Month: December 2013

*The Second Machine Age*

The authors are Erik Brynjolfsson and Andrew McAfee, and the subtitle is Work, Progress, and Prosperity in a Time of Brilliant Technologies.

I have written enough on related issues that a review seems pointless, but after having read it through I will say a) it will be one of the most important books of the coming year, and b) everyone should read it.  It will be out January 20, 2014.

Here is Pethokoukis on the book, with a handy summary.  Here is a new Tim Harford column citing the book.

Why does Singapore have such a low birth rate?

In the comments, Collin asked:

How is it the most productive, functional country Singapore has one of the lowest birth rate in the world? Is this robot future in which only the better off have children? Why is it richer the world is the less people can afford children?

Right now the total fertility rate in Singapore is at about 1.2 and at times it has slipped down as far as 1.16.  (Though it just went up to 1.29, perhaps because of “dragon babies,” noting that intertemporal substitution may snatch some of this back.)  Why?

1. Singapore does education very well, and education lowers birth rates.

2. Singapore land and housing prices are especially high, which makes it very costly to have a family with three kids.  Long working hours are expected too.

3. Singapore is a lot more fun than it used to be, and in this regard it has improved more than say France has.  Children are a bit more fun, because modern life is safer, but “the fun of children” is subject to Baumol’s cost disease.

4. Women are doing very well in Singapore and arguably they are not so willing to marry down in terms of income and educational status.  I was struck, when I gave a talk to the economists at the Civil Service College in Singapore this summer, that well over half the audience was female.  Sadly for some, rates of female “singlehood” for women in their twenties are still rising (pdf, very useful).  Controlling for education, however, female singlehood is not going up, which indicates the decline in fertility is related to the rise in education.  And in that same piece you will find direct evidence for a “marriage squeeze” for well educated women and less educated men.  That same squeeze doesn’t seem as strong in the other wealthy East Asian countries.

5. This 209 pp. cross-national comparative study (pdf, also very useful) suggests that Singapore’s generous childbearing subsidies do not work because women are still expected to shoulder so many responsibilities of child rearing.  The traditional family model there is stronger than in say France.  At the same time, France is a culture of leisure, long vacations, and limited work hours in a way which is quite far from practices in Singapore.

6. Modern fairytales do not work.  Rap music also does not work (try this video, if you need help), nor do government-sponsored cruises and speed dating services.

7. It is suggested that population density lowers birth rates.

8. Child care and subsidized child care have been less common in Singapore than in France (see about p.119 of this pdf, the comparative study cited above), though Singapore has been changing in this regard.

Here is a typical Singaporean answer to the question:

What is stopping you from having more than 1-2 children?
“Very stressful, because when they misbehave, you have to scold them.”

Why do you think some Singaporeans are not having children nowadays?
“It is very stressful for Singaporeans as the cost of living has gone up and they do not have time for their children. More women are now busy working too.”

If you are interested in the comparison, ethnic Chinese in Malaysia have a total fertility rate of about 1.8.  Malays in Singapore have a TFR of about 1.6, whereas the ethnic Chinese and ethnic Indians in Singapore are just barely above 1.0.  To me that suggests that both culturally-specific-to-Chinese-high-earner factors and cost-of-living-in-Singapore factors are playing a significant role.  Malay population growth, in terms of Malay babies born in Malaysia, is robust.  Perhaps Singaporean men need more confidence.  In Shanghai, by the way, the rate is barely above 1.0.

If I had to put it all in a sentence, I might try this: in Singapore, work and educational norms have shifted far faster than have family norms, relative to other birth-subsidizing countries such as France.

Note, most of all, that the low birth rate in Singapore is not the fault of Lee Kuan Yew.

Upon which day of the week should Christmas fall?

I say the goal is to minimize non-convexities, which in this context means avoiding the possibility of no mail or UPS deliveries for two days running.  That makes Saturday and Monday especially bad days to have Christmas.

When Christmas is on Wednesday, as it was this year, on that Wednesday you still can be reading the books which arrived on Tuesday and then a new lot comes on Thursday.  The public libraries also close for only one day, not two or three in a row.

Christmas on Wednesday also means that the roads are deserted for all the other weekdays, since many people end up leaving town for the entire week.  Then you can visit all those ethnic restaurants you wanted to get to in Gaithersburg or Mount Vernon without hassle.

