Month: November 2019
Japanese hotel markets in everything
A Japanese hotel offers a room that costs only $1 per night, but there’s a catch — the guest’s entire stay is livestreamed on YouTube.
Tetsuya Inoue, who took over the Asahi Ryokan hotel in Fukuoka from his grandmother last year, said he was looking for ways to boost business and was inspired by a British YouTuber who livestreamed his time at the hotel.
“This is a very old ryokan and I was looking into a new business model,” Inoue told CNN. “Our hotel is on the cheaper side, so we need some added value, something special that everyone will talk about.”
Inoue said room No. 8 is now equipped with cameras that are always livestreaming on his YouTube channel, One Dollar Hotel. He said the feed is video only and the cameras are pointed away from the bathroom area to give guests some privacy.
“Young people nowadays don’t care much about the privacy,” Inoue said. “Some of them say it’s OK to be [watched] for just one day.”
He said the hotel loses money with the $1 stays, but once his YouTube channel reaches 4,000 view hours, he will be able to monetize the scheme with ads.
Here is the link, via Ashish K. and the excellent Samir Varma.
Is Elon Musk Prepping for State Failure?
FuturePundit on twitter has an interesting theory of Elon Musk’s technology portfolio, namely a lot of it will be very valuable for living in a failed state.
Solar panels, for example, are a necessity when the state can’t deliver power reliably, as is now the case in California.
Solar panels plus the Tesla give you mobility, even if Saudi Arabia goes up in smoke and world shipping lines are shut down.
Starlink, Musk’s plan for 12,000 or more cheap, high-speed internet satellites, will free the internet from reliance on any terrestrial government.
Musk’s latest venture, the truck, certainly fits the theme and even if the demonstration didn’t go as well as planned isn’t it interesting that the truck is advertised as bulletproof. Mad Max would be pleased.
And what will you be carrying in your Tesla truck? One of these for sure.
Finally, the Mars mission is the ultimate insurance policy against failed states.
An argument about monetary policy I had never heard before
This paper studies a model in which a low monetary policy rate lowers the cost of capital for entrepreneurs, potentially spurring productive investment. Low interest rates, however, also induce entrepreneurs to lever up so as to increase payouts to equity. Whereas such leveraged payouts privately benefit entrepreneurs, they come at the social cost of reducing their incentives thereby lowering productivity and discouraging investment. If leverage is unregulated (for example, due to the presence of a shadow-banking system), then the optimal monetary policy seeks to contain such socially costly leveraged payouts by stimulating investment in response to adverse shocks only up to a level below the first-best. The optimal monetary policy may even consist of “leaning against the wind,” i.e., not stimulating the economy at all, in order to fully contain leveraged payouts and maintain productive efficiency.
That is from a new NBER working paper by Viral V. Acharya and Guillaume Plantin.
Since I don’t see share buybacks as “draining” the economy of investment (the funds simply get recycled to other companies and ventures), I can’t agree with this argument. Still, if you are worried about buybacks, perhaps you should think twice about always pushing for easier monetary policy.
Favorite popular music listening for 2019
There have been two clear favorites:
Billie Eilish, When We All Fall Asleep, Where Do We Go?, with “You should see me in a crown” as the favorite song.
Janelle Monáe, Dirty Computer. At first I thought this was a good pop album, but it kept getting better and better.
My favorite rap album this year was Tyler the Creator, IGOR.
I’ve also discovered the amazing music of Sunn O))), a kind of black death metal, hat tip S, start with Black One.
I see the last few years of popular music as supporting my basic take that there are more good songs in a year than ever before, but fewer breakthrough new concept albums or musical styles than in say 1963-1992 or so.
What do you all recommend?
Screening Human Embryos for Polygenic Traits Has Limited Utility
By Ehud Karavani, et.al., possibly an important piece:
The increasing proportion of variance in human complex traits explained by polygenic scores, along with progress in preimplantation genetic diagnosis, suggests the possibility of screening embryos for traits such as height or cognitive ability. However, the expected outcomes of embryo screening are unclear, which undermines discussion of associated ethical concerns. Here, we use theory, simulations, and real data to evaluate the potential gain of embryo screening, defined as the difference in trait value between the top-scoring embryo and the average embryo. The gain increases very slowly with the number of embryos but more rapidly with the variance explained by the score. Given current technology, the average gain due to screening would be ≈2.5 cm for height and ≈2.5 IQ points for cognitive ability. These mean values are accompanied by wide prediction intervals, and indeed, in large nuclear families, the majority of children top-scoring for height are not the tallest.
Here is the link, and for the pointer I thank the excellent Kevin Lewis.
