Month: September 2016

Workplace sentences to ponder

It really is time to hurry up and give Bill Baumol that Nobel Prize:

…In the past sixteen years, 94 per cent of the net jobs created were in education, healthcare, social assistance, bars, restaurants, and retail, even though those sectors only employed 36 per cent of America’s workforce at the start of the millennium…

Average hourly pay in these sectors, weighted by their relative sizes, has consistently been about 30 per cent lower than in the rest of the economy…

And since typical jobs in bars, restaurants, and retail involve far fewer hours than normal, weekly pay packets for workers in these growing industries were more than 40 per cent lower than workers in the rest of the economy. Average weekly earnings are now 3 per cent lower than they would have been if the distribution of employment had stayed the same as in January, 2000…

That is from Matthew C. Klein, who is riffing on Ryan Avent, don’t forget Ryan’s new book.

A new (old) argument against a guaranteed basic income

Later this year, roughly 6,000 people in Kenya will receive regular monthly payments of about a dollar a day, no strings attached, as part of a policy experiment commonly known as basic income.

…In a recent GiveDirectly blog post, the charity’s Kenya-based official, Will Le, explains that refusal rates in East Africa have typically held steady between 4% and 6% in past cash transfer trials. They’ve been especially low in countries like Uganda and Rwanda. In one Kenyan region known as Homa Bay, however, the rates have risen as high as 40%.

…GiveDirectly’s investigations have shown that people who refuse the cash are skeptical. They find it “hard to believe that a new organization like GiveDirectly would give roughly a year’s salary in cash, unconditionally,” Le writes. “As a result, many people have created their own narratives to explain the cash, including rumors that the money is associated with cults or devil worship.”

Here is the full story, the pointer is from the excellent Samir Varma.  And here is the GiveDirectly response.

Samir also refers us to this study of why not all states have legalized medical marijuana, here is one result: “If all 50 states had legalized medical marijuana by 2014, according to their estimates, that could translate to savings of $1.5 billion per year in Medicaid spending.”

Thursday assorted links

1. Who needs the standing desk when you’ve got the 5?

2. Puffin kung fu.

3. How to launch nuclear weapons.

4. How to pick the fastest line (NYT).

5. Education boosts economic growth, but only with a long lag (pdf).

6. “…RAND’s calculations plus my own Fermi estimate suggest that prescription drug price regulation would cost one billion life-years, which would very slightly edge out Communist China for the title of Worst Thing Ever.”  Link here.

What is the social value of Uber?

That is my latest column for Bloomberg, here is the method:

Uber calculates figures for surge pricing at times of high demand, but it rounds off. So a computation of market conditions that might lead to a surge price that is 1.249 times higher than normal fares is rounded down to 1.2, but 1.251 would be rounded up to 1.3. Yet the initial, unrounded 1.249 and 1.251 estimates represent almost the same underlying market tightness.

Using data from Uber, the authors therefore could see how the demand for Uber varied with surge prices that vary (say from 20 percent to 30 percent above normal fares) even when market conditions are roughly constant.

Here is the source:

A new paper by Peter Cohen, Robert Hahn, Jonathan Hall, Steven Levitt…and Robert Metcalfe…

They conclude UberX produces about $6.8 billion in consumer surplus a year.  My caveat:

If anything, this method underestimates the worth of Uber, as it doesn’t capture what economists call “option value.” Let’s say you walk home with a guy or gal late at night, hoping something nice will happen. But you’re not quite sure, as he or she might make the wrong noises about a particular political candidate, and then you would wish to bail out quickly. Uber would be the safety net. Most of the time you don’t end up using the service or recording a transaction that would count for this study, but you can start making plans because you know you have Uber as a fallback.

Or consider those urban residents who have ditched their cars altogether. They know they can take Uber to the local market if they need to, even if most of the time they have not run out of milk and dog food. Similarly, the existence of Uber is helping some localities economize on mass transit expenditures.

The study also doesn’t measure how Uber might help get the U.S. to the next level of market innovation, which in this case might mean a network of on-demand, self-driving vehicles.

Do read the whole thing.

The Irony of Hillary Clinton’s Data Analytics

Barack Obama’s campaign adopted data but Hillary Clinton’s campaign has been molded by data from birth. Politico has the remarkable story:

Staff in Clinton’s analytics department sit under a sign that hangs from the ceiling with the words “statistically significant” printed on it. And overnight, in some of the few hours that headquarters isn’t whirring with activity, the team’s computers run 400,000 simulations of the fall campaign in what amounts to a massive stress-test of the possibilities on Nov. 8.

