mikey’s trainers work with him five to six hours a day during the week and three hours a day on weekends.  The annual cost is in the six figures”

Here is a related blog post from Annie Lowrey.  I leave it as an exercise for the reader to deduce the implications for the finances of higher education in this country.

Diane Coyle’s new publishing venture

She writes to me:

This is a quick note about a new publishing initiative of mine, Perspectives, a series of short books on aspects of economics and technology. The first four are out later this month – Jim O’Neill on the urgent need for changes in global governance, Julia Unwin on how emotion shapes our views on poverty, Andrew Sentance on why it will be painful to regain a higher growth rate, and Bridget Rosewell on how London can reshape itself post-financial crisis.

They are the kind of book I like to read myself: authoritative, outside the usual ruts of policy debate, and short. Kate Barker on planning policy and Dave Birch on the new technology of money coming up.

Assorted links

1. The culture that is Pankration?  Exaggerated or not?  Also from the world of tabloids, here is where the French seat ugly people.

2. What are some top cities for low rent?  That is taken from a more general index of which are the best cities for MillenialsThe cheapest marijuana seems to be out West.

3. The average length of dissertation across fields.  Biostatistics has the shortest average dissertation, economics is third shortest.

4. …”a ship-shipping ship, shipping shipping ships.”

5. The rise and fall of InTrade.  And RePec Fantasy League for economists.

6. Starship Troopers: one of the most misunderstood movies ever.

Is a Ph.D. important for succeeding in finance?

There is a new paper by Ranadeb Chaudhuri, Zoran Ivkovich, Joshua Matthew Pollet, and Charles Trzcinka, the abstact is this:

Several hundred individuals who hold a Ph.D. in economics, finance, or others fields work for institutional money management companies. The gross performance of domestic equity investment products managed by individuals with a Ph.D. (Ph.D. products) is superior to the performance of non-Ph.D. products matched by objective, size, and past performance for one-year returns, Sharpe Ratios, alphas, information ratios, and the manipulation-proof measure MPPM. Fees for Ph.D. products are lower than those for non-Ph.D. products. Investment flows to Ph.D. products substantially exceed the flows to the matched non-Ph.D. products. Ph.D.s’ publications in leading economics and finance journals further enhance the performance gap.

For the pointer I thank Samir Varma, whose teenage daughter has a new book on iTunes here.

My *New Yorker* interview on *Average is Over*

It was with Joshua Rothman, here is one bit:

The whole narrative you unfold—intelligent software, human-computer cooperation, deferring to our smartphones—sounds very futuristic. Do you think we’re living through a historically unprecedented period?

I don’t accept the view that this new era is so different from every time in the past. Consider the industrial revolution, which starts in Great Britain in the seventeen-seventies or seventeen-eighties. For a long time, you had rising inequality, fairly stagnant living standards, a lot of problems adjusting. Of course, we did eventually get over it in the longer run, and it was much better for everyone. But it took, arguably, fifty or sixty years for us to make that transition. I think this future wave of inequality, which is already underway, will be a lot like that. It will take us decades to make the transition. Those decades will bring a lot of problems. But I think that in the much longer run—which is not what the book is about—it will be much more positive than it will seem during the transition era. I think this period fits quite nicely with historical precedent.

There is also this:

In the U.S., New York City is probably the most unequal place we’ve got. And I find it striking how many people believe, first, that inequality is terrible, and that this vision for the future is horrible, and, at the same time, think, “Oh, I love New York City!”

We already have places with extreme inequality, but life there goes on, and we don’t recoil in horror. The non-wealthy parts of New York are very vital, and have the best of humanity in them. We have intuitions [about equality and inequality] that are derived from American post-war history. I don’t want to dismiss those intuitions altogether, but I think we need to be more skeptical of them.

More on peak driving and its implications

Reihan reports:

University of Minnesota economist David Levinson envisions a future in which per capita vehicle travels falls significantly, bringing traffic congestion down with it. The chief driver of this death of traffic is not the emergence of a new transportation technology, though technology certainly plays a role in Levinson’s scenario. Rather, it is the shrinking of the American workweek coupled with new business models which draw primarily on existing technologies. Though written in an understated style, it is quite entertaining. I recommend reading it in its entirety. A few aspects of his vision struck me as particularly notable:

1. Just as it was once standard for U.S. workers to work a six-day week, Levinson imagines that the workweek will continue to shrink. Every-other Friday off (the 5/4 schedule) becomes standard by 2015; by 2020, the standard schedule becomes a 9 hour day with four days a week in the office and 4 additional hours of checking in from home; by 2025, workers are taking every-other Monday off (the 4/3 schedule); and by 2030, the “flipped” office, like the “flipped” classroom, becomes the norm — i.e., workers do the bulk of their work at home, and they come to the office for “interactive collaboration days.”

2. But it’s not just the workweek that will change. The pattern of how we work over the life course will also change. Levinson envisions a world in which almost half the population doesn’t enter the paid workforce until age 30, as firms lose interest in financing training. Instead, most people go through an extended apprenticeship period that can last as long as a decade, combining unpaid internships and attending school online. And most people exit the workforce by age 60, as technological advances reduce the value of older workers.

3. The changing workweek causes the value of office buildings to plummet. As office buildings are converted to apartments, the least desirable of which become home to the 20-somethings toiling away at their unpaid internships (subsidized, presumably, by parents, or sustained by part-time work), residential constructions in the suburbs grinds to a halt, and suburban property values drift down, thus making suburban neighborhoods more attractive to low-income households. Large garages are transformed into stores, workshops, and accessory dwellings as families choose to maintain fewer automobiles. Car-sharing, meanwhile, grows more entrenched as a larger share of the population comes to reside in urban cores. (This has the effect of reducing per capita vehicle trips because while car-sharing eliminates many of the fixed costs associated with vehicle ownership, it increases the marginal cost per trip.)