And if you are taking a vacation abroad, and trying to use a limited number of vacation days, you certainly don’t want Christmas to fall on either a Saturday or a Sunday, which in essence wastes a granted day off.

You know what is also good about Christmas on Wednesday?  It means New Year’s Day will be on Wednesday too, double your pleasure double your fun.

Most Popular MR Posts of 2013

Here is my annual round-up of the most popular MR posts of 2013 as measured, somewhat eclectically, using the number of links, tweets, shares, comments and so forth. Sadly, the post that was most linked to this year was by neither Tyler nor myself but by… Tyrone.

Look people, I have explained this before. Tyrone is a bad man. Do Not Encourage Tyrone. Fortunately for us Tyrone doesn’t like it when people like him. 

Second most highly linked was my post No One Is Innocent. I was also pleased that a related post, Did Obama Spy on Mitt Romney?, was also highly linked although I think that the question raised in this post about the potential for NSA tools to be abused for political purposes hasn’t been truly addressed in the main stream media. Conor Friedersdorf at The Atlantic in The Surveillance State Puts U.S. Elections at Risk of Manipulation was one of the few people to pick up on this important question.

Also highly linked were my post The Great Canadian Sperm Shortage and a few less substantive items drawn mostly from elsewhere such as Equal Population US States and What is the Most Intellectual Joke You Know.

If you followed Tyler’s timely advice in another highly linked post, China, and the soaring price of Bitcoin, you would have saved yourself from a big loss (albeit you would have made an even bigger profit by ignoring Tyler’s earlier advice).

The most shared post was Tyler’s Stereotyping in Europe with over seven thousand shares, followed by Nobody dislikes inflation more than strippers. I was pleased that a bunch of my substantive posts were highly shared including:

Another highly shared and commented upon post was Our DNA, Our Selves on the FDA and 23andMe. Mark my words, when this or similar case goes to court the FDA will eventually lose on free speech grounds.

Gun posts get lots of comments including The Culture of Guns, The Culture of AlcoholGuns, Suicide and Natural ExperimentsFirearms and Suicides and How Japan Does Gun Control.

Question posts such as Who is the Worst Philosopher? and Who is the most influential public intellectual of the last twenty-five years? get lots of comments as did Who is Juan Galt?

There is overlap between most linked, shared, and commented so some of the above would fit in several categories but it’s surprisingly weak. Posts with a lot of comments, for example, often do not draw lots of links.

What were your favorite posts of 2013? And what requests do you have for 2014?

Duopolistic battle between two man-machine visions

Sometimes when I talk about driverless cars I am asked to what extent we already have driverless planes today.  The answer is a bit complicated:

The broader issue…is raised in an FAA report: “For any given situation, who will have final control authority?”  The pilot or the flight management computer?  Aircraft manufacturers and their automation designers have somewhat different philosophies.  Airbus has tended to favor the machine — its automation is designed essentially to prevent the plane from getting outside its safe “flight envelope” no matter what the pilot does.  Meanwhile, Boeing tends to give the pilot the final word — and its adherents can be adamant.  A Boeing-flying Delta captain puts it this way: “When shit hits the fan, a pilot should be able to disengage all the magic and fly the airplane with basics…All you can do is hope the software engineers haven’t screwed you with some magical sub-mode that, [sitting] in an office with a nice warm cup of coffee, makes sense at the time.”  For every fan of Airbus’s “make-it-impossible-to-crash” approach, there’s a proponent of Boeing’s support for new cockpit technology only where “there is no adverse effect to the human-machine interface.”

That is from Mark Gerchick’s Full Upright and Locked Position: Not-so-Comfortable Truths about Air Travel Today, a pretty good book although much of the material may be already known to some of the potential readers.

Here is a recent FT article about the advent of self-driving ships.

What I’ve been reading

1. Margaret MacMillan, The War that Ended Peace: The Road to 1914.  Good even if you think, as I do, that you are sick of WWI books.

2. Hermione Lee, Penelope Fitzgerald: A Life.  This book made many UK “best of” lists.  It is subtle, like the author herself, and will prompt you to further reading or rereads, for instance I enjoyed The Gate of Angels right after this biography and soon will try Offshore.