Friday assorted links
More Pregnancy, Less Crime
When it comes to crime, economists focus on deterrence. Deterrence works but it’s not the only thing that works. Simple things like better street lighting can reduce crime as can high-quality early education or psychological interventions such as cognitive behavioral therapy. The sociological literature has emphasized that crime is about preferences as well as constraints. Life-events or turning points such as marriage and childbirth, for example, can greatly change crime preferences. The sociological literature is mostly from case studies but in an excellent new paper, Family Formation and Crime, Maxim Massenkoff and Evan Rose (both on the job market from Berkeley) demonstrate these insights in a huge dataset.
A big part of what makes their paper compelling is that almost all of the results are blindingly clear in the raw data or using simple analysis. Here, for example, is the crime rate for women (drug, DUI, economic, or property destruction crimes) in the years before pregnancy, during pregnancy (between the red dotted lines) and after birth. Crime rates fall dramatically with pregnancy and in the three years after birth they are 50% lower on average than in the years before pregnancy.
Pregnancy imposes some physical limits on women but the effects are also very large for men whose crime rates fall by 25-30% during pregnancy of their partner and continue at that lower rate for years afterwards. Keep in mind that in our paper on three strikes, Helland and I found that the prospect of an additional twenty years to life (!) reduce criminal recidivism by just ~17%, so the effect of pregnancy is astoundingly large.
It’s not obvious what the policy implications are. Have children at a younger age doesn’t sound quite right, although in an analysis on teen births Massenkoff and Rose do indeed show that whatever the costs of teen pregnancy there are some offsetting benefits in reduced crime of the parents. More generally, however, there are policy implication if we think beyond the immediate results. First, these results show that crime isn’t simply a product of family background, poverty and neglect. Crime is a choice.
In Doing the Best I Can: Fatherhood in the Inner City, Edin and Nelson relay the following anecdote (quoted in Massenkoff and Rose):
Upon hearing the news that the woman they are “with” is expecting, men such as Byron are suddenly transformed. This part-time cab driver and sometime weed dealer almost immediately secured a city job in the sanitation department (p. 36).
Byron chose to change and he did so based on the rational expectation of a future event. Massnekoff’s and Rose show that these choices are common.
Instead of thinking of these results as being about pregnancy and marriage we should ask what is it about pregnancy and marriage that makes people reduce crime? Love, responsibility and long-run thinking are all at play. In economic terms, pregnancy reduces discount rates and gives men and women a reason to invest in human capital and work for the future. Children and marriage play a large role in socializing and “civilizing” both men and women but they surely can’t be the only such factors. Indeed, although men and women on average reduce their crime rates dramatically on pregnancy this is mostly coming from men and women who had high rates to begin with–there are plenty of men and women who don’t much reduce their crime rates on pregnancy because they were already low–in a way, these men and women were pre-socialized so how do we extend the benefits of pregnancy to the expectation of pregnancy or how can we widen the effect to other factors that can also civilize?
A journal editor speaks about referees (and authors)
What are the most common errors that reviewers make when reviewing health papers for you?
There are three errors that reviewers make. First, many junior reviewers write really long reviews to show that they were thorough. This doesn’t help—if the paper has 8 problems then the editor is often most interested in the top two.
Second, some reviewers can also have really high standards in a way that creates lots of Type II errors—never accepting a paper. At the Review of Economics and Statistics, we were writing to accept more papers, but reviewers made this hard by using an impossible standard for identification.
Finally, and this is rare, but a by-product of the “triple-aim” (described above): some reviewers write reports with innuendo and meanness—I never went back to them and still think very poorly of these individuals. To be mean, when protected by the veil of an anonymous review process, is a deep pathology.
My advice is: write short reviews—don’t over referee or rewrite the paper—you are the reviewer, not the author. Be kind. Be kind. Be kind. Kindness is not the same as low standards, but posing questions and raising challenges with curiosity and humility. Always remember that an editor is reading the review, sharing it with other editors, and one’s nastiness is noted and remembered especially when directed towards a new member of the profession.
That is from an interview with Amitabh Chandra of ReStat.
Do social media drive the rise in right-wing populism?
Abstract: Many observers are concerned that echo chamber effects in digital media are contributing to the polarization of publics and in some places to the rise of right-wing populism. This study employs survey data collected in France, the United Kingdom, and United States (1500 respondents in each country) from April to May 2017. Overall, we do not find evidence that online/social media explain support for right-wing populist candidates and parties. Instead, in the USA, use of online media decreases support for right-wing populism. Looking specifically at echo chambers measures, we find offline discussion with those who are similar in race, ethnicity, and class positively correlates with support for populist candidates and parties in the UK and France. The findings challenge claims about the role of social media and the rise of populism.
That is from a new paper by Shelley Boulianne, Karolina Koc-Michalska, and Bruce Bimber, via somebody on Twitter.
