Friday assorted links


4. But but but .. efficient markets.

Moral of the story (as if more lessons are needed): put your money in a total market index fund just like EMT suggests.

I think there is some broken circular logic there.

(Index funds may survive in a post-efficient world, for reasons only partially related to partial efficiency.)

Then bet against their biases if you think there are profits to be made.

Is owning an index betting against their biases?

Look, the experimental evidence says index funds work. Great! Other evidence, including at link 4, says the EMT is .. not completely right. Therefore index funds can work *while* the EMH is not completely right, and is not completely a justification.

"We find that this bias is not associated with improved fund performance...Funds with more partisan bias suffer from higher levels of idiosyncratic volatility."

So, no violation of EMH, or even the more restrictive CAPM. If expected return of every stock depends only on beta, then a portfolio drawn from a more restricted universe due to partisan bias will not have any alpha (no improved fund performance) but may have higher idiosyncratic volatility (due to less diversification in a restricted universe).

Once we know there is partisan selection, we can 1) doubt efficient allocation of capital, and 2) worry that return would vary, especially in varied market regimes. Political regimes?

#3 - There's some historical evidence by looking at the consanguinity laws by state. States admitted after 1875 (that therefore wrote their constitutions then) are much more likely to ban cousin marriage (or even consider it a criminal offense.) The older the state, the less likely it is banned. (North Carolina has the amazing restriction that first cousin marriages are allowed, except in the case of "double first cousins" (a cousin on both sides of the family, such as if two brothers from one family each married sisters from another family, genetically sharing as much data as a sibling.)

Historians like to argue that laws against phenomenon X are passed only if phenomenon X occurs. On that logic cousin marriage might have been rare in North Carolina and must have been seen as a major threat in the younger states. Historians, eh?

It does argue that groups of siblings marrying other siblings (in small towns) was likely enough in NC that they had to consider double first cousins, certainly.

The historical argument is that the new states were being formed at exactly the moment that the popular perception and mood changed, and thus it reflects something that was an active point of debate at the time but starting to becoming disapproved.

I think most historians would argue that laws against phenomenon X are passed only if phenomenon X is fairly common among socially disfavored members of the community. On that logic, cousin marriage was most likely seen as a lower-class phenomenon, characteristic of backward hardscrabble regions. (Alternatively, one might speculate that perhaps cousin marriage was common among blacks, but I understand from other reading that it was not, or among immigrants, but Catholic rules against consanguinity make me doubt that explanation.)

Catholic rules on consanguinity were made to be broken-- or at least to have dispensations issued. If you read history you will find numerous instances of that, including a few uncle-niece pairings the Church allowed as late as the 19th century.

Princess Mary of Portugal was given to his uncle Michael. But he betraued her and seized the throne illegally.

Public Choice Economists would tend to argue that laws against phenomenon X are passed only if phenomenon X has already declined enough so there isn't significant resistance to the law. So for example, the federal child labor law wasn't passed until child labor was no longer used much and even then specifically exempted the primary areas where it was still used at the time.

"States admitted after 1875 (that therefore wrote their constitutions then) are much more likely to ban cousin marriage (or even consider it a criminal offense.)"

Can you list a few states in which the issue is addressed in the state *constitution* (adopted before 1875 or after)?

The article, such as it is, mentions fourth-cousins. In a sense, everyone is a cousin so I'm not sure how meaningful this is.

Yes, I was a bit surprised by that. My paternal grandmother's parents were first cousins (they eloped); I was expecting to find out how common this was.

"Then, in the late 19th century, something changed, and people stopped marrying their cousins." What, the NYT can't think of even one American exception to that generalisation?

Well, it doesn't mean fifth cousins, like Eleanor and Franklin, only first or maybe second cousins. I can't think of a famous exception.

It specifically references fourth cousins

#1: in a cack-handed way he does make a case for good theory. "The fish oil groups were found to have improved risk factors and fish oil supplements were heralded as a new wonder treatment for heart disease. Only they weren’t. Subsequent trials repeatedly revealed no significant effect of fish oil on health."

The problem could scarcely be simpler: "risk factor" doesn't mean that which causes risk, it merely means positive correlate. So reducing "risk factors" shouldn't be expected necessarily to reduce rates of heart attack and stroke. Here's a well-worn analogy: in the old days of heavy cigarette smoking, washing yellow stains off your fingers wouldn't have saved you from lung cancer. Just a positive correlate, you see: the yellow stains were not causes of death.

Clearly what's needed is a good theory about the deep causes of heart attacks. There isn't one, just a heap of mumbo-jumbo about animal fats, good and bad cholesterol, and so on. It's a great scandal but makes a nice little earner for lots of people. It's just as well that the great epidemic of middle-aged death by heart attack has been in substantial decline in much of the world for decades (in the US, since about 1965).

