Wednesday assorted links

1. How futures trading affected Bitcoin prices.

2. “Without air conditioning, each 1°F increase in school year temperature reduces the amount learned that year by one percent.

3. Ethiopia on me on Ethiopia: “In the US very well educated and very sophisticated cosmopolitan people have no sense of how nice things are in Ethiopia and how well things are going. These include people with PhDs in economics familiar with Davos for a regular economic meeting.”

4. vbuterin on privacy.

5. The invisible asymptote: “More people are more skilled at being hurtful in text than photos.”  A good post with many points of interest.

6. Should central banks become banks?


Crypto fan boy / girl might not have filed a tax return to the IRS in their lifetime....

"Profit is when I liquidate my fiat money back to bitcoins."

Who would have thought crypto fanatics are also Flat Earthers...

The quote makes no sense.

However, congratulations!

Your comment is materially less wrong than the paper produced by the three SF Fed Bank economists and one (really he should be ashamed) Stanford U. finance prof.

The CME treats Bitcoin as commodities, not financial instruments.

The IRS treats crypt-currencies as "property", again not financial instruments, denominated in US dollars. Ergo there is no taxable income/liability until the crypto is sold for dollars at a profit. Then, it may be a capital gain, which doesn't mean so much after Trump's hugely great tax cuts/reforms.

From a IRS 2014:

"In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.

"The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:"

Unfamiliarity with income taxes may be a function of never having filed an IRS tax return.

Tell me how much I like butt sex.

> The IRS treats crypt-currencies as "property", again not financial instruments, denominated in US dollars. Ergo there is no taxable income/liability until the crypto is sold for dollars at a profit.

Not so. From a tax expert

When it comes to the taxation of cryptocurrency mining using the PoW system, IRS Notice 2014-21 is pretty clear. The Notice holds that when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency, as of the date of receipt, is includible in gross income. In addition, the Notice holds that if a taxpayer’s “mining”of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax.

"2. “Without air conditioning, each 1°F increase in school year temperature reduces the amount learned that year by one percent.”"

I've noticed that even a 7-8 Deg change in Temperature drastically decreases my ability to learn by lecture in a sitting environment. On the other hand, actually standing and moving around seems to ameliorate the effects.

I wonder if the study is simply temperature or other factors such as ventilation or air movement. Are there thresholds?

The reason I ask is that jobs where you don't move around, do repetitive but precise and demanding work produce the most temperature sensitive workers imaginable. Air traffic control is one example. I did a job where they do genetic analysis; they prepare samples and do a bunch of very precise and repetitive steps for the analysis; increasing the ventilation rates made the workers far less temperature sensitive. Assuming that you have fresh air (which we do here in the mountains). Air movement is critical as well to disturb the air cushion that forms around our bodies.

I doubt that it is linear at 1 degree increments.

Is that why Southerners in the US are dumber than Northerners? Say New England is 10 degrees cooler than Alabama. That means Alabamans learn 10% less. Science has confirmed what we knew all along.

The entire purpose of this faux study is in the single quote: "with extreme heat being particularly damaging and larger effects for low income and minority students."
It's just another fake study designed to funnel government resources to select groups. It's rentseeker 101.

Does this mean that we should reduce school temperatures to absolute zero so that the students will have infinite capacity for knowledge absorption?

The lead author is Goodman. Goodman is also a manufacturer of AC units. Coincidence? I think not! The study is a ploy to sell more AC units!

"According to Cowen, Ethiopia needs some kind of public relations campaign which will not necessarily be done by the country itself but by those sympathetic to the country who could write and back Ethiopia’s changed image."

Is it a job application? Ok, joking. But have the Ethiopians or their apologists tried to make the world know the quality of their donkeys? I am sure it would be a game changer in Davos.

2. I didn't have to walk five miles in the snow to get to school, but I did attend public schools in the South not one of which had air conditioning. But then, neither did our house. To make matters worse, our public schools like most required boys to wear long pants and socks. Back then air conditioning was the exception not the rule. Of course, we didn't miss what we did not know. Buildings were different then, with high ceilings, large windows, and attic fans. Today, we live and work in buildings with little fresh air circulating, the combination of the air tight windows and insulated walls, the heat, and the air conditioning producing fertile ground for the mold growing in the walls. I suspect that each 1% increase in mold reduces intelligence by at least 1% while shortening life expectancy so that our time in this life being stupid fortunately is reduced by at least 1%.

How does the mold get out of the walls and into your lungs?

2. Yes. Grew up in New York City. The tall windows and ceilings were rendered less effective when the Board of Ed banned opening the upper windows. Somebody, somewhere, got nailed by a window pole, and that was that, you had to be "safe" from window poles. Never mind heat prostration, that's for sissies anyhow.

With or without the window poles, June was mostly a waste. But the Board of Ed insisted on slogging all the way through to June 30 anyhow. And yet politicians bureaucrats are always shocked, so very shocked, that the public doesn't want to shovel even more money at them to engage in even more such useless antics.

2. What's less environmentally impactful, however: heating a winter classroom to comfortable levels, or cooling a summer classroom to comfortable levels?

Oftentimes, I find people complaining about air conditioning perfectly happy to burn tons of fuel to warm places in the winter, and conveniently ignore the greenhouse gas effect.

Seems like that will take care of itself

5. So, is 'revenge porn' something that can be mentioned in this comment section? Followed by the coming world of deep fakes?

Admittedly, Instagram is a highly policed environment, but the idea that people cannot be less hurtful with images seems to ignore various motivations.

