Month: November 2018

Will a low price actually prove good for crypto?

That is the topic of my latest Bloomberg column, here is one bit:

Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOs leading to quick riches. The rhetoric is shifting toward a more cautious or even apologetic tone. The corresponding reality can perhaps be one of greater focus and relevance.

We’re at the point where crypto finally has to prove its social worth. But what might that mean? Imagine using crypto as a medium of micropayments to pay for media on the internet. Or perhaps you’ll use the blockchain to verify your identity, rather than telling some stranger on the phone the last four digits of your Social Security number. Or how about a system for self-executing, zero-cost contracts? (For example: I will give $10,000 to a charity if 10 other people do.) Maybe the burgeoning field of virtual reality will rely on crypto to support some of its transactions, starting with virtual sex, which the major banks might stay away from. Alternatively, I might use crypto assets to send money to Mexico, avoiding the steep charges from current money transfer systems. In the more utopian visions, crypto leads to the rise of entirely self-governing systems, powered by the blockchain.

And this:

By the way, if you are confused by the terms “proof of stake” and “sharding” (and others), that is probably a good thing. As the tech guru Stewart Brand is reported to have said, the proliferation of terminology in crypto is a sign that new ideas and possibly important new technologies are afoot.

Stay tuned…

Tuesday assorted links

Why Is the Fight for Free Speech Led by the Psychologists?

Jeffrey Sachs (not the economist) asks, Why are psychologists so prevalent in the free speech movement?:

If any academic field is associated with the contemporary debate surrounding free speech, it’s psychology. Haidt, Pinker, Peterson, Saad, Jussim, even Lehmann. All specialize or have backgrounds in academic psych.

The Scholar’s Stage offers a good answer:

I attribute this all to three things.

1. The conclusions academics reach tend to rankle the right. There are exceptions. If your research draws on evolutionary psychology, focuses on innate behavioral differences, or touches any sort of psychometrics (e.g., IQ), the angry tide does not sweep in from the right. The wave these men and women fear crashes in from leftward side. Moreover, the sort of leftist opposition that the academic consensus on these topics face leaves little room for rational debate or compromise: controversies over psychometrics or evolutionary psychology are usually framed in terms of good and evil, not right and wrong. The scientists involved are to be conquered, not reasoned with.

So that is point one: the people who want to shut controversial psychologists up are overwhelmingly creatures of the left.

2. Psychology, especially social psychology, is itself an overwhelmingly leftist discipline. We actually have data on this, and it is pretty grim: a recent survey of American tenure-track professors reveals that there 17.4 registered Democrat psychologists for every single registered Republican.[2] If there is a field of people who ought to be sympathetic to social justice railroading, these people are it.

3. Despite this, behavioral scientists have not yet adopted the rhetorical techniques or methodology of inquiry of “critical theory.”  In contrast, see how these modes of inquiry have swallowed up the fields of anthropology and communications, and established creeping colonies in history, sociology, and area studies.  Given the left-leaning sympathies of almost all in the profession, the threat that the same might happen to the study of human behavior is real.

…Haidt et. al. are confident they can win the debate if they are allowed to debate. For the heterodox anthropologist or sociologist the game is already over: their discipline has already been conquered. For the economist, the threat is too remote to take seriously. Behavioral science exists in that rare in-between: methodologically, it has the tools to fight back against the excesses of the activist. Socially, it provides a compelling reason for its practitioners to use them.

What should I ask Rebecca Kukla?

I will be doing a Conversation with her, here is her home page:

Professor of Philosophy and Senior Research Scholar in the Kennedy Institute of Ethics at Georgetown University

Also: amateur powerlifter and boxer and certified sommelier

I live in the middle of Washington, DC, with my 13-year-old son Eli and my two Portal-themed cats, Chell and Cube. My research focuses on social epistemology, philosophy of medicine, and philosophy of language. 

This interview is an excellent entry point into her thought and life, here is an excerpt from the introduction:

[Rebecca] talks about traveling the world with her nomadic parents, her father who was a holocaust survivor and philosopher, hearing the Dream argument in lieu of bedtime stories, chaotic exposure to religion, getting a job at and apartment at the age of 14, the queerness of Toronto, meeting John Waters and Cronenberg, her brother who is the world’s first openly transgender ordained rabbi, getting into ballet, combating an eating disorder, the importance of chosen family, co-authoring an article with her dad, developing an interest in philosophy of mathematics, the affordability of college in Canada, taking care of a disabled, dramatically uninsured loved one, going to University of Pitt for grad school, dealing with aggravated depression, working with Brandom, McDowell, the continental/analytic distinction, history of philosophy, how feminism and women—such as Tamara Horowitz, Annette Baier, and Jennifer Whiting–were treated at Pitt, coping with harassment from a member of the department, impostor syndrome, Dan Dennett and ‘freeedom’, her sweet first gig (in Vermont), dining with Bernie Sanders, spending a bad couple of years in Oregon, having a child, September 11th, securing tenure and becoming discontent at Carleton University, toying with the idea of becoming a wine importer, taking a sabbatical at Georgetown University which rekindled her love of philosophy, working on the pragmatics of language with Mark Lance, Mass Hysteria and the culture of pregnancy, how parenting informs her philosophy, moving to South Florida and the quirkiness of Tampa, getting an MA in Geography, science, philosophy and urban spaces, boxing, starting a group for people pursuing non-monogamous relationships, developing a course on Bojack Horseman, her current beau, Die Antwoord, Kendrick, Trump, and what she would do if she were queen of the world…