4. Shopping, once a big contributor to vehicle trips, is transformed as people (and their autonomous agents) order online and have goods delivered; decentralized manufacturing and 3-D printing on-demand, in turn, shrink supply chains

There is more at the link

Assorted links

1. Japan markets in everything.  And the culture that is Japan, involves plastic wrap.

2. When it comes to immigration, the refugee gap seems to be closing.

3. Bulletproof three-piece suits.

4. Some observations on Germany’s current account surplus.  I would stress the point that “countries which don’t use their borrowing or investment well” are better pinpointed as the problem.  And is austerity endogenous?

5. Colorado voted decisively against investing more tax dollars in primary education.

6. Is William Vollmann underrated?

New stuff

The CIA buys phone data and meta-data from AT&T.  The extra in the 2.8% growth figure for U.S> gdp came from inventory build-up, but the government shutdown doesn’t seem to have mattered much.  Russia’s long-term growth forecast is falling, from five percent to 4.3, to four, now to 2.5%.  54% of voting white women in Virginia opted for Cuccinelli.  Asteroid strikes are more likely than we had thought.

Facts about Puerto Rico (Caribbean Average is Over)

Puerto Rico’s output has declined 16 percent since 2004. Its recession, triggered by the 2006 phaseout of a federal manufacturing tax break, began before that of the mainland and lasted longer. Only about a million of Puerto Rico’s 3.6 million people are employed. Not coincidentally, Puerto Rico’s population shrank 4 percent in the past decade, as many of the best and brightest sought opportunity on the U.S. mainland.

Here is a bit more.

A theory of good intentions

Paul Niehaus has a new paper, and here is the abstract:

Why is other-regarding behavior so often misguided?  I study a new explanation grounded in the idea that altruists want to think they are helping.  Frictions arise because perceptions and reality can diverge ex post, especially when helping remotely (as for example with international development projects).  Among other things the model helps explain why donors have a limited interest in learning about effectiveness, why charities market based on need rather than effectiveness, and why beneficiaries may not be able to do better than to accept this situation.  For policy-makers, the model implies a generic trade-off between quantity and quality of generosity.

When in doubt, self-deception about helping is the next best thing to helping itself, and cheaper to produce.  If I recall properly, the original pointer was from Michael Clemens.

Are students nicer than pornographers and domain traders?

Maybe not.  In a new paper, “Who’s Naughty? Who’s Nice? Experiments on Whether Pro-Social Workers are Selected Out of Cutthroat Business Environments,” Mitchell Hoffman and John Morgan report:

Levitt and List (2007) conjecture that selection pressures among business people will reduce or eliminate pro-social choices. While recent work comparing students with various adult populations often fails to find that adults are less pro-social, this evidence is not necessarily at odds with the selection hypothesis, which may be most relevant for behavior in cutthroat competitive industries. To examine the selection hypothesis, we compare students with two adult populations deliberately selected from two cutthroat internet industries — domain trading and adult entertainment (pornography). Across a range of indicators, business people in these industries are more pro-social than students: they are more altruistic, trusting, trustworthy, and lying averse. They also respond differently to shame-based incentives. We offer a theory of reverse selection that can rationalize these findings.

Hat tip goes to Kevin Lewis.

Carlsen vs. Anand

They start playing Saturday, with a 12-game format.  Originally I had been picking Anand, on the grounds of superior match experience and better opening preparation.  But Carlsen’s results have simply been too strong lately, including in St. Louis.  Tarjei Svensen puts it well:

Against current @2700chess top 10 , @MagnusCarlsen has 21 wins, 53 draws and only 2 losses since Jan 2011.

Or if we judge the match by numerical rating, Carlsen again is a strong favorite.

The Chennai venue may help Anand, as Carlsen will be bringing a Norwegian chef to convert the local ingredients into…what…a $35 dollar small pizza?  Still, being surrounded by your friends, entire family, and numerous well-wishers is not always a net advantage in a competition.  Carlsen may find it easier to concentrate on the chess.  And Anand is 43 years old, which puts him as one of the oldest players in the top 100.  Carlsen is 22 and it feels like it is his time.

Here are some opinions from grandmasters, some of whom are being diplomatic.  Here Matt Wilson considers whether world champions simply got lucky.  Here are some options on how to watch the match.

Amazon markets in everything

Note: This item is only available from third-party sellers (see all offers.)
Available from these sellers.
1 new from $55,000.00
  • Financial Analyst
  • Specialties: Data management, Financial Reporting; Financial Modeling; Cash flow valuation, Scenario/sensitivity analysis, and ROI, NPV, and IRR analyses; Advanced proficiency with Microsoft Office 2011, ability to quickly adapt to new database software.

The link is here, with review, a bargain I say, hire her!  And see if they will throw in free shipping…

Assorted links

1 Randall Wright has a new on-line course.

2. Cass Sunstein on Whittaker Chambers vs. Ayn Rand.

3. Oliver Burkeman’s The Antidote: Happiness for People Who Can’t Stand Positive Thinking is now out in paperback.

4. The culture that is Russia, and another nationalist angle here.

5. Does man or machine make better coffee?  Or perhaps both working together?

6. Do you believe these stories?  I believe Rachel Fong, and most of the others too.

7. New center on inequality to start, with Brad DeLong as blogger.