Month: July 2020

Megan McArdle on Patrick Collison on China

By the time someone gets to be chief executive of a successful firm, they have generally been trained out of saying anything surprising in public. So I was positively astonished Monday when I saw Patrick Collison, the CEO of payments firm Stripe, tweet that “As a US business (and tech) community I think we should be significantly clearer about our horror at, and opposition to, the atrocities being committed by the Chinese government against its own people.”

On first read, that sentiment might seem banal. Of course we should clearly oppose China’s intensifying political repression. But is easier to list American business leaders who have cravenly excused the inexcusable than to name those such as Collison, who have been brave enough to state the obvious. When it comes to China’s human rights abuses, the position of the American business community is prone…

“It must be possible,” Collison tells me, “to acknowledge the basic facts — for example, that concentration camps and forced sterilization programs are reprehensible evils. If it becomes de facto unacceptable to do so, as part of some kind of self-perpetuating silence, it really seems to me that that’s a positive feedback loop that we should hurry to break.”

There is much more at the link, definitely recommended.

What should I ask Nicholas Bloom?

I will be doing a Conversation with him, so what should I ask?  Here is part of his official bio:

Nicholas (Nick) Bloom is the William Eberle Professor of Economics at Stanford University, a Senior Fellow of SIEPR, and the Co-Director of the Productivity, Innovation and Entrepreneurship program at the National Bureau of Economic Research. His research focuses on management practices and uncertainty. He previously worked at the UK Treasury and McKinsey & Company.

Is there anyone whose name is on more important/interesting papers over the last ten years?  Here is a sampling.

So what should I ask him?

Deconvexifying the car, car feature markets in everything

…BMW is planning to move some features of its new cars to a subscription model, something it announced on Wednesday during a briefing for the press on the company’s digital plans.

…now the Bavarian carmaker has plans to apply that model to features like heated seats. BMW says that owners can “benefit in advance from the opportunity to try out the products for a trial period of one month, after which they can book the respective service for one or three years.” The company also says that it could allow the second owner of a BMW to activate features that the original purchaser declined.

In fact, BMW has already started implementing this idea in some markets, allowing software unlocking of features like adaptive cruise control or high-beam assist (in the United States, those options are usually standard equipment). Other features are more whimsical, like having a Hans Zimmer-designed sound package for your electric BMW or adaptive suspension for your M-car. Indeed, the company says that its forthcoming iNext will “expand the opportunities for personalization.” I’m sure y’all can’t wait.

Here is the full story, via the excellent Samir Varma.  In the standard theory of bundling, bundling enables more price discrimination, as for instance with the cable TV bundle.  But if most consumers really don’t value the add-ons at all, which perhaps is the case here, a’la carte may maximize revenue after all.

Friday assorted links

1. Profile of Nathan Tankus.  And Clockwork Orange review.

2. The growing influence of Sci-hub.

3. Somerville, Mass. recognizes polyamory (NYT).

4. France bans Dutch bike TV ad for creating ‘climate of fear’ about cars.  “The French advertising code prohibits the exploitation of fear and suffering in commercials.”

5. “…a novel song sung by white-throated sparrows is spreading across Canada at an unprecedented rate. What’s more, the new song appears to be replacing the pre-existing melody, which dates as far back as the 1960s.”  Link here.

Tales from Trinidad barter markets in everything

One of my favorite countries, this is from the newspaper:

DESPERATE to get his taxi badge, a man bought a $500 used typewriter and donated it to the Licensing Office…

The seller, who asked not to be named, wrote: “So funny story. I had a typewriter for sale on Facebook marketplace for some time. I get this call from a young man. We chat for a bit. He says he’s down at licensing office. He’s coming right now.

“When he arrives he gives me the story. Since December he’s been trying to get his taxi badge. He bought a maxi taxi and can’t use it because he’s waiting for his badge. Then when he passed pandemic lockdown happened. Three months later, Licensing Office opens with an appointment system, appointment to pay, then appointment to collect. The day arrives to collect. He’s told typewriter is not working over a week.”

The post goes on to say that officials at Licensing agreed that if they got a typewriter they would be able to provide the taxi badge.

The seller continues: “He finds me on Facebook marketplace. When he arrives he says ‘You ever heard of a private person buying a typewriter for the State?’ Money paid. He calls later to say everyone is getting their license today. He actually called twice while at licensing office to get further instruction on operating the typewriter. Well done, young man. Well done!”

