Month: August 2021
Olympic Charter Cities
An interesting idea from Max. It’s getting harder to find a city to host the Olympics , a Charter Olympic City might be just the ticket to get a Charter City off the ground and share costs.
A public-private partnership model for building the Olympic village would alleviate some of the budgetary pressure on governments and provide a launchpad for stakeholders to get their special jurisdiction off the ground. The current funding model for Olympic projects is that governments foot the entire upfront bill and pay for private contractors to build the stadiums and a mini-city. In exchange, they don’t share the revenue from the games themselves or the developed area after the games with anyone (except the IOC).
…An Olympic charter city provides an alternative funding model that has the potential to be more profitable for cities and private developers. As in the development of a charter city, a portion of the upfront cost of construction would be paid for by a private developer, rather than entirely from the local government. This cost sharing is mirrored after the games where the local government and a private charter city developer share political autonomy, tax revenues, and the cost of providing public services for the Olympic charter city.
The Political-Economic Causes of the Soviet Great Famine, 1932–33
This study constructs a large new dataset to investigate whether state policy led to ethnic Ukrainians experiencing higher mortality during the 1932–33 Soviet Great Famine. All else equal, famine (excess) mortality rates were positively associated with ethnic Ukrainian population share across provinces, as well as across districts within provinces. Ukrainian ethnicity, rather than the administrative boundaries of the Ukrainian republic, mattered for famine mortality. These and many additional results provide strong evidence that higher Ukrainian famine mortality was an outcome of policy, and suggestive evidence on the political-economic drivers of repression. A back-of-the-envelope calculation suggests that bias against Ukrainians explains up to 77% of famine deaths in the three republics of Russia, Ukraine and Belarus and up to 92% in Ukraine.
That is a new NBER working paper by Andrei Markevich, Natalya Naumenko (my colleague at GMU), and Nancy Qian. The paper represents a significant advance in terms of basic data, and the core hypothesis of ethnic favoritism is strongly validated.
The median voter theorem is underrated
That is the theme of my latest Bloomberg column, here is one excerpt:
More broadly, it is striking how many policies of the Biden administration reflect ideas or proposals from the Trump administration. Biden’s “Buy America” plan could be a Trump administration protectionist initiative. The Trump administration spent $2 trillion on coronavirus relief; the Biden administration proposed and spent $1.9 trillion. Trump wanted to pull U.S. troops out of Afghanistan; Biden actually did. Biden has left many of Trump’s anti-China policies, such as the tariffs, in place. Biden also has continued rapid deportation programs for immigrants.
All of these policies are broadly aimed at the center. It is no accident that Biden, even though his “honeymoon” period is ending, has remained broadly popular in the polls.
There are still areas in which Republicans and Democrats differ greatly, of course. On Covid-19, they have divergent attitudes and safety practices. Still, the Biden administration has not seriously considered either a nationwide vaccination mandate or governmental vaccine passports, as neither would be especially popular with voters.
Then there are cultural issues, where the median voter theorem most definitely does not hold. What seems to have happened is that Americans have picked one area in which they can let off steam and express their mutual mistrust — and in turn that has allowed a kind of consensus to form around many actual government policies. Perhaps what the median voter theorem misses is that individuals have a deeply irrational side and need to treat some political debates more like a mixed martial arts competition than as a forum for getting things done.
The median voter theorem tends to be unpopular in an increasingly left-leaning academic environment. It has a decidedly anti-utopian quality, as it insists that policy is not going to deviate too far from the views of the ordinary American. It implies that many projects of left-wing progressives are pipe dreams, at least until major shifts in public opinion set in. It dismisses the common progressive attitude that current voters would welcome major left-wing reforms and are only waiting for a heroic politician to stare down the special interest groups that oppose them.
To be clear, there is no presumption that the median voter actually wants the right thing. As an economist, I am particularly frustrated by how frequently American voters fail to appreciate the benefits of international trade and migration, or how they tend to believe that government programs financed by borrowing represent a free lunch. They also put disproportionate weight on low gasoline prices, to cite yet another example from a long list of mistaken views.
Still, as a practical matter, the median voter probably represents a kind of protection against the worst excesses and arrogances of the human spirit. Failed politicians do tend to get voted out of office. Crazy views, regardless of how popular they may be, tend to get sanded down by the political process.
The upshot, for the U.S. at least, is that the reality of American life is very different from the one that pundits regularly describe.
True.
Physical vs. mental ailments
A loyal MR reader asks:
Physical ailments generally lead to behaviors that offset or improve them, whereas mental ailments often seem to lead to behaviors that make them worse (eg it’s hard to exercise when you’re depressed)
This seems very odd to me; why would this be the case? Are there any physical diseases that lead to reinforcing rather than mitigating behavior? Does this imply that mental illness is a post-evolutionary phenomenon?
Model this, or do you dispute the stylized facts?