The wealth tax and non-profits
That is the topic of my latest Bloomberg column, here is one excerpt:
Or imagine how art markets might be affected by a wealth tax. Rather than keeping their art collections private, many more billionaires would donate that art to museums and other nonprofits. This appears to be a good outcome. But it would exacerbate one of the art world’s worst problems, which is inflated appraisals for tax purposes. At any rate, America’s museums do not have the space or resources to display and look after all of these paintings and sculptures; it is already common for a museum to display no more than 5% or 10% of its collection.
Essentially, a lot of art would be removed from circulation, stored in warehouses largely for tax reasons. Along the way, Christie’s and Sotheby’s might go bankrupt, as well as many art galleries, as the demand to buy art would plummet. You may think that the demise of a few galleries and auction houses is a small price to pay to reduce wealth inequality. But consider that artists, too, need to make a living…
The U.S. has created the most dynamic and effective nonprofit sector in the world. It rests on a delicate balance of private support and some indirect (not too much) government subsidy. America interferes with that balance at its peril.
There is much more at the link.
Thursday assorted links
1. Is flying and tourism good for the environment? (NYT)
2. Eww…(is that the right spelling?)…”People Are Having Sex With 3D Avatars of Their Exes and Celebrities.”
3. macrohive.com.
4. More brands are becoming perceived as politically partisan (WSJ).
5. New papers on Smith and Hume, with themes of liberalism and esotericism.
Favorite jazz listening for 2019
Most of all, I discovered jazz guitarist Mary Halvorson this year. Start with Code Girl or Meltframe, or of course YouTube.
This year I also enjoyed:
Myra Melford’s Snowy Egret, The Other Side of Air.
Makaya McCraven, Universal Beings.
Two out of three picks being women is unusual for jazz, but for the better. I will note that I do not select on the basis of “quotas,” so what I list is truly what I am recommending.
I’ll also stick by my view that current times are the very best for jazz, ever, even though jazz is no longer culturally central and Miles Davis is dead. Your ability to see an amazing jazz concert for less than $50 — often much less — and from top-quality seats has never been greater. Jazz music represents an amazing arbitrage opportunity (unlike paying through the nose to see either Taylor Swift or Boomer classic rock groups), at least if you know what you are doing and you have access to the proper cities, most of all NYC but by no means only.
On fentanyl, from the comments
Problems with the TFP concept, from my new paper with Ben Southwood
Here is another excerpt from “Is the rate of scientific progress slowing down?”:
First, many scientific advances work through enabling a greater supply of labor, capital, and land, and those advances will be undervalued by a TFP metric. Let’s say someone invents a useful painkiller, and that makes it easier for many people to show up to work and be productive. Output will rise, yet that advance will show up as an increase in labor supply, rather than as an increase in technology or scientific knowledge. Similarly, a new method for discovering oil may boost output, but that will be classified as an increase in oil supply, even though it does properly represent a form of scientific progress. TFP is best at measuring scientific and technological advances that are superimposed on top of an existing supply of the other factors of production. If, for instance, you imagine a series of capital and labor resources at a factory, and someone develops a new formula for combining those resources more effectively, this will be picked up very effectively by standard TFP measures.
The more general problem is that many scientific and technological advances are embodied in concrete capital goods. Again, the TFP measure does best when the supply and nature of capital is fixed, and a new idea makes that capital (and associated labor) more effective. But what happens when the new idea is itself embodied in a concrete capital good? If a hospital equips its surgeons with iPads, or with Augmented Reality glasses, to make them more effective in the operating room, as a first order effect that measures as an increase of capital expenditures by the hospitals rather than as an innovation. Health and later output will increase, but will we really know if it is due to better ideas or just more investment? It will appear to measure as new investment. Capital expenditures and TFP are not so easily separated, whether at the conceptual or the practical measurement level.
Similarly, separating TFP from labor expenditure is not always so simple either. If a worker generates and carries forward a new scientific idea for producing more with a given amount of labor, that measures the same way as the worker being taught greater conscientiousness and producing more. Yet the former is (ideally) TFP and the latter is not, but both will count as an increase in the quality of labor input in the same way.
Here is my original post on the paper. Here is the paper.
China fact of the day
China is set to add new coal-fired power plants equivalent to the EU’s entire capacity, as the world’s biggest energy consumer ignores global pressure to rein in carbon emissions in its bid to boost a slowing economy.
Across the country, 148GW of coal-fired plants are either being built or are about to begin construction, according to a report from Global Energy Monitor, a non-profit group that monitors coal stations. The current capacity of the entire EU coal fleet is 149GW.
While the rest of the world has been largely reducing coal-powered capacity over the past two years, China is building so much coal power that it more than offsets the decline elsewhere.
Here is more from Leslie Hook at the FT.
That is from a commentator named Sure.