3. Drew Daniel, 20 Jazz Funk Greats, in the 33 1/3 series.  On the Throbbing Gristle album of the same name, this superb book is one of the best and most instructive pieces of popular music criticism I have read, ever.  I recommend reading it while listening to the album, song by song.  Drew Daniel by the way is part of the group Matmos (interesting in their own right) and an English professor at Johns Hopkins.  He deserves something better than tenure.

4. Samuel Scheffler, Death & the Afterlife, with commentaries from other famous philosophers at the back.  The bottom line: through the careful use of thought experiments, we can infer that we care about the impersonal future more than we might think.  Scheffler is still getting better and deeper as a philosopher.  This Thomas Nagel review of the book is gated, but even the first few (ungated) paragraphs are worth reading.

5. Michael Avery and Danielle McLaughlin, The Federalist Society: How Conservatives Took the Law Back from Liberals.  Self-explanatory.

Walter Oi has passed away

Here is an appreciation from David Henderson.  Here is an appreciation from Steve Landsburg.  Oi played a key role in helping to end the military draft, he was a mainstay of the Rochester economics program, he wrote an essential piece on the economics of two-part tariffs, he analyzed the implications of labor as a fixed factor for employment over the course of the business cycle, and also he was known for having overcome blindness to pursue a very successful career.  Here is Oi on

John Cochrane on portable health insurance

The entire Op-Ed is interesting and noteworthy, but the part on health insurance is perhaps the cutting edge of the piece analytically:

Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.

People want to buy this insurance, and companies want to sell it. It would be far cheaper, and would solve the pre-existing conditions problem. We do not have such health insurance only because it was regulated out of existence. Businesses cannot establish or contribute to portable individual policies, or employees would have to pay taxes. So businesses only offer group plans. Knowing they will abandon individual insurance when they get a job, and without cross-state portability, there is little reason for young people to invest in lifelong, portable health insurance. Mandated coverage, pressure against full risk rating, and a dysfunctional cash market did the rest.

Rather than a mandate for employer-based groups, we should transition to fully individual-based health insurance. Allow national individual insurance offered and sold to anyone, anywhere, without the tangled mess of state mandates and regulations. Allow employers to contribute to individual insurance at least on an even basis with group plans. Current group plans can convert to individual plans, at once or as people leave. Since all members in a group convert, there is no adverse selection of sicker people.

I suppose my worry is this.  As individuals age, they will become greater health risks and that will hold even if Cochrane keeps Medicare going.  That means a higher price for their individual portable insurance.  It is not clear to me under what conditions premia can be raised legally (what does “unexpected increase” mean?), but it seems the result is much higher premia for sick people, or legally-mandated low premia, but then providers will restrict access and lower the quality of care, as another means of raising the price of course.  Contractually speaking, price is verifiable but quality of care is not.  The overall problem is not one of “adverse selection” but rather simply that the good information of the suppliers means that insurance is hard to sell at all for many conditions.

I do understand the option of letting the premia rise, and selling insurance against that event too, and maybe that could work.  Still, it is surprising how many insurance markets don’t really blossom even if it seems they would make economic sense.  Just ask Robert Shiller or look at the earlier history of failed CPI futures.   I’d like to experiment with Cochrane’s idea, which I think has real promise, but on a trial basis first.  The question is what such a trial might actually mean, and who would be willing to give up their current arrangements to make such an experiment possible.  If the recent Obamacare reactions show anything, it is that status quo bias is getting stronger all the time in matters of health care.

Assorted links

Google Glass: my early impressions

I have one now and I wish to thank whoever it is that offered me the invitation to buy.  It is a privilege to have an early chance to preview and try out what may well prove to be a major technological advance.

That said, I still don’t find this to be a useful device.  Here are my difficulties, many of which are specific to me:

1. Right now it’s only for people who see well.  I kept on wanting to put on my (non-Google) glasses to view things through Google Glass.  That doesn’t work.  I also find it involves eyestrain and discomfort to look up into that upper right corner.  That’s probably my defect rather than Google’s, but in contrast I know I am high quality enough to use their search engine and probably their driverless car as well.  (Gmail remains a toss-up but I fear I am failing at it, even though I use it only for storage.)