And from the interview itself:

I suspect that I’m basically unmentorable. I am self-destructively independent and stubborn, and deeply resentful of any attempt to control or patronize me, even when that’s not really a fair assessment of what is going on.

So what should I ask her?

How much do the experts wish to discount the future by?

…we find that expert opinion is particularly varied on the rate of time preference.  The modal value is zero, in line with many prominent opinions.  But with a median (mean) of 0.5 percent (1.1 percent)…


…while we find that experts recommend placing greater weight on normative than positive issues when determining the SDR, most believe that the SDR should be informed by both.

That is from the latest issue of American Economic Journal: Economic Policy, “Discounting Disentangled” by Drupp, Freeman, Groom, and Nesje.  You will of course find a lengthy discussion of these issues in my own Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals.

Gang update

From El Salvador (WSJ):

Politicians must ask permission of gangs to hold rallies or canvass in many neighborhoods, law-enforcement officials and prosecutors said. In San Salvador, the nation’s capital, gangs control the local distribution of consumer products, experts said, including diapers and Coca-Cola . They extort commuters, call-center employees, and restaurant and store owners. In the rural east, gangs threaten to burn sugar plantations unless farmers pay up.

At what point do we say the government has been replaced?  On the analytics:

“We’ve left behind the era of the cartel and the kingpin,” said Alejandro Hope, a security consultant in Mexico City. “Today, most violence in Latin America is the result of a new system that’s more diverse, harder to control, and much more local.”

In Brazil to the south (NYT):

In Rio de Janeiro state alone, more than 5,197 people have been killed this year — far more than the 3,438 civilians killed in conflict last year in Afghanistan, according to United Nations figures.

One-quarter of those may have been killed by the state, a sign of state weakness not strength.

One approach is to view all this as a problem to be solved, and surely there is something to that attitude.  Another approach, not mutually exclusive, is to view it as a problem that is getting harder to solve.

Amazon search is getting worse, especially for classic books

Just type in “Gulliver’s Travels,” and the first page will not show any editions you actually ought to buy.  And there are so many sponsored ads for mediocre, copyright-less editions.  If you type in “Gulliver’s Travels Penguin” you eventually will get to this, a plausible buy for the casual educated reader.  And wouldn’t it be nice if someone told you the $156.31 Cambridge University Press edition is by far the best choice? — full of marginal annotations!

Monday assorted links

Maybe We Won’t All Die in a Pandemic

The high frequency of modern travel has led to concerns about a devastating pandemic since a lethal pathogen strain could spread worldwide quickly. Many historical pandemics have arisen following pathogen evolution to a more virulent form. However, some pathogen strains invoke immune responses that provide partial cross-immunity against infection with related strains. Here, we consider a mathematical model of successive outbreaks of two strains: a low virulence strain outbreak followed by a high virulence strain outbreak. Under these circumstances, we investigate the impacts of varying travel rates and cross-immunity on the probability that a major epidemic of the high virulence strain occurs, and the size of that outbreak. Frequent travel between subpopulations can lead to widespread immunity to the high virulence strain, driven by exposure to the low virulence strain. As a result, major epidemics of the high virulence strain are less likely, and can potentially be smaller, with more connected subpopulations. Cross-immunity may be a factor contributing to the absence of a global pandemic as severe as the 1918 influenza pandemic in the century since.

From a new paper in bioRxiv, the biological preprint service analagous to arXiv.

Hat tip: Paul Kedrosky.

How does paid maternity leave affect children?

Abstract: This paper provides the first evidence of the effect of a U.S. paid maternity leave policy on the long-run outcomes of children. I exploit variation in access to paid leave that was created by long-standing state differences in short-term disability insurance coverage and the state-level roll-out of laws banning discrimination against pregnant workers in the 1960s and 1970s. While the availability of these benefits sparked a substantial expansion of leave-taking by new mothers, it also came with a cost. The enactment of paid leave led to shifts in labor supply and demand that decreased wages and family income among women of child-bearing age. In addition, the first generation of children born to mothers with access to maternity leave benefits were 1.9 percent less likely to attend college and 3.1 percent less likely to earn a four-year college degree.

That is the job market paper of Brenden Timpe, a brave man from the University of Michigan.