Monday assorted links
1. “As Elizabeth Currid-Halkett reported in her 2017 book, The Sum of Small Things, affluent parents have increased their share of educational spending by nearly 300 percent since 1996.” Link here.
2. The most significant buildings constructed since World War II? (NYT)
5. English-language version of “Bergman Island” coming out in October.
Are You More Strategic than a Fifth Grader?
Isabelle Brocas and Juan Carrillo have a new paper in the JPE testing when children develop strategic (k-level) reasoning. A clever game outlined below illustrates the basic idea. Players 1,2 and 3 are asked to make (simultaneous) choices to earn prizes (money for the adults and older kids, points for toys for the younger kids). The sophisticated, rational choice becomes successively more difficult as we from from player 3 to player 1. Player 3 is simply asked to match a shape. In the case shown, for example, player 3 earns the most by choosing the red square labelled C since it matches the shape of the blue square labelled A. Player 2 earns the most by choosing the color chosen by Player 3. Of course, Player 2 doesn’t know what color Player 3 will choose and so has to reason about Player 3’s actions. What color do you choose? Player 1 earns the most by choosing the same letter as Player 2 but now must reason about Player 2 which involves reasoning about how Player 2 will reason about Player 3. What letter do you choose?
What do the authors find? First, for both adults and kids either they get it or they don’t. The ones who don’t make the right choice as Player 3 but then randomly choose when playing either Player 2 or Player 1. The ones who get it, play correctly at all three levels. In other words, almost everyone who reasons correct as Player 2 (1-level reasoning) also reasons correctly as Player 1 (2-level reasoning).
Second, there is a marked increase in the ability to perform k-level thinking between ages 8 and 12 but after age 12 (fifth grade) there is shockingly little growth. Together the first and second points suggest that k-level thinking is more of a quantum leap than an evolution in reasoning ability.
Third, most adults reason correctly in this simple game but a significant fraction do not. As the authors put it “some very young players display an innate ability to play always at equilibrium while some young adults are unable to perform two steps of dominance.”
Demographic factors are mostly as expected, children interested in STEM fields perform better (n.b. this implies that contrary to some opinions the STEM set are better at social interaction), kids from better socio-economic backgrounds perform better and slightly unexpected females perform better than males, perhaps because they are more disciplined.
As the authors conclude:
Adolescents are particularly exposed to situations in which strategic sophistication is crucial to avoid wrong decisions. Examples include engaging in risky activities, such as accepting drugs from peers or engaging in unprotected sex. Also, with the development of the internet, naive users are often preyed upon, asked to provide personal information, or tricked into making harmful decisions. Information deliberately intended to deceive young minds also circulates through social media. Making correct decisions in such environments requires understanding the intentions of others and anticipating the consequences of following their advice or opinions. More generally, children and adolescents are gradually discovering the dangers hiding behind social interactions and need to come equipped to detect them, assess them, and navigate around them. We conjecture that failures in these abilities are closely related to underdeveloped logical abilities, and we predict that the level of sophistication of an individual detected through a simple task matches their behavior in social settings.
A new chess variant
With Steven Brams, an American game theorist, Ismail devised a radical but easily implemented solution to the perceived white bias in chess. Their system, dubbed “balanced alternation”, allows black to make two moves after white’s opening move, with white then taking the next two moves before reverting to standard play.
By giving black a double riposte to white’s opening, Ismail argues that the imbalance would be sharply reduced and “render chess fairer than any other reform of which we are aware”.
…Other players questioned whether chess really needs to be fairer, given the number of draws at elite level. When AlphaZero played itself in last year’s experiment, 98 per cent of the games ended in draws. “More draws? What a bore!” said a leading chess writer.
Ismail acknowledged that the chess world “can be very conservative”. He added: “I do expect a backlash at a proposal like this, but I hope open-minded players will want to give it a try.”
Here is more from The Times of London (gated). You will note that my pet proposal for reforming chess also introduces a kind of color equity, though it is not motivated by that goal. To limit the import of opening preparation and to minimize the number of draws, we should randomize the initial opening moves, but within reason, with an average value clustered around 0.00, and with a focus on non-drawish lines. So some games would start with 1.b4 d5, which is “playable” for White, though few players would move as such in a major tournament. Most of the randomizations shoul be fairly sharp variations, and so the randomization would allow the Petroff and Berlin to surface only one out of every 768 games.
Within one hundred years the future is going to get very weird
That is the theme of my latest Bloomberg column, here is one excerpt:
The notion that the future will be weirder than we think, and come sooner, is a possibility raised by Holden Karnofsky, the co-chief executive officer of Open Philanthropy. It’s an intriguing and provocative idea.
I consider genetic engineering, longevity research, finding signs of life on other planets, neural engineering, and AI as possible developments, plus a bit more.
