Month: November 2021

Saturday assorted links

1. “Each student is allowed to bring only one pet and must pay a $250 cleaning fee for the academic year; emotional support animals are free.

2. Japanese Columbo.

3. “Bar-tailed Godwits regularly travel more than 7,000 miles non-stop.

4. “Latvia bans unvaccinated lawmakers from voting, docks pay.

5. “Millions of people not fully vaccinated against Covid in the regions of Upper Austria and Salzburg will be allowed to leave their homes only for reasons considered essential to life, such as going to work, grocery shopping or visiting the doctor…”  Link here.

6. Those new service sector jobs? And why academics remain in the academy.  And further deflation in the Austrian brothel, including for fourteen-year-olds.

Negative-sum games

When Vespa soror — giant hornets found in parts of Asia — attack a honeybee hive, they kill as many bees as possible, decapitating them and scouring the hive to harvest their young.

To protect their hives from such a catastrophe, some species of honeybees have developed an arsenal of defensive techniques. They may forage for other animals’ feces and place it at their nest’s entrance to repel predators, a tactic called “fecal spotting.” Or, in a technique known as “balling,” a cluster of honeybees may engulf a hornet, vibrate their flight muscles and produce enough heat to kill the enemy.

Now, a new study published in Royal Society Open Science says honeybees have another defense: screaming.

More precisely, the bees in the study produced a noise known as an “antipredator pipe” — not something that comes out of their mouths, but rather a sound they produce by vibrating their wings, raising their abdomens and exposing a gland used to release a certain kind of pheromone.

Here is the full story.

Is Marriage A Normal Good? Evidence from NBA drafts

Little is known about the causal link between male economic status and marriage outcomes, owing to lack of data on unanticipated permanent income shocks for men. I tackle this by exploiting a natural experiment surrounding NBA drafts, an annual event where NBA teams draft college and international basketball players from 1st to 60th. Given high-quality expert predictions of player draft order and well-defined initial salaries decreasing monotonically by draft rank, I show that disparities between actual and predicted draft rank generate exogenous income shocks. This setup contributes novel income treatments that are not only large and individual-specific but also opportunely occurring early in both career and adult life, when marriage decisions are particularly salient. I additionally construct a new dataset tracking players’ major family decisions and am the first to show that marriage is indeed a normal good for men. All else equal, a 10% increase in initial five-year salary raises likelihood of marriage by 7.9% for the 2004-2013 draft cohorts. I argue my results constitute lower-bound estimates for general population men, as effect sizes are larger and more significant for lower expected salaries.

That is from Jiaqi Zou, who is on the job market from University of Toronto.  I like her statement of purpose: “I am particularly interested in identifying barriers and limiting beliefs that constrain individuals from their life’s pursuits.”

What would a world with very cheap energy look like?

I am indebted to Jason Crawford and Matt Yglesias for the inspiration on this topic, here is an excerpt from my Bloomberg column:

One second-order effect is that countries with good infrastructure planning would reap a significant relative gain. The fast train from Paris to Nice would become faster yet, but would trains on the Acela corridor?

Next in line: Desalinating water would become cheap and easy, enabling the transformation and terraforming of many landscapes. Nevada would boom, though a vigorous environmental debate might ensue: Just how many deserts should we keep around? Over time, Mali and the Middle East would become much greener.

How about heating and cooling? It might be possible to manipulate temperatures outdoors, so Denmark in January and Dubai in August would no longer be so unbearable. It wouldn’t be too hard to melt snow or generate a cooling breeze.

Wages would also rise significantly. Not only would more goods and services be available, but the demand for labor would also skyrocket. If flying to Tokyo is easier, demand for pilots will be higher. Eventually, more flying would be automated. Robots would become far more plentiful, which would set off yet more second- and third-order effects.

Cheap energy would also make supercomputing more available, crypto more convenient, and nanotechnology more likely.

And this:

And limiting climate change would not be as simple as it might at first seem. Yes, nuclear fusion could replace all of those coal plants. But the secondary consequences do not stop there. As water desalination became more feasible, for example, irrigation would become less expensive. Many areas would be far more verdant, and people might raise more cows and eat more beef. Those cows, in turn, might release far more methane into the air, worsening one significant set of climate-related problems.

But all is not lost! Because energy would be so cheap, protective technologies — to remove methane (and carbon) from the air, for instance — are also likely to be more feasible and affordable.

In general, in a carbon-free energy world, the stakes would be higher for a large subset of decisions. If we can clean up the air, great. If not, the overall increase in radical change would create a whole host of new problems, one of which would be more methane emissions. The “race” between the destructive and restorative powers of technology would become all the more consequential. The value of high quality institutions would be much greater,  which might be a worry in many parts of the world.

This is a thought exercise, and I would say you are wasting your breath if you fume against fusion power in the comments.

Is the growing geographic concentration of innovation flattening out?