“Displacement in the Criminal Labor Market: Evidence from Drug Legalizations”

Legalizing drugs harms some black markets but spurs activities in others:

It is widely hypothesized that legalization disrupts illicit markets and displaces illegal suppliers,  but the consequences for those who are displaced remain poorly understood. In this paper, I use comprehensive administrative data from three states that legalized marijuana covering all individuals released from prison in the years immediately before and after the policy change to estimate the effect of legalization on the subsequent criminality of convicted dealers. I find that marijuana legalization increased the 9-month recidivism rate of marijuana offenders by 6 percentage points relative to a baseline rate of 10 percent. The increased recidivism is largely driven by a substitution to the trafficking of other drugs, which is consistent with a Becker-style model where individuals develop human capital specific to the drug industry. To learn about potential mechanism behind these results, I use detailed drug transaction price data to estimate the effect of legalization on average prices and price dispersion, and I find suggestive evidence that both the average level and residual variance decline following legalization, which is consistent with legalization eroding rents earned in the illicit marijuana market. Lastly, I explore the generalizability of my findings in a distinct legalization experiment from history: the end of National Prohibition. I replicate the main insights at an organizational level and show that, in response to the repeal of Prohibition, the Italian-American Mafia shifted personnel from bootlegging to narcotics. Overall, the results in this paper suggest that an unintended consequence of drug legalization is a re-allocation of drug criminals to other illicit activity.

That is from Heyu Xiong, who is currently on the job market from Northwestern.

Sunday assorted links

1. Heterodox Academy podcast with Charlotta Stern.  And a related paper “Does political ideology hinder insights on gender and labor markets?”

2. “…exposure to a disruptive peer in classes of 25 during elementary school reduces earnings at age 24 to 28 by 3 percent. We estimate that differential exposure to children linked to domestic violence explains 5 percent of the rich-poor earnings gap in our data,and that each year of exposure to a disruptive peer reduces the present discounted value of classmates’ future earnings by $80,000.”  By Carrell, Hoekstra, and Kuka.  The size of that effect seems large to me, but worth a ponder in any case.

3. Scott Adams on the persuasive powers of Trump.

4. “…struggling individuals were more motivated by giving advice than receiving it.

5. Can tracking your moods with a wrist band stop your suicide?  Should we even go down this path?

6. Steve Bannon debates David Frum.

How are immigrants and refugees in Sweden doing?

We use administrative Swedish data to show that, conditional on parent income, immigrant children have similar incomes and higher educational attainment in adulthood than native-born Swedes. This result, however, masks the fact that immigrant children born into poor families are more likely than similar natives to both reach the top of the income distribution and to stay at the bottom. Immigrant children from high-income families are also more likely than natives to regress to the economic bottom. Notably, however, children from predominantly-refugee sending countries like Bosnia, Syria, and Iran have higher intergenerational mobility than the average immigrant child in Sweden.

That paper, co-authored with Cristina Bratu, is from Valentin Bolotnyy, who is on the job market from Harvard.  Here is my post on his job market paper.

MR sentences to ponder

Also, I finally had a chance to meet Tyler Cowen and tell him that his blog played a bit part in how I ended up dating my now-wife. Back when we were messaging on OKCupid (to clarify: my wife and I were messaging; I have not contacted Tyler Cowen on OKC), I wanted to establish my Internet-nerd bona fides, so I mentioned that I’d been linked by a prominent economics blog. She mentioned that she had been linked by a very prominent economics blog. It was Marginal Revolution, both times. (Her post: on taking oneself seriously. My post is lost to history, but I believe it was about the causes and consequences of onion futures being illegal.)

Since Cowen is an expert on many topics, it should come as no surprise that he’s an export on MR lore, so he informed me that at least one couple has gotten married on the site. One economic story you can tell about the last hundred or so years is that, as economies globalize, we compete head-to-head with more people, and need to define our domains ever more narrowly if we hope to be #1. Apparently “used Marginal Revolution to get married” was, in fact, far too broad a domain for me to have any hope of excelling.

That is from Byrne Hobart, with the essay mostly on his recent visit to Bloomberg and the Bloomberg AI panel.

Maybe echo chambers are evolving because they are efficient?

Our analysis reveals that segregation into small, homogeneous groups can be a rational choice that maximizes the amount of information available to an individual. In fact, homophilic segregation can be efficient and even Pareto-optimal for society. Why is that? Our argument builds on the idea that people have not only different information, but also different preferences. These differences in preferences can prevent successful communication, because people do not want to reveal their information to those who are different, and distrust the motives of those who speak to them. It then becomes easier to exchange information in segregated, homogeneous cliques than in large crowds. Echo chambers, though they may cut off potential communication with a great number of people, make actual communication possible, and are hence useful for society.

That is from a new paper by Ole Jann and Christoph Schottmüller.  I believe Jann is currently on the job market from Oxford this year.  Here is their other paper on the economics of privacy.  And from Schottmüller: “The quality of
advice can be highest if the adviser’s competence is uncertain.”