Via K.

Combining life insurance and health insurance

Why not internalize the relevant externalities by bringing the two together?:

We estimate the benefit of life-extending medical treatments to life insurance companies. Our main insight is that life insurance companies have a direct benefit from such treatments because they lower the insurer’s liabilities by pushing the death benefit further into the future and raising future premium income. We apply this insight to immunotherapy, treatments associated with durable gains in survival rates for a growing number of cancer patients. We estimate that the life insurance sector’s aggregate benefit from FDA-approved immunotherapies is $9.8 billion a year. Such life-extending treatments are often prohibitively expensive for patients and governments alike. Exploiting this value creation, we explore various ways life insurers could improve stress-free access to treatment. We discuss potential barriers to integration and the long-run implications for the industrial organization of life and health insurance markets, as well as the broader implications for medical innovation and long-term care insurance markets.

That is from a recent article by Ralph S J Koijen and Stijn Van Nieuwerburgh in the May 2020 QJE.  Here are ungated versions of the same paper.  And here is Robin’s related idea from 1994.

New evidence that amino acid mutations matter for contagiousness

It seems the virus mutated in Europe and became significantly more contagious (though not more dangerous per unit dose):

The Spike D614G amino acid change is caused by an A-to-G nucleotide mutation at position 23,403 in the Wuhan reference strain; it was the only site identified in our first Spike variation analysis in early March that met our threshold criterion. At that time, the G614 form was rare globally, but gaining prominence in Europe, and GISAID was also tracking the clade carrying the D614G substitution, designating it the “G clade”. The D614G change is almost always accompanied by three other mutations: a C-to-T mutation in the 5’ UTR (position 241 relative to the Wuhan reference sequence), a silent C-to-T mutation at position 3,037; and a C-to-T mutation at position 14,408 that results in an amino acid change in RNA-dependent RNA polymerase (RdRp P323L). The haplotype comprising these 4 genetically linked mutations is now the globally dominant form. Prior to March 1, it was found in 10% of 997 global sequences; between March 1- March 31, it represented 67% of 14,951 sequences; and between April 1- May 18 (the last data point available in our May 29th sample) it represented 78% of 12,194 sequences. The transition from D614 to G614 was occurred asynchronously in different regions throughout the world, beginning in Europe, followed by North America and Oceania, then Asia (Figs. 1-3, S2-S3).

That is from a new paper in Cell by B. Korber et.al., via Eric Topol.  You will note there is another recent paper suggesting the east and west coasts of the United States have faced different mutations and thus different levels of contagiousness, but that seems less well established.

The authors do not mention Taiwan, but if I understand their chronology correctly, it would seem that Taiwan has not significant been hit by the most contagious version of the virus.

In any case, I will repeat my general point: moralizing about the virus is premature.  And of course the main result presented in this new paper is subject to revision, further scrutiny, and possible reversal.

Addendum: Here is NYT coverage.

Thursday assorted links

Cornell understands the equilibrium

They are reopening campus for the coming semester and here is one reason why:

…the finding from Cornell researchers that holding the semester online potentially could result in more infections and more hospitalizations among students and staff members than holding the semester in person would.

study by Cornell researchers concluded that with nominal parameters, an in-person semester would result in 3.6 percent of the campus population (1,254 people) becoming infected, and 0.047 percent (16 people) requiring hospitalization. An online semester, they concluded, would result in about 7,200 infections and more than 60 hospitalizations.

Do note it is critical to the argument that the returning students actually are tested on a regular basis, which of course is very hard to enforce on-line.

My Conversation with Annie Duke

Here is the transcript and audio, here is the opening summary:

Annie joined Tyler to explore how payoffs aren’t always monetary, the benefits and costs of probabilistic thinking, the “magical thinking” behind why people buy fire insurance but usually don’t get prenups, the psychology behind betting on shark migrations, how her most famous linguistics paper took on Steven Pinker, how public policy would change if only the top 500 poker players voted, why she wasn’t surprised to lose Celebrity Apprentice to Joan Rivers, whether Trump has a tell, the number one trait of top poker players, and more.

Here is one bit from Annie:

DUKE: So when I went on my first date with my husband, my brother and brother-in-law immediately decided to make a market, and it was whether we were going to get married. Now to be fair, my husband and I — before we went on our first date, we’d been friends. Both my brother and my brother-in-law knew my eventual husband, but this is when we’re going on our first date. They make a market. I think that my brother-in-law ended up bidding 23.