#1 - "Karl W. Smith at" - this author is apparently a fan of the Twin Santas (cut taxes and deficit spend) which Reagan practiced, and as advocated by Mr. Niskanen (of Niskanen Center), in his "starve the beast" (deficit spend massively and hope government collapses). In short, "voodoo economics".

I suspect Niskanen would roll in his grave over what the Niskanen Center is up to. It says libertarian but it is straight up Rawlsian. I'd say it is what Moldbug used to call antinomian. It is basically modern universalist protestantism. No mention of actual and non-Rawlsian "liberties" like property rights and freedom of association.

I like the Niskanen Center's woke libertarianism. It seems the time for it.

How does a woke libertarian respond to news that Uber and Lyft drivers actually make around $3/hr?

Tell them it could be worse, they could be YouTube content creators.

Yes, this falls in the same "be the platform or be the product" pattern.

I didn't put this under the "topics" thread, but some issues of "new work" seem unresolved.

Obviously it’s their business what they do with their time thinks this libertarian. Clearly they think it’s a good idea to drive for Uber and I am certainly not arrogant enough to second guess them.

I don't think that was woke, because it was too efficient markets, not enough behavioral economics, and rather free from concern for the plight of marginal workers.

It was libertarian though.

"Other studies and surveys have found higher hourly earnings for Uber drivers, in part because there are numerous ways to report income and to calculate costs and time and miles spent on the job."

"free from concern for the plight of marginal workers."

There's the rub- virtue signaling is your concern. Actual welfare of these people means nothing to you.

It has long been my belief that the average driver thinks he is making more than he is, given fractions of a fill-up used, wear and tear, etc.

If you tell me "there are numerous ways to report income and to calculate costs" that is consistent with bounded rationality on the matter.

In other news:

"Ninety-six percent of Uber drivers leave the platform within one year."

So maybe they figure it out eventually.

Probably that driving for Uber of Lyft is a type of small business and most small businesses fail. It's just like selling Avon.

I would tell them that if they felt their compensation was unsatisfactory, that they should stop doing it.

They'd celebrate. The fact that the competition in drivers is perfect enough to drive wages down to nearly nothing is a sign that consumers are being catered to like kings.

That's interesting, seems you follow these nuances, and I was aware that Niskanen before he died repudiated the Starve The Beast strategy since deficit spending actually increases Big Government and does not cause it to collapse so fast. Follow the money: who funds Niskanen Center? Googling...only one hit at OpenSecrets: 02/09/2018 Green Capitol LLC Niskanen Center Energy & Nuclear Power Lloyd Ritter
There's more than meets the eye here, but you'd have to dig a lot more to find it...

Starve the beast seems to require going to the brink like Greece or Illinois to impose real cuts, so I'm willing to accept some shared sacrifice: ask not what your country can do for you but what you can do for your country!

....USSR government collapsed because it flat ran out of money (borrowed or otherwise)

Russia is back and more powerful than ever. Russia managed to do what the USSR never could: get their Manchurian Candidate elected--Trump!

"Voodoo economics" was the idea that income tax cuts would entirely pay for themselves (i.e. a large substitution effect overwhelming the income effect) such that the beast does NOT starve. Starving the beast isn't a bad idea.

the Twin Santas
Great! They are twins, both give gifts for free, and neither one is real.

3. I'm self-impressed that my genealogy includes a captain in the revolutionary war (for our side). On the other hand, the genealogy of Jesus in Luke includes Adam and Eve. Can anybody top that genealogy? My (now former) wife's genealogy includes a well-known 19th century patriot. So impressed were her ancestors that the family tree from two generations ago has but one branch. Yes, the marriage of first cousins. They still do that sort of thing in South Carolina. My (now former) wife and I had no children. The genealogy stops here.

Human family trees are bell-shaped curves in ability. I have in my family heroes that founded the modern Greek state, museums dedicated to some of them, some state monuments dedicated to some of them (which end up mentioned in tour books, which is pretty cool and I've used it to impress a date at least once), and then, on the other hand, incest idiots and shepherds found in compromising positions with their flock. Bell shaped curve... As for not having kids, I don't know your circumstances but you could come to the Philippines and sire issue if you really wanted to.

My dad traced my ancestors back to the 13C, they were all farm labourers in the same village for generation upon generation. I broke the pattern, I labor in a cube farm.

Roger of Wendover’s Flowers of History traces Alfred of Wessex’s lineage back to Adam. Several of The Ark and Dove passengers who settled early Maryland were descendants of Alfred’s. Modern genealogists scoff at Roger, of course. But give me a medieval monk any day. Flowers of History is an entertaining read by the way. I can trace back to Atila the Hun whose pedigree is fairly well established back to a northern Chinese nomad from around 850 BC. Am also very proud to claim African ancestry via Huneric the Vandal who was born in Carthage.

If Roger of Wendover believes Adam was a real person, and indeed the first person, don't all of us have lineage back to him (and Eve)?

