Month: June 2022

Monday assorted links

1. Gross and Emanuel on reforming the NIH (recommended, Atlantic).  The world really is coming around on this issue.

2. FIRE will move into broader free speech issues.

3. New Perry Mehrling book on Charles Kindleberger is coming.

4. “…we find that adding cultural measures to the model increases the explanatory power from 44% to 95% of the gender compensation gap.

5. How did civil service exams affect who gets employed by the federal government? p.s. Is there any chance here that “elitism” is good rather than bad?

6. Comparing past and present inflation.

Can Education be Standardized? Evidence from Kenya

From Guthrie Gray-Lobe, Anthony Keats, Michael Kremer, Isaac Mbiti, and Owen Ozier:

We examine the impact of enrolling in schools that employ a highly-standardized approach to education, using random variation from a large nationwide scholarship program. Bridge International Academies not only delivers highly detailed lesson guides to teachers using tablet computers, it also standardizes systems for daily teacher monitoring and feedback, school construction, and financial management. At the time of the study, Bridge operated over 400 private schools serving more than 100,000 pupils. It hired teachers with less formal education and experience than public school teachers, paid them less, and had more working hours per week. Enrolling at Bridge for two years increased test scores by 0.89 additional equivalent years of schooling (EYS) for primary school pupils and by 1.48 EYS for pre-primary pupils. These effects are in the 99th percentile of effects found for at-scale programs studied in a recent survey. Enrolling at Bridge reduced both dispersion in test scores and grade repetition. Test score results do not seem to be driven by rote memorization or by income effects of the scholarship.

Promising results, to be sure…

Further results on YouTube radicalization

To what extent does the YouTube recommendation algorithm push users into echo chambers, ideologically biased content, or rabbit holes? Despite growing popular concern, recent work suggests that the recommendation algorithm is not pushing users into these echo chambers. However, existing research relies heavily on the use of anonymous data collection that does not account for the personalized nature of the recommendation algorithm. We asked a sample of real users to install a browser extension that downloaded the list of videos they were recommended. We instructed these users to start on an assigned video and then click through 20 sets of recommendations, capturing what they were being shown in real time as they used the platform logged into their real accounts. Using a novel method to estimate the ideology of a YouTube video, we demonstrate that the YouTube recommendation algorithm does, in fact, push real users into mild ideological echo chambers where, by the end of the data collection task, liberals and conservatives received different distributions of recommendations from each other, though this difference is small. While we find evidence that this difference increases the longer the user followed the recommendation algorithm, we do not find evidence that many go down `rabbit holes’ that lead them to ideologically extreme content. Finally, we find that YouTube pushes all users, regardless of ideology, towards moderately conservative and an increasingly narrow range of ideological content the longer they follow YouTube’s recommendations.

That is from a new research paper by Jonathan Nagler and Joshua A. Tucker.  And here are previous posts on YouTube, some of them covering radicalization charges in further detail.  Via the excellent Kevin Lewis.

What I’ve been reading

1. Dan Werb, The Invisible Siege: The Rise of Coronavirus and the Search for a Cure.  An excellent book on the history of coronaviruses more generally, with much of the strongest material coming on how earlier coronavirus investigations fed into the progress we have made on Covid-19.  Recommended, not just what all the other Covid books are telling you.

2. James Poskett, Horizons: The Global Origins of Modern Science.  A useful account of what the title promises, with a look at contributions from pre-conquest Mexico, China, and other non-Western locales.  Maybe the book pushes the non-Western theme a little too much at points, but this is basically a sane and readable account, and most of the cross-cultural connections are valid rather than strained.

3. Evan Lieberman, Until We Have Won Our Liberty: South Africa After Apartheid.  An interesting book, and one which contains a lot of useful information.  Yet the author works too hard to avoid recognizing just how badly matters have gone.  Overall, incomes are down and the racial wealth gap has not improved…and that is after getting rid of one of the most inefficient economic systems of all time, namely apartheid.  For sources try this and this, among others.  The income gains you can find are focused in a super-small group.