To stay in power, for example - 'For months he has faced allegations he sexually assaulted a woman he was having an affair with before he became governor and that he threatened to blackmail her with a nude photo he took while she was blindfolded.'

Admittedly, he could not have posted such a picture on Instagram.

LOL at these accusations. But hey, if you can't trust an adulteress, who can you trust?

Doesn't bother me though, as Greitens was a RINO.

If #2 is generalizable, that has large implication for global development models and narratives. Could explain general observations about higher latitudes being more productive and dynamic without having to resort to racial explanations.

There has been some research done on related theories of how parasite load can affect human development and governance structures:

Re: John Lennon weird dentist story:

Nobody mentioned cloning John Lennon? That would be really cool!

3. Nice to see a Trump appointee arranging for Prof. Cowen to speak with the imprimatur of the United States.

Well, a former Obama appointee with deep roots in the swamp, but still, at least the U.S. actually has an ambassador in Ethiopia, in contrast to South Korea. Undoubtedly due to the vast importance President Trump places on America's relationship with apparent future African economic powerhouses.

Or maybe because President Trump knows how to appreciate a good ass when he sees one. He certainly has shown he knows how to kick donkeys.

I love that the Ethiopian article refers to Tyler as "once regarded as America's hottest economist"

#2 What is the optimal temperature? If you've ever worked in an office building you know there's about a 10 degree range.

Found a draft of the paper and this seems to be the framework:

"Replacing a school day in the 60s with a hotter school day lowers achievement, with the extent of that damage increasing roughly linearly with temperature above 70◦F."

People will vary, but that sounds like optimal temperature for cognition and for comfort are not the same.

Work and school aren't the same thing. Most work isn't about cognitive skill development, it's about producing widgets or filling out forms.

From a dialetical perspective this study could show that humans are having a problem adapting to temperature variations or that humans have been successful enough in modifying their environment that they are able to increase their cognition. Which is it?

“Or maybe because President Trump knows how to appreciate a good ass when he sees one.”

Vulgar. Is this what German-Americans have become under the odious Trump regime?

2. “In poor countries, we can sometimes be like, ‘Oh, it’s food insecurity, it’s drought, it’s not temperature,’” Grace said. “This is a place for us to start thinking about what physical environments do to our health.”

3. We still approach the World with imperialist thinking. What is a savage? Someone who lives well in a different culture or someone who lives in your culture but acts with impunity.

2. Temperature doesn't seem to explain much of anything about test scores. Look at the maps. The counties with higher test scores also have a higher fraction of days on which classrooms get too hot. There is almost no variation in school AC penetration, but what little their is show a negative correlation with percentage of Hispanic and black student population. The collinearity of temperature and state fixed effects is most likely high (also Maine seems to perform terribly on PSATs). I know showing r-squared is not popular in economics, but I would love to see what these temperature variables add to explanatory factors. I would also like to see the coefficients on income presented alongside the coefficients on temperature. But I guess as long as p > 0.05 (also, please don't put a star next to a coefficient with p < 0.05), then it's a result. The main result (in table 2) is that a 1 degree increase in average temp decreases the score by 0.001 standard deviations. The authors note the average gain in PSAT performance between is 0.3 standard deviations. This seems like a clear case of getting a significant result just because you have lots of data points. Even if this effect is real, the places with the highest mean temperatures already have AC. Note that a lot of their data is coming from southern CA a few pockets in Texas and Florida, and a lot of the northeast. Let me know when that actually have important results about what affects test scores.

#5 gets the implications of discoverability:

Along comes a service that not only wipes out content by default after a short period of time but is inscrutable to the very parents who might crash the party. In fact, there's an entire class of products for which I believe an Easter Egg-like interface is actually preferable to an elegant, self-describing interface, long seen as the apex of UI design (more on that another day).

#3. I've talked with Ethiopian born people in the US who told me they had to go to great lengths to pay people smugglers to get them to the US, and they don't want to return. The few I spoke with were wonderful people, btw.

We need to deport these illegal thugs back to Africa.

1. The article is wrong when it says it was "difficult or impossible" to short bitcoin before the futures market. At etoro it was possible and very easy to short bitcoin before the futures trading market opened.

“More people are more skilled at being hurtful in text than photos.”

Is that a dare?

"6. Should central banks become banks?"

I tend to agree with the piece. There seems to be a group that is convinced the central bank lowering short term interest rates is a special payoff to big players in the economy but as the piece points out that doesn't make much sense.

One area you could argue, though, is the Fed could be a place for money savings. Since the Fed cannot go bankrupt, checking accounts or even savings accounts held at the Fed would compete with the private banks for safety. The FDIC could be paired back and the 'unbanked' could be brought into the system by a cheap option for basic accounts that would compete against over priced private banks. Private banks, instead of running with equal FDIC guarantees could instead offer higher returns in exchange for higher risks.

4 was good. Not much discussion. Because it is reasonable?

5. Good read, forget about the Washington Post for a moment and read this quote:

"Per Jeff's latest annual letter to shareholders:

" One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. I see that cycle of improvement happening at a faster rate than ever before. It may be because customers have such easy access to more information than ever before – in only a few seconds and with a couple taps on their phones, customers can read reviews, compare prices from multiple retailers, see whether something’s in stock, find out how fast it will ship or be available for pick-up, and more. These examples are from retail, but I sense that the same customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries as well. You cannot rest on your laurels in this world. Customers won’t have it."

#5 Invisible Asymptote is absorbingly written even though I use none of those products except an occasional Amazon order. Remains of the Day archive seems worth checking out

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