Very good piece on Swiss referenda, thanks.

#1 raises a good point, which sometimes gets downplayed in popular science accounts.

The role of theory is not just to explain experiments and tell you what's possible. It's also to raise skepticism about bad experiments and tell you what shouldn't be possible.

One of the big problems in the replication crisis is that everyone was testing their own theories. Naturally, everybody discovered they had been right all along! Theorists really need to push back against that kind of stuff and insist that some experimental work needs a closer look.

#3; The answer is never as there are currently some people who fall under the broad definition of American that are married to a first cousin. The issue of consanguinity is one of frequency. A few here and there is meaningless. The frequency in places like Pakistan has a significant negative impact on the quality of human capital. Pakistanis are 3% of Britain's population, but account for 30% of genetic defects.

The Catholic Church began to crack down on cousin marriage in the 6th century. The Franks joined in on this, relying on the Church to prevent cousin marriage. Pepin the Short declared that all marriages should take place in the Church. The Catholic Church went even further and banned second, third and fourth cousin marriage in some places. The point is cousin marriage has been frowned upon for a very long time in the West.

That's probably important for all sorts of reasons.

>That’s probably important for all sorts of reasons.

It's not just genetic defects we should worry about. Countries with high rates of cousin marriage tend to have very low levels of inter-personal trust. If you only trust your local clan/tribe/extended family, you won't be interested in the broader nationstate.

That's a problem that plagues much of the Middle East.

> Countries with high rates of cousin marriage tend to have very low levels of inter-personal trust

That's not a problem one can realize if they're in it, only after a few generations and a couple Westerners and pollsters have decided to come up with something.

If you haven't paid any attention to the Wansink scandal, you might find it interesting. I disagree that anything other than the system which isn't aggressive enough in eliminating bad work is "one of the big problems" with replication in Science. That's why it is so difficult to solve - because it is systematic. You can't explain Wansink any other way.

#5 A better question is not so much how the Swiss make their referenda work, but on how California makes them fail.

But insofar as it is a good question, the article says the secret is good, impartial, explanatory info along with the ballots. But it doesn't hint at how this info is written, who writes it and what process makes that "impartial".

I have my dark guesses about all those things, but I like the Swiss system, insofar as I know anything at all about it. So I am thankful for that piece for giving some details.

"2. Will Ethiopia become China’s fast fashion factory?"
One by one the domino tiles fall. And we retreat.

#3. The Wikipedia article on Cousin Marriage might be worth a read if you're not informed about it. The most notable thing about that article for me was what it didn't say. There was a litany of adverse consequences in birth defects and health problems for cousin marriages in groups which had a long history of such in-group breeding. The only clearly established benefit -which the article claimed was a net neutral due to higher child mortality- was higher fertility. Clearly, if there are deleterious genes passed on, there must also be advantageous genes. This apparently has either not been examined adequately or perhaps we just don't currently have the ability to analyze it.

#2, Interesting that they chose Ethiopia, a landlocked nation. I recall reading that the Chinese had a relatively favorable view of the Ethiopian people. (And I emphasize "relatively".)

Among Chinese I have met with expatriate assignments, Ethiopia was a frequent destination. I expect extant Chinese investment and talent is a strong predictor for where new ventures will happen.

2. "Your new-found, sullen peoples/Half devil and half child." If the Chinese think they can make a go of it in Africa, more power to them. I predict that they will have the same success with African factories as the Swedes have had with Muslim immigrants.

#3 had the potential to be a really edifying article, if the author had anywhere near as much curiosity about the science as she apparently does about accompanying every substantive proposition with a left wing PC hedge. I thought the article was supposed to be about the database and the scientific findings, but it merely generalizes the scientific findings passing; the real story is how to resolve this uncomfortable cognitive dissonance resulting on the one had from the fact that these databases are privately owned and therefore highly suspect and on the other hand that they constitute a lot of information likely to be helpful to Science. The fact that this knowledge has been bestowed by the private market means that it is likely, in the author’s view, to be one or more of the following (count ‘em): fraudulent, racist, classist (and I’m sure I’m missing something else). A description of the headline topic is barely uttered before a professor is hauled in to raise doubts about its legitimacy.

Has it never occurred to any of these people that there may be benefits, in addition to any risks, of private science? Is it possible that sometimes researches can form interest-group constituencies and people with no real curiosity end up getting paid collectively millions upon millions of dollars to “research” e.g. the effect of Swedish massages on rabbits?

Sorry for the rant, it’s just so frustrating.

I thought the same.

The Left's gag reflex to cast doubt on even scientific discoveries because they're financed by private enterprises is getting hard to swallow. It's as if these articles get run through a filter right before publishing, it's that interjecting and ungraceful to read.

#4) Some people consider ESG/SRI investment criteria to be features, not bugs.

3. In my family, around about 1905.

3: More like WHERE did they stop marrying their cousins.

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