…“I have never seen a campaign that’s more driven by the analytics,” [one] strategist said. It’s not as if Kriegel’s data has ever turned around Clinton’s campaign plane; it’s that her plane almost never takes off without Kriegel’s data charting its path in the first place.

…Among the pioneering areas Kriegel’s analytics team has studied, according to people familiar with the operation, is gauging not just whom to talk to, how to talk to them and what to say — but when to say it. Is the best time to contact a voter, say, 90 days before the election? 60 days? One week? The night before? It is a question Obama’s team realized was crucial to mobilizing voters in 2012 but had never been truly analyzed. With a full calendar of competitive primaries, Kreigel and his team had plenty of chances to run rigorous, control-group experiments to ferret out answers to such questions earlier this year.

Here is one fascinating bit on the algorithms that were used to estimate delegate flippability in the primary:

First, the campaign ranked every congressional district by the probability that campaigning there could “flip” a delegate into Clinton’s column. Because every district has a different number of delegates allocated proportionally (in Ohio, for instance, 12 districts had 4 delegates each while one had 17), this involved polling and modeling Clinton’s expected support level, gauging the persuadability of voters in a particular area and then seeing how close Clinton was to a threshold that would tip another delegate in her direction. (At the most basic level, for instance, districts with an even number of delegates, say 4, are far less favorable terrain, as she and Bernie Sanders were likely split them 2-2 unless one of them achieved 75 percent of the vote.)

That so-called “flippability score” was then layered atop which media markets covered which seats. If a media market touched multiple districts with high “flippability” scores, it shot up the rankings. Then the algorithm took in pricing information, and what television programs it predicted the most “flippable” voters would be watching, to determine what to buy.

The irony? More questions are being asked, more data is being collected and more randomized experiments are being run in the effort to win the presidency than will ever be used to choose policy by the presidency. Sad.

Strauss’s pedagogical method

Strauss’s pedagogical method was famous for its simplicity and directness.  A student would be asked to read a passage from the work being discussed; Strauss would make a comment or two, noting contradictions or discrepancies with earlier passages; a student might then raise a question, which would lead Strauss to digress, taking it to a much higher level and illustrating with with often earthy examples.  (He was particularly fond of examples from a newspaper advice column of the time, “Dear Abby.”)  Then on to the next passage.

That is from Mark Lilla’s new book The Shipwrecked Mind: On Political Reaction.  There is also this bit from the book:

Michel Houellebecq is not angry.  He does not have a program, and he is not shaking his fist at the nation’s traitors…He appears genuinely to believe that France has, regrettably and irretrievably, lost its sense of self, but not because of feminism or immigration or the European Union or globalization.  Those are just symptoms of a crisis that was set off two centuries ago when Europeans made a wager on history: that the more they extended human freedom, the happier they would be.  For him, that wager has been lost.  And so the continent is adrift and susceptible to a much older temptation, to submit to those claiming to speak for God.  Who remains as remote and as silent as ever.

I enjoy such books.  But in earlier times I preferred Ann Landers to Dear Abby.

Those new service sector jobs, installment #1437, Cambodian fortune teller edition

Why stick with that NGO when global markets beckon?:

In the northwest corner of Phnom Penh’s Boeng Keng Kang market, a new stall is creating a buzz among shoppers.

Its occupant is a 28-year-old former U.S. Peace Corps volunteer who offers tarot-card readings in Khmer. And customers say her predictions are on point.

With strings of fake leaves hanging from the ceiling, colorful paper butterflies affixed to one wall, and a sign that reads “Mantis Magic,” the booth—which has been open for two weeks—stands out from the neighboring hairdressers and food stalls.

“I didn’t have a job, I needed something to do and I wanted to help people through my spiritual work. I was getting messages to do this, so I just followed my gut,” said Eileen, who speaks conversational Khmer and asked to be identified only by her first name so that her mother in the U.S. would not find out about her new trade.

Originally from New York, Eileen said she graduated from West Virginia University with degrees in gender studies and criminal investigations before relocating to Cambodia nearly five years ago with the Peace Corps.

After spending two years writing grant proposals for a local NGO while pursuing a master’s degree in development at the Royal University of Phnom Penh, she grew restless and earlier this year decided to pursue a passion for mysticism she had cultivated since the age of 10.