My brother then called me up, cracking up, that my brother-in-law had bid 23 when we hadn’t been on a first date yet. And I then started laughing at my brother, said, “Well, that means you had to bid 22. Why are you laughing at him? You somehow bid 22. It’s our first date.” Now, that’s because we’re all people who sort of think this way. And so this sort of becomes the fun of the friendship, but there are other people . . .

And this from Annie:

DUKE: My suspicion is that if only the top 500 poker players voted, people would be thinking a lot more about edge cases — where things could go wrong, for sure, because poker players just are obsessed with that. I think that there would be more long-termism as opposed to short-termism, again, because you have to be obsessed with that as a concept. I think that people would be thinking about “What are the unintended consequences? How does this look?”

Another thing that’s really important that poker players think about is, “If I put this policy in that looks like it’s awesome, how can someone come in and find the cracks in it so that it can turn into something bad?” I feel like the top 500 players would definitely be thinking in that way more.

You will have to read or hear the dialogue to take in my many good questions.

Why American lockdown exceptionalism?

That is the topic of my latest Bloomberg column, and here is part of the explanation:

The danger lies in the potential for ratchet effects. If hardly anyone is eating out or going to bars, you might be able to endure the deprivation. But once others have started doing something, you will probably feel compelled to join them, even at greater risk to your life.

Consider that in the 1920s, the chance of catching a disease or infection from dining out was pretty high, but people still went out. Accepting that level of risk was simply considered to be part of life, because everyone saw that everyone else was doing it. In similar fashion, members of an infantry brigade are usually willing to charge an enemy position so long as they can be assured that all their comrades are, too.

So if you are wondering why the U.S. has become so tolerant of Covid-19 risk, one reason is simply that it has the most pro-consumption norms of any major Western nation. The pursuit of socially influenced high consumption levels is far more common in America than in, say, Kosovo, a country with a relatively good anti-Covid safety record.

And one implication is this:

So telling Americans that they are stupid and excessively sociable is likely only to make the problem worse.

Better in fact is everyone thinks no one else is going out very much.

Wednesday assorted links

When Police Kill

When Police Kill is the 2017 book by criminologist Franklin Zimring. Some insights from the book.

Official data dramatically undercount the number of people killed by the police. Both the Bureau of Justice Statistics’ Arrest-Related Deaths and the FBI’s Supplemental Homicide Reports estimated around 400-500 police kills a year, circa 2010. But the two series have shockingly low overlap–homicides counted in one series are not counted in the other and vice-versa. A statistical estimate based on the lack of overlap suggests a true rate of around 1000 police killings per year.

The best data come from newspaper reports which also show around 1000-1300 police killings a year (Zimring focuses his analysis on The Guardian’s database.) Fixing the data problem should be a high priority. But the FBI cannot be trusted to do the job:

Unfortunately, the FBI’s legacy of passive acceptance of incomplete statistical data on police killings, its promotion of the self-interested factual accounts from departments, and its failure to collect significant details about the nature of the provocation and the nature of the force used by police suggest that nothing short of massive change in its orientation, in its legal authority to collect data and its attitude toward auditing and research would make the FBI an agency worthy of public trust and statistical reliability in regard to the subject of this book.

The FBI’s bias is even seen in its nomenclature for police killings–“justifiable homicides”–which some of them certainly are not.

The state kills people in two ways, executions and police killings. Executions require trials, appeals, long waiting periods and great deliberation and expense. Police killings are not extensively monitored, analyzed or deliberated upon and, until very recently, even much discussed. Yet every year, police kill 25 to 50 times as many people as are executed. Why have police killings been ignored?

When an execution takes place in Texas, everybody knows that Texas is conducting the killing and is accountable for its consequences. When Officer Smith kills Citizen Jones on a city street in Dallas, it is Officer Smith rather than any larger governmental organization…[who] becomes the primary repository of credit or blame.

We used to do the same thing with airplane crashes and medical mistakes–that is, look for pilot or physician error. Safety didn’t improve much until we started to apply systems thinking. We need a systems-thinking approach to police shootings.