U.S. invention has become increasingly concentrated around major tech centers since the 1970s, with implications for how much cities across the country share in concomitant local benefits. Is invention becoming a winner-takes-all race? We explore the rising spatial concentration of patents and identify an underlying stability in their distribution. Software patents have exploded to account for about half of patents today, and these patents are highly concentrated in tech centers. Tech centers also account for a growing share of non-software patents, but the reallocation, by contrast, is entirely from the five largest population centers in 1980. Non-software patenting is stable for most cities, with anchor tenants like universities playing important roles, suggesting the growing concentration of invention may be nearing its end. Immigrant inventors and new businesses aided in the spatial transformation.

That is new research by Brad Chattergoon and William R. Kerr.

Legal Systems and Economic Performance in Colonial Shanghai, 1903-1934

Abstract: How important are legal systems to economic performance? To address this question, I focus on a historical period from colonial Shanghai, where quite different legal systems operated in the International Settlement andFrench Concession. In particular, employing novel historical data, I examine 1903–1934 land value discontinuities at the border between these Settlements. Substantial discontinuities were found in the 1900s, with higher land values associated with the International Settlement. However, by the 1930s, this land value advantage of the International Settlement had disappeared. A closer look at the institutions reveals that the French Concession adapted its operation to be more business friendly, under competition from the neighboring International Settlement. This suggests that the French legal system per se was not a barrier to economic growth, but rather it could function well if interpreted and implemented properly. This paper thus adds to evidence that formal legal system is not a key determinant of economic performance.

That is from Mingxi Li, who is on the job market this year from UC Davis.

Why group evaluations are overly conservative

The evaluation and selection of novel projects lies at the heart of scientific and technological innovation, and yet there are persistent concerns about bias, such as conservatism. This paper investigates the role that the format of evaluation, specifically information sharing among expert evaluators, plays in generating conservative decisions. We executed two field experiments in two separate grant-funding opportunities at a leading research university, mobilizing 369 evaluators from seven universities to evaluate 97 projects, resulting in 761 proposal-evaluation pairs and more than $250,000 in awards. We exogenously varied the relative valence (positive and negative) of others’ scores and measured how exposures to higher and lower scores affect the focal evaluator’s propensity to change their initial score. We found causal evidence of a negativity bias, where evaluators lower their scores by more points after seeing scores more critical than their own rather than raise them after seeing more favorable scores. Qualitative coding of the evaluators’ justifications for score changes reveals that exposures to lower scores were associated with greater attention to uncovering weaknesses, whereas exposures to neutral or higher scores were associated with increased emphasis on nonevaluation criteria, such as confidence in one’s judgment. The greater power of negative information suggests that information sharing among expert evaluators can lead to more conservative allocation decisions that favor protecting against failure rather than maximizing success.

Here is the full paper from Jacqueline N. Lanie,, via the excellent Kevin Lewis.

Apply for an ACX grant

From Scott Alexander:

I want to give grants to good research and good projects with a minimum of paperwork. Like an NIH grant or something, only a lot less money and prestige.

How is this different from Marginal Revolution’s Fast Grants, Nadia Eghbal’s Helium Grants, or EA Funds‘ grant rounds?

Not different at all. It’s total 100% plagiarism of them. I’m doing it anyway because I think it’s a good idea, and I predict there are a lot of good people with good projects in this community who haven’t heard about / participated in those, but who will participate when I do it.

How much money are you giving out?

ACX Grants proper will involve $250,000 of my own money, but I’m hoping to supplement with much more of other people’s money, amount to be determined. See the sections on ACX Grants + and ACX Grants ++ below.

Here is further detail, including a link to the application form.

Thursday assorted links

1. One version of a Chicago parable.

2. How is science policy going?

3. The culture that is Viennese (and alternatively, Swiss).

4. Vaccine take-up, from west to east.  Model this.

5. “Dólar “azul” y billete de 500 euros: las nuevas reglas del mercado blue que descolocan a los clientes.

6. Backlash to NFTs on Discord.

7. Bolsonaro cuts federal science budget by 90 percent.

Explaining NFTs

Writing at the Harvard Business Review, Steve Kaczynski and Scott Duke Kominers have en excellent explanation of how NFTs create value–the best I have read.

NFTs don’t just provide a kind of digital “deed.” Because blockchains are programmable, it’s possible to endow NFTs with features that enable them to expand their purpose over time, or even to provide direct utility to their holders. In other words, NFTs can do things — or let their owners do things — in both digital spaces and the physical world.

In this sense, NFTs can function like membership cards or tickets, providing access to events, exclusive merchandise, and special discounts — as well as serving as digital keys to online spaces where holders can engage with each other. Moreover, because the blockchain is public, it’s even possible to send additional products directly to anyone who owns a given token. All of this gives NFT holders value over and above simple ownership — and provides creators with a vector to build a highly engaged community around their brands.