A Cambodian friend helped her lease the market stall two weeks ago, Eileen said. She said she had met with unexpected financial success, earning about $450 since opening while charging 10,000 riel (about $2.50) per session.

Here is the full story, by Maria Paulo Brito and Ouch Sony, it has other interesting points, and for the pointer I thank Dustin Palmer.

And, via Kaushal Desai, here is a 16-year-old British girl who earned £48,000 helping Chinese parents name their babies.

Does Chinese parental matchmaking matter?

There is a new NBER paper on this topic by Fali Huang, Ginger Zhe Jin, and Lixin Colin Xu, the results are striking:

While parental matchmaking has been widespread throughout history and across countries, we know little about the relationship between parental matchmaking and marriage outcomes. Does parental involvement in matchmaking help ensure their needs are better taken care of by married children? This paper finds supportive evidence using a survey of Chinese couples. In particular, parental involvement in matchmaking is associated with having a more submissive wife, a greater number of children, a higher likelihood of having any male children, and a stronger belief of the husband in providing old age support to his parents. These benefits, however, are achieved at the cost of less marital harmony within the couple and lower market income of the wife. The results render support to and extend the findings of Becker, Murphy and Spenkuch (2015) where parents meddle with children’s preferences to ensure their commitment to providing parental goods such as old age support.

Here is an earlier SSRN version.

Does supply-side economics deserve a second look?

That is the topic of my latest Bloomberg column, which focuses on Edward Conard’s new book The Upside of Inequality (not a good descriptive title for the book, in my view).  Conard’s central idea is that risk-bearing equity capital is the truly scarce asset in most economic situations, and economic analysis should adapt accordingly.  He is very creative in seeing some of the implications of this view, for instance:

This framework makes Conard a revisionist on the U.S. trade deficit. The traditional story is that Americans buy goods from, say, East Asia, and the sellers respond by investing those dollars back in the U.S., a win-win situation. Conard believes that analysis would hold only if people who accumulate cash from foreign transactions invest their funds into risky, innovative enterprises.

But too often they buy government securities, and so Conard views the U.S. trade deficit as something that makes the government bigger without making the economy more dynamic. This confounds the traditional libertarian defense of free trade by indicating that we are not really getting market-oriented investments when the funds return.

That is the kind of argument that few people are willing to accept, yet they typically don’t have a good rejoinder to it either.  And on supply-side economics here are my comments:

Maybe supply-side economics isn’t as wrong as its reputation indicates. Maybe the earlier supply siders just spent too much time focusing on one supply obstacle – high taxes – when other barriers were bigger problems.

…Cuts in marginal tax rates became overrated after the Reagan recovery years of the 1980s, but maybe after the failed Bush experience they are now somewhat underrated.

Perhaps no economic policy is going to work especially well in a time when median incomes are falling. If we can clear away other impediments to supply, tax cuts may prove potent once again. Don’t forget that there are decades of research in economics showing that tax incentives matter.

Ditto!

I disagreed with much in Conard’s book, but found it very stimulating to ponder.  It puts many of the pieces together in a new and different way.

Wednesday assorted links

1. Chess with tractors and harvesters.  And chess as data for psychological research.

2. A contrarian view on Chinese infrastructure investment as leading to excess fragility.

3. Joshua Mitchell tries to produce a smarter version of Trump’s ideas.  And Peter Thiel on why to support Donald Trump.  Not my views, but always happy to present smart people who think otherwise and engage with the core issues.

4. Peer review by algorithm?

5. Biblioburros, and other unusual libraries.

6. How many Obamacare enrollees are getting subsidies?

7. How to restructure government transparency, and here is Matt’s underlying piece Against Transparency.

*The Fall of Heaven*

I loved this book, the author is Andrew Scott Cooper, and the subtitle is The Pahlavis and the Final Days of Imperial Iran.  It is the best book I know for understanding the Iranian revolution, and it is compulsively readable throughout.  Did you know for instance that the Ayatollahs were deeply disturbed by the presence of The Mary Tyler Moore Show and also Rhoda on Iranian TV?