4. Paul Mango, Warp Speed: Inside the Operation that Beat Covid, the Critics, and the Odds.  Written by an HHS insider and participant, this is kind of cheesy and fanboyish.  But probably it should be!  For one thing, the book gives you a sense of just how much talent was involved in OWS, an under-discussed lesson.  On p.69, you can learn that they repeatedly considered human challenge trials and learn their question-begging reasons for refusing to do them.

5. David Hackett Fischer, African Founders: How Enslaved People Expanded American Ideals.  An extended history of U.S. slavery, focusing on regional differences, for instance Carolina Gullahs vs. New Orleans vs. Mississippi.  As you might expect, the broader story is integrated with that of the particular African origins of the slaves as well.  A strong book, recommended.

Michael Magoon’s From Poverty to Progress: Understanding Humanity’s Greatest Achievement is a very good introduction to the importance of progress and material wealth in history.

Sunday assorted links

1. “Our results suggest that the degree to which Twitter is political has likely been overstated in the past.

2. When do ideas get easier to find? Hard to excerpt, but important piece.

3. The economics of stadium names.

4. Pollution from car tire wear.

5. The Swedish history of not feeding other people’s children.

6. The 1993 ferry sinking off the coast of Jeremie, Haiti had a high death toll — some sources say over one thousand (does anyone know the proper final toll?).  Yet the incident doesn’t seem to have its own Wikipedia page.

7. Ann Turner Cook, original Gerber baby, dies.

The Insane Wait Times to Get an Appointment for a US Visitor Visa

The wait times to get an appointment to get a visa to visit the US are absurdly long. To get an appointment for a Visitor Visa in New Delhi, for example, takes 291 days. In Mexico City the wait time is 581 days. In Nairobi, Kenya it takes 664 days!  Moreover, “It should be noted that the “Wait Times for a Nonimmigrant Visa to be Processed” information by country does not include time required for administrative processing.”

In the past, I’ve criticized India for making it cumbersome to get a tourist visa–greatly lowering much needed tourism revenues in India–but India has been moving in the right direction. The US in contrast is just an embarassment.

Hat tip: Todd Moss on twitter.

When should rhetoric be racially salient?

Utilizing a correlational design (N = 498), we found that those who perceived COVID-19 racial disparities to be greater reported reduced fear of COVID-19, which predicted reduced support for COVID-19 safety precautions. In Study 2, we manipulated exposure to information about COVID-19 racial disparities (N = 1,505). Reading about the persistent inequalities that produced COVID-19 racial disparities reduced fear of COVID-19, empathy for those vulnerable to COVID-19, and support for safety precautions. These findings suggest that publicizing racial health disparities has the potential to create a vicious cycle wherein raising awareness reduces support for the very policies that could protect public health and reduce disparities.

Here is more from Skinner-Dorkenoo  Via D.  There may be broader lessons as well.

Crypto’s volatility premium

That is the topic of this week’s Bloomberg column, 2x the usual length, building on earlier work by Tyrone, see also this Megan McArdle column.  As for me, here is a key excerpt:

Much of the primary value of crypto assets is from their price volatility, which is part of their appeal. I raised this possibility some while ago, tongue in cheek, but upon further reflection it seems to me an actually useful (albeit counterintuitive) way of thinking about crypto assets. The general idea of price volatility as a value dates at least as far back as Fischer Black, one of the founders of options price theory.

In standard economic theory, investors are risk-averse, meaning they prefer more stable consumption patterns to less stable ones. That is usually true, but it does not mean investors always prefer more stable investment prices — a crucial distinction.

Consider this hypothetical: You are given an envelope containing one dollar. You are then offered the opportunity to exchange it for an envelope which contains either twice the money (that is, $2) or half the money (50 cents), each with 50% probability. In essence, you are accepting some exchange-rate volatility.