It’s not uncommon to see creators organize in-person meetups for their NFT holders, as many did at the recent NFT NYC conference. In other cases, having a specific NFT in your online wallet might be necessary in order to gain access to an online game, chat room, or merchandise store. And creator teams sometimes grant additional tokens to their NFT holders in ways that expand the product ecosystem: owners of a particular goat NFT, for example, were recently able to claim a free baby goat NFT that gives benefits beyond the original token; holders of a particular bear NFT, meanwhile, just received honey.

Thus owning an NFT effectively makes you an investor, a member of a club, a brand shareholder, and a participant in a loyalty program all at once. At the same time, NFTs’ programmability supports new business and profit models — for example, NFTs have enabled a new type of royalty contract, whereby each time a work is resold, a share of the transaction goes back to the original creator.

This all means that NFT-based markets can emerge and gain traction quickly, especially relative to other crypto products. This is both because the NFTs themselves have standalone value — you might buy an art NFT simply because you like it — and because NFTs just need to establish value among a community of potential owners (which can be relatively small), whereas cryptocurrencies need wide acceptance in order to become useful as a store of value and/or medium of exchange.

Read the whole thing. Kaczynski and Kominers also offer good advice to firms and organizations interested in creating NFTs. It remains true, of course, that there is a lot of foolish and wasted spending in the space–that’s typical of most new asset classes where the rush to get into the space throws up a lot of noise making the signal more difficult to detect.

Addendum: Don’t forget you can buy the Marginal Revolution NFT! You will be purchasing from the new owner (we sold it) but I believe we get a royalty which also illustrates an advantage of the NFT model.

Image: SupDucks6484.

Connecticut fact of the day

Over the last two decades, the number of managerial and professional staff that Yale employs has risen three times faster than the undergraduate student body, according to University financial reports. The group’s 44.7 percent expansion since 2003 has had detrimental effects on faculty, students and tuition, according to eight faculty members.

In 2003, when 5,307 undergraduate students studied on campus, the University employed 3,500 administrators and managers. In 2019, before the COVID-19 pandemic’s effects on student enrollment, only 600 more students were living and studying at Yale, yet the number of administrators had risen by more than 1,500 — a nearly 45 percent hike. In 2018, The Chronicle of Higher Education found that Yale had the highest manager-to-student ratio of any Ivy League university, and the fifth highest in the nation among four-year private colleges.

The full article offers a number of competing explanations for this development.  Perhaps all of them are true!

Real consumption must at some point fall

That is the theme of my latest Bloomberg column, here is one excerpt:

The best way to adjudicate competing claims about today’s economy is to consider opportunities for consumption. Over much of the last two years, labor supply contracted significantly, in large part due to the pandemic. That means the economy produced less. If you produce less, sooner or later you have to consume less, too. And if you consume less, you will be dissatisfied with economic conditions, especially in America, where the consumer typically is considered to be king (or queen).

There isn’t any way around this basic logic, no matter what the data say. Even if measured consumption is currently high, at some point it will have to fall relative to expectations. And indeed there are a host of problems, with shortages, supply-chain delays and a sluggish service sector. In a normal year, more Americans would have seen “Dune” on the big screen and gone to concerts. Americans are not quite able to get what they want, and that is obscured in the aggregate statistics.

The biggest messenger for consumption losses is the rate of consumer price inflation, which measured at 6.2% on last reading. Not so many Americans expect to get an offsetting raise…in return, and above-average inflation is likely to continue for a year or two, some would say for longer. So real wages for many millions of Americans will be noticeably lower for the near future, too. That will translate into lower levels of consumption, with the timing of those losses depending on the spending and borrowing plans of individual households.

Add to all this growing and unprecedentedly high debt for the federal government, plus unfunded liabilities in Medicare and Social Security.

Even if they don’t understand the exact economic logic here, most Americans grasp the common-sense truth that inflation and deficits are bad — for them, for their real wages, and for their future opportunities. They are happy to have higher savings in the bank, but they see the treadmill turning ever faster.

Some parts of the labor shortage also qualify as a decline in consumption. One reason for the “great resignation” is that people cannot get the kinds of jobs they want. That too is a manner of enduring lower consumption, even though it does not show up in consumption statistics. It’s not just the unemployed, as many people took jobs they were only marginally happy with. A job might involve a higher risk of Covid exposure than a worker feels comfortable with, or an internship might take place in a largely empty office.

Here is the James Brown song “The Payback.”

China fact of the day

Global concerns over inflation were also inflamed by data released earlier on Wednesday, showing that Chinese producer price inflation — the measure of what businesses pay each other for goods — rose 13.5 per cent in October from the same time last year, its biggest leap in 26 years as factories absorbed higher energy prices.

Here is more from the FT, mostly about domestic U.S. inflationary pressures.