Here is one excerpt:

Iran’s political and economic malaise gave a renewed sense of urgency to the Shah’s top priority, which was to settle the question of the Imperial succession once and for all.  His initial preference was for a European princess who could provide the House of Pahlavi with the luster of dynastic legitimacy.  He soon ran into trouble.  The Windsors rebuffed his interest in Queen Elizabeth II’s cousin Princess Alexandra of Kent, while his favorite, Princess Maria Gabriella, the Catholic daughter of the deposed King Umberto of Italy, was ruled out owing to opposition from the Vatican and Iran’s ulama.

And this, from the Shah himself:

“When everybody in Iran is like everybody in Sweden, then I will rule like the King of Sweden,” he declared.

I would describe this book as relatively sympathetic to the Shah, and also arguing that the oppressions and tortures of Savak are sometimes overstated.

This one makes my best non-fiction of the year list, and it will be in the top tier of that list.

eBooks are not declining as much as you might think

And self-published “indie” authors — in part because they get a much bigger cut of the revenue than authors working with conventional publishers do — are now making much more money from e-book sales, in aggregate, than authors at Big Five publishers.

And this:

The AAP also reported, though, that e-book revenue was down 11.3 percent in 2015 and unit sales down 9.7 percent. That’s where things get misleading. Yes, the established publishing companies that belong to the AAP are selling fewer e-books. But that does not mean fewer e-books are being sold. Of the top 10 books on Amazon’s Kindle bestseller list when I checked last week, only two (“The Light Between Oceans” and “The Girl on the Train,” both mass-market reissues of novels that have just been made into movies) were the products of major publishers. All the rest were genre novels (six romances, two thrillers) published either by the author or by an in-house Amazon imprint. Their prices ranged from 99 cents to $4.99.

That is from Justin Fox at Bloomberg.

Tuesday assorted links

1. Can these new glasses fix color blindness?

2. Good Pethokoukis and Delisle dialogue on student debt and free college.

3. Maybe gated for you, but a truly excellent and important FT piece on Silicon Valley and the DOD.

4. “Astoundingly, though, more than a quarter of all ticket buyers still decide what film to see only after showing up…” (NYT).

5. Get ready for Bottom’s Dream!

6. Stalker, but for wood ants.

Good sentences about miniature donkey therapy meet-ups

A miniature donkey can change your life. Ten of them can change it a lot.

And:

Five years ago, Mr. Stiert was a software engineer at IBM. A bunch of things happened — divorce, a layoff, a sort of reckoning. Now, at 57, he says, “Every day is donkey day.”

And:

Ms. Hill, 26, said she kept returning because donkeys “don’t judge.”

“They understand, even though they don’t talk,” she said.

And the dreaded regulatory state raises its feared hand:

(Before you run out to shop for donkeys yourself, make sure they’re legal in your town. They are not in New York City, for instance, where the Health Code bans “all odd-toed ungulates” — hoofed animals — other than domesticated horses, “including, but not limited to, zebra, rhinoceros and tapir.”)

Those are not the only good sentences about miniature donkey therapy meet-ups, Andy Newman at the NYT has more.  Here is a final winner:

For all their surprising virtues, donkeys can be a little stubborn.

From the comments, Joseph Henrich on group selection

There are separate issues that get muddled up under this label.

1. There’s a semantic debate among mathematical evolutionary biologists about what the best fitness accounting system is (e.g., inclusive fitness as promoted by the Oxford crowd, or a pluralistic approach favored by most other mebs). This debate will seem totally stupid to economists. This debate shouldn’t be confused with the empirical question of whether intergroup competition has shaped genetic or cultural evolution.

2. The difference between genetic vs. cultural evolution, and between cultural group selection and genetic group selection. Many researchers like Boyd and Richerson have argued against the importance of genetic group selection for humans but FOR the importance of intergroup competition shaping cultural evolution. Much modelling suggests that conditions that normally inhibit the importance of GGS in genetic systems are mitigated in cultural evolutionary systems–because of multiple stable equilibrium (think folk theorem with different populations stuck at different equilibrium)

3. Empirically, a lot of evidence suggests that intergroup competition has shaped cultural evolution (institutions, social norms, religions, etc.)

Two recent target articles in BBS with full commentaries and replies are the places to start

http://www.des.ucdavis.edu/faculty/Richerson/CGS%20for%20BBS.pdf

http://www2.psych.ubc.ca/~ara/Manuscripts/2016%20Norenzayan%20cultural%20evolution.pdf

I would avoid the opinions of web-publishing non-experts, who have not contributed to the primary literature and don’t understand cultural evolution.

In general I thought the comment thread on group selection was excellent.