Most people will find this bet a pretty good one. The new expected value of your envelope is (0.5 x $2) + (0.5 x $0.5), or $1.25. That is a higher expected value than your original dollar.

If you are perched at the margin of subsistence, this bet might seem too risky. But for most investors, who have some level of wealth, it is an improvement in prospects, though with some additional risk.

Bitcoin and other crypto assets are essentially offering you a form of this bet. To be sure, this 50-50 bet does not exactly describe the price dynamics of crypto assets. But it is one way of illustrating that crypto prices, relative to the dollar, will either go up a lot or down a lot. The bet helps show that some investors might welcome price volatility — or, if you wish, call it exchange-rate volatility. And with even wilder swings in value, there is more extreme price volatility, which can be even more appealing.

So when Bitcoin and other crypto assets come along, they are a new source of expected gain — precisely due to their price volatility. It is like being invited into a casino where the odds favor you rather than the house! You won’t always win, but a lot of people will want to keep playing.

I’ve been pondering that argument since 2013, maybe now is the time to simply accept it.. Fischer Black and Jensen’s Inequality!

Factory Built Housing

Government concerns about great disparities in housing conditions, what are often called housing crises, date to at least the 1920s. These great disparities are, of course, still with us 100 years later. In this essay, we argue there will be no progress ending these great disparities until the residential construction industry adopts technology that other industries began adopting more than 100 years ago – factory production methods. There have been attempts to introduce these methods in residential construction for the last century, but they are always blocked and sabotaged by monopolies in the traditional construction sector, that is, the sector producing homes outside, on-site, using “stick-built” methods. Monopolies in traditional construction sabotage many types of factory-built homes. In this essay, we focus on the sabotage of particular types of such homes, what we call small-modular homes. These homes can be produced and sold at very-low prices, so that the sabotage of these homes has disproportionately hurt the low-income. The sabotage is the primary reason for the existence of, and perpetuation of, U.S. housing crises.

[Small-modular homes]…are blocked from most areas of the country – it’s simply illegal for a household to purchase such a home and place it on land owned by the household. In areas where they are “allowed,” they are often zoned for areas like manufacturing districts and dumps. Even then, regulations mean higher production costs for these homes in factories. They also mean the homes are financed as automobiles (with personal loans, or chattell loans) and not real estate loans. It’s clear why these homes are a threat to those constructing stick-built homes, especially in the lower-priced home market, and why monopolies in traditional construction have invested so heavily in blocking these small-modular homes. The homes are of high-quality, built to a strict national building code. They are manufactured at a cost per square foot that is one-third to one-half less than the cost per square foot to construct homes with traditional methods.

That’s from James Schmitz’s paper for the Minneapolis Fed, Solving the Housing Crisis will Require Fighting Monopolies in Construction.

Amazingly, a majority of the houses produced in the early 1970s were factory-built before these types of houses were driven out of the market. Capps at Bloomberg notes:

Manufactured homes briefly dominated the U.S. housing market during the 1960s. By 1972, these homes — not just mobile homes but small-scale modular houses — accounted for some 60% of all new single-family homes produced nationwide, according to census data. That number has diminished so much that the role of factories in building affordable housing has gone all but forgotten.

The Biden administration wants to put America’s house factories — those used to be a thing, really — back to work. A new housing plan by the White House offers a set of actions designed to close the nation’s massive affordability gap.

As Schmitz discusses at length in another paper, part of the reason economists have ignored the destruction of factory built housing is that economists came to think of the danger of monopoly as solely involving price (or, to put it the other way as Austrians do, they thought of the virtue of competition as only involving price.). In fact, monopolies reduce productivity and they use the political process to sabotage other firms. Competition isn’t just about price but about increased productivity and creative destruction.

P.S. I am in the process of building a factory-built house. The factory part was by far the easiest and most efficient part of the process.