2. I would do better if the small screen were above the left eye rather than the right.

3. It works through wireless, which means either a) I can use it at home which is exactly where I don’t need it, or b) I can carry around a WiFi device, which indeed I do have, but at some point it all stops being so easy, and furthermore there are then two battery lives to worry about (4-5 hours for Glass, I am told by various sources), two things I need to turn on and off, and higher carrying costs.  There is by the way a Bluetooth method for running them through (some) smart phones, I am not sure at what difficulty or expense.

4. I tried to prime its connection to two wireless systems (home, and the mobile WiFi device) and each time I required the services of the help desk.  I wouldn’t call it buggy, but it doesn’t have the seamless, intuitive ease of use that we are growing to expect from new devices.

5. Glass is comfortable enough to wear, but when you take it off there is no easy and safe way to fold it up and put it away safely.  It’s non-wear carrying costs appear to exceed its liquidity premium.

6. The timeline seems to get crowded — but with what? — and getting out of the timeline and into other functions is not intuitive.  In general the shifting around across functions involves awkwardness.  There is the tap, the multiple tap, the forward and backward finger slides, and movements of your head, all of which need to be somewhat learned and coordinated.

7. Perhaps my biggest worry is that my iPad does most of what Glass is supposed to do, at least as far as I can tell.  I find that my carrying costs for the iPad are quite low, especially since I am usually carrying around a bag of books anyway.  When using Glass, I feel I first have had to grab an iPad, shrink it a good amount so I can no longer easily view it, tape it to my upper right forehead, and start tapping on it and sliding it instead of using the keyboard.

8. I do understand the “hands-free” point, but it does not benefit me much.  I wouldn’t use Glass when driving, don’t need it when cooking, and don’t wish to take photos when doing that other thing.

The pluses are that the voice recognition seems to work pretty well and the photos and video are decent quality, on top of the remarkable fact that the device is possible at all.  Wearing the Glass is extremely light and relatively comfortable.  The help line is open on Christmas day and involves no wait time at all.  It’s remarkable, when you first open the device, how little there is to the whole thing.  You keep on thinking “so where’s the rest of it?” and there is no more, a small band encased in light plastic performs all of these remarkable functions and Glass brings us yet one step closer to a future world of pure seamless magic, albeit a magic for acrobatic eyes only.

I still feel Google Glass has remarkable potential, but for me it is not yet something I wish to use rather than analyze.

Here is one useful review, more positive than my account, and here is another review.

Are your eBooks reading you?

“What writer would pass up the opportunity to peer into the reader’s mind?” she asked.

Scribd is just beginning to analyze the data from its subscribers. Some general insights: The longer a mystery novel is, the more likely readers are to jump to the end to see who done it. People are more likely to finish biographies than business titles, but a chapter of a yoga book is all they need. They speed through romances faster than religious titles, and erotica fastest of all.

At Oyster, a top book is “What Women Want,” promoted as a work that “brings you inside a woman’s head so you can learn how to blow her mind.” Everyone who starts it finishes it. On the other hand, Arthur M. Schlesinger Jr.’s “The Cycles of American History” blows no minds: fewer than 1 percent of the readers who start it get to the end.

Oyster data shows that readers are 25 percent more likely to finish books that are broken up into shorter chapters. That is an inevitable consequence of people reading in short sessions during the day on an iPhone.

…He contrasted two romance novels. One had few Amazon reviews and little promotion, but Scribd’s data showed 6 out of 10 readers were finishing it — above average for the genre. Another romance had hundreds of reviews on Amazon, but only about 4 out of 10 readers bothered to finish it. They began closing the book, the data showed, when the writer plunged deeper into fantasy. Maybe this was not a good idea.

Some writers, of course, might not be receptive to hearing this.

“If you aren’t careful, you could narrow your creativity. You won’t take risks,” said Ms. Loftis, the young adult novelist. “But the bigger risk is not giving the reader what she wants. I’ll take all the data I can get.”

There is more here.

Assorted links

1. Interview with Neil Wallace, and another one here (pdf).  Both are interesting.

2. A good best jazz of 2013 post.

3. Yet another good argument against free will.

4. Quits seem low, even if we adjust for high unemployment.

5. Cyprus update: “The one bright spot is tourism from Russia, which is enjoying an explosive growth as the country slips into a new economic and cultural orbit.”

6.  A better set of Christmas presents there are not.  And an amusing Christmas satire on economics blogs, quite good.