Police kill males (95%) far more than females, a much larger ratio than for felonies. Police kill more whites than blacks which is often forgotten, although not surprising because whites are a larger share of the population. Based on the Guardian data shown in Zimring’s Figure 3.1, whites and Hispanics are killed approximately in proportion to population. Blacks are killed at about twice their proportion to population. Asians are killed less than in proportion to their population.

A surprising finding:

Crime is a young man’s game in the United States but being killed by a police officer is not.

The main reason for this appears to be that a disproportionate share of police killings come from disturbance calls, domestic and non-domestic about equally represented. A majority of the killings arising from disturbance calls are of people aged forty or more.

The tendency  of both police and observers to assume that attacks against police and police use of force is closely associated with violent crime and criminal justice should be modified in significant ways to accord for the disturbance, domestic conflicts, and emotional disruptions that frequently become the caseload of police officers.

A slight majority (56%) of the people who are killed by the police are armed with a gun and another 3.7% seemed to have a gun. Police have reason to fear guns, 92% of killings of police are by guns. But 40% of the people killed by police don’t have guns and other weapons are much less dangerous to police. In many years, hundreds of people brandishing knives are killed by the police while no police are killed by people brandishing knives. The police seem to be too quick to use deadly force against people significantly less well-armed than the police. (Yes, Lucas critique. See below on policing in a democratic society).

Police kill more people than people kill police–a ratio of about 15 to 1–and the ratio has been increasing over time. Policing has become safer over the past 40 years with a 75% drop in police killed on the job since 1976–the fall is greater than for crime more generally and is probably due to Kevlar vests. Kevlar vests are an interesting technology because they make police safer without imposing more risk on citizens. We need more win-win technologies. Although policing has become safer over time, the number of police killings has not decreased in proportion which is why the “kill ratio” has increased.

A major factor in the number of deaths caused by police shootings is the number of wounds received by the victim. In Chicago, 20% of victims with one wound died, 34% with two wounds and 74% with five or more wounds. Obvious. But it suggests a reevaluation of the police training to empty their magazine. Zimring suggests that if the first shot fired was due to reasonable fear the tenth might not be. A single, aggregational analysis:

…simplifies the task of police investigator or district attorney, but it creates no disincentive to police use of additional deadly force that may not be necessary by the time it happens–whether with the third shot or the seventh or the tenth.

It would be hard to implement this ex-post but I agree that emptying the magazine isn’t always reasonable, especially when the police are not under fire. Is it more dangerous to fire one or two shots and reevaluate than to fire ten? Of course, but given the number of errors police make this is not an unreasonable risk to ask police to take in a democratic society.

The successful prosecution of even a small number of extremely excessive force police killings would reduce the predominant perception among both citizens and rank-and-file police officers that police have what amounts to immunity from criminal liability for killing citizens in the line of duty.

Prosecutors, however, rely on the police to do their job and in the long-run won’t bite the hand that feeds them. Clear and cautious rules of engagement that establish bright lines would be more helpful. One problem is that police are protected because police brutality is common (somewhat similar to my analysis of riots).

The more killings a city experiences, the less likely it will be that a particular cop and a specific killings can lead to a charge and a conviction. In the worst of such settings, wrongful killings are not deviant officer behavior.

…clear and cautious rules of engagement will …make officers who ignore or misapply departmental standards look more blameworthy to police, to prosecutors, and to juries in the criminal process.

Police kill many more people in the United States than in other developed countries, even adjusting for crime rates (where the U.S. is less of an outlier than most people imagine). The obvious reason is that there are a lot of guns in the United States. As a result, the United States is not going to get its police killing rate down to Germany’s which is at least 40 times lower. Nevertheless:

[Police killings]…are a serious problem we can fix. Clear administrative restrictions on when police can shoot can eliminate 50 to 80 percent of killings by police without causing substantial risk to the lives of police officers or major changes in how police do their jobs. A thousand killings a year are not the unavoidable result of community conditions or of the nature of policing in the United States.

China update of the day

Chinese authorities are carrying out forced sterilisations of women in an apparent campaign to curb the growth of ethnic minority populations in the western Xinjiang region, according to research published on Monday.

The report, based on a combination of official regional data, policy documents and interviews with ethnic minority women, has prompted an international group of lawmakers to call for a United Nations investigation into China’s policies in the region.

The move is likely to enrage Beijing, which has denied trampling on the rights of ethnic groups in Xinjiang, and which on Monday called the allegations “baseless”.

Here is the full story from The Guardian.