Tim Harford covers *Talent* and parallel design

And Brian Eno.  Here is one opening bit from the FT:

Consider the advice for job interviewers in Talent, a new book by economist Tyler Cowen and venture capitalist Daniel Gross. They suggest asking a routine question, such as “give me an example of when you resolved a difficult challenge at work”. Then ask for another example. And another. The pat answers will be exhausted quickly, and the candidate will have to start improvising, digging deep — or perhaps admit to being stumped.

“If the candidate really does have 17 significant different work triumphs,” write Cowen and Gross, “maybe you do want to hear about what number 17 looks like.”

Indeed, one way to describe this tactic is that the interviewer is asking for answers in parallel rather than answers in series. Instead of stringing together a logical sequence of 17 questions, the interviewer is asking for 17 different answers to the same question.

Recommended, a great piece, subtle, and goes well beyond the topics of the book.

Those new (?) service sector jobs

The level of pay is new at least:

Who knew that LA lifeguards—who work in the sun, ocean surf, and golden sands of California— could reap such unbelievable financial reward?

It’s time we put Baywatch on pay watch. In 2019, we found top-paid lifeguards made up to $392,000.

Unfortunately, today, the pay and benefits are even more lucrative.

Daniel Douglas was the most highly paid and earned $510,283, an increase from $442,712 in 2020. As the “lifeguard captain,” he out-earned 1,000 of his peers: salary ($150,054), perks ($28,661), benefits ($85,508), and a whopping $246,060 in overtime pay.

The second highest paid, lifeguard chief Fernando Boiteux, pulled down $463,517 – up from $393,137 last year.

Our auditors at found 98 LA lifeguards earned at least $200,000 including benefits last year, and 20 made between $300,000 and $510,283. Thirty-seven lifeguards made between $50,000 and $247,000 in overtime alone.

And it’s not only about the cash compensation. After 30 years of service, LA lifeguards can retire as young as 55 on 79-percent of their pay.

Hard to believe?  The source is given as a FOIA request to LA County.  The details provided are so specific that if they are wrong, some kind of lawsuit would be forthcoming.  So maybe this is for real!  Here is the full article.  Via Anecdotal.

How the heritability of politics works?

Estimates from the Minnesota Twin Study show that sociopolitical conservatism is extraordinarily heritable (74%) for the most informed fifth of the public – much more so than population-level results (57%) – but with much lower heritability (29%) for the public’s bottom half.

Here is the research article by Nathan P. Kalmoe and Martin Johnson.  The reference is from Matt Yglesias, and one possibility is that you are born with inherited values, but you need to be educated to learn where those values ought to put you on the political spectrum.

Friday assorted links

1. Robert Armstrong at the FT directly addresses my eurozone inflation questions.  The results, to me, still do not discriminate against Fischer Black’s “inflation will be whatever people expect” hypothesis.

2. David A. Price of the Richmond Fed interviews me.

3. Life hacks (NYT).

4. Dressing the Queen, and with a nod toward Strauss.

5. The last Howard Johnson’s restaurant closed.

A Ross Douthat proposal on guns

So I would like to see experiments with age-based impediments rather than full restrictions — allowing would-be gun purchasers 25 and under the same rights of ownership as 40- or 60-year-olds, but with more substantial screenings before a purchase. Not just a criminal-background check, in other words, but some kind of basic social or psychological screening, combining a mental-health check, a social-media audit and testimonials from two competent adults — all subject to the same appeals process as a well-designed red-flag law.

Here is the full NYT Op-Ed.  And speaking of Ross, and guns, or rather gun, Ross gives the correct Straussian reading of Maverick, namely that Tom Cruise dies early in the movie, and the rest of the film is his pre-death fantasy.  This take is all the more plausible if you have seen Michael Powell’s Stairway to Heaven/Matter of Life or Death, where this is clearly the correct interpretation.