…these changes are far more radical than those that occurred between 1921 and today. Compared to 1921, we are much wealthier and more secure — but a lot of basic structures of the world remain broadly the same. I don’t think that much of what we can do now would strike our 1921 predecessors as magical, though the speed and power of our computers might surprise them. Nor would visitors from 1921 think of us as somehow not human.
Of course none of these developments are inevitable. Another very weird future is entirely possible: that we humans use our creative energies for destruction, causing civilization to take some major and enduring steps backwards.
Either way, the future is not just more and nicer suburbs, better pay and new forms of social media. All those are likely to happen, but they won’t be the biggest changes. When it comes to the future of the human race, we — and our children, for those of us who have any — may turn out to be especially important generations. I very much hope we are up to this moment.
Recommended.
Sunday assorted links
Monterrey notes
Most of all, I was surprised at how beautiful the city setting is — gleaming skyscrapers surrounded by green mountains.
The red Faro del Comercio is the city’s landmark, in honor of the 100th anniversary of the founding of the city’s Chamber of Commerce.
You can visit an excellent old iron works factory.
For “randomly scattered bizarre but interesting sculptures” I give Monterrey an A+. It is also the best location in Mexico for modernist architecture, as the landmark items in Mexico City are too scattered. Excellent for brutalist buildings as well. If you are interested in architecture, Monterrey is a must.
The city’s PPP_adjusted gdp per capita is over 35k, which alone makes it one of the most interesting parts of Mexico. It also seemed well within acceptable safety margins, just don’t drive the road up to Nuevo Laredo.
My two best meals were at Koli Cucina de Origin (fixed price menu only) and Cara de Vaca (get the green chile tacos). Overall the city is not top notch for “comida popular,” so go to the mainstream good restaurants.
It is one of the least walkable cities. Everything is spread out, and the most interesting parts are not typically compact neighborhoods. There are often highways to cross.
A mere hour away is Saltillo, home of serrapes and capital city of the state of Coahuila. The outskirts serve up a lot of American fast food, the city center is sleepy and feels like the 1950s. More generally, there is lots of “horse country” surrounding Monterrey and Saltillo. It is not uncommon to see cowboy hat and boots.
Not many people visit Monterrey for tourism, but I was very happy to have spent six days there and was never bored. It should be considered an essential part of one’s “Mexico education.”
The incentives for Mexican hotel Covid testing
Yes you need a negative result on the test to return to the United States, but you never know the sensitivity of the test you are taking. It should be from an “approved provider,” but what does that mean? No authority from the United States can readily verify how good the test is.
Let us say you are a hotel owner, which kind of testing service do you wish to commission to send around to your rooms to test your American guests? A highly sensitive test that will yield periodic false positives, or a not very sensitive test that won’t generate false positives and might even result in some false negatives? And say some of your guests truly will be Covid-positive — do you wish to keep them in their rooms for another week or two, with all the attendant risks, or do you wish to send them along their way?
You don’t even have to imagine that the hotel owners are entirely cynical. They themselves can’t judge the accuracy of the tests, so a service that yielded a fair number of Covid positives could be seen as “they make too many mistakes and won’t let our guests leave, we don’t want them.” If the Delta variant is outracing publicity about the Delta variant, as was the case for a while in Tulum, such a hotelier reaction might be all the more likely.
I did in fact test negative. And the testers were very nice to me.
What I’ve been reading
1. Richard Lapper, Beef, Bible, and Bullets: Brazil in the Age of Bolsonaro. A very good country-specific book, it takes you from “Brazil is the country of the future and always will be” to “Brazil was the country of the future and maybe never will be again.” Did you know that the Pentecostals and Evangelicals have five times the number of radio stations as does the Roman Catholic Church?
2. Graham Johnson, Poulenc: The Life in the Songs. An A+ book if…you give a damn. Here is one song by Poulenc. Compare it to this also beautiful recording. And this one. The book also serves as an excellent biography of the composer, the songs making up for the fact that his life did not see amazing amounts of action and dramatic tension.
2. Alex Ferguson with Michael Moritz, Leading: Learning from Life and My Years at Manchester United. Short, but nonetheless one of the very best books on leadership and also talent search. You also don’t have to know anything about soccer, or care about soccer. Recommended, and this one supports my view that the best management books are about sports and music, not “business management” in the mainstream sense of that term.
Adrian Woolridge’s The Aristocracy of Talent: How Meritocracy Made the Modern World is absolutely correct. It is remarkable how many deeply wrong books the world has been generating about this topic.
Andrew W. Lo and Stephen R. Foerster’s In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest is a good look at the development of portfolio theory, starting with Markowitz.
There is William L. Silber, The Power of Nothing to Lose: The Hail Mary Effect in Politics, War, and Business.
I found rewarding Lily Collison and Kara Buckley, Pure Grit: Stories of Remarkable People Living with Physical Disability.
I have not had a chance to read Masaaki Shirawaka, Tumultuous Times: Central Banking in an Era of Crisis; he was Governor of the Bank of Japan from 2008 to 2013.