Month: July 2023
The rise of niche consumption
Over the last 15 years, individual households have concentrated their spending on a few preferred products. However, this is not driven by “superstar” products capturing larger market shares. Instead, households increasingly purchase different products from each other. As a result, aggregate spending concentration has decreased. We develop a model of heterogeneous household demand and use it to conclude that increasing product variety drives these divergent trends. When more products are available, households select products better matched to their tastes. This delivers welfare gains from selection equal to about half a percent per year in the categories covered by our data.
By Brent Neiman and Joseph Vavra, that is from a new issue of American Economic Journal: Macroeconomics. Some of you may recall a related discussion of “matching” in The Complacent Class.
Sunday assorted links
1. Most of the claims in this Evgeny Morozov NYT Op-Ed are wrong (for a start, he doesn’t realize that current public libraries are largely empty), but it makes the interesting point that AI represents the fulfillment of a neoliberal vision, as on that turf government simply cannot keep up. Also from NYT here is Rabbi Wolpe, much better and saner than BAP and a lot of the other stuff people are looking to.
2. The weirdest political video I ever have seen? See #7 for background!
3. They are solving for the new no affirmative action equilibrium.
4. Massive phosphate rock deposit discovered in Norway. Julian Simon ascendant.
5. Why Would Anyone Collect 150 John Deere Lawn Tractors? Why not I say!?
6. Folsom Prison Blues (instrumental).
7. Niall Ferguson on the 17th century (Bloomberg). Close to my own views.
Cultural values and productivity (rooftops)
This paper estimates differences in human capital as country-of-origin specific labor productivity terms, in firm production functions, making it immune to wage discrimination concerns. After accounting for wage and experience, estimated human capital varies by a factor of around 3 between the 90th and 10th percentile. When I investigate which country-of-origin characteristics correlate most closely with human capital, cultural values are the only robust predictor. This relationship persists among children of migrants. Consistent with a plausible cultural mechanism, individuals whose origin place a high value on autonomy hold a comparative advantage in positions characterized by a low degree of routinization.
That is by Andreas Ek from Lund University, recently accepted to the Journal of Political Economy. I do not currently see ungated versions of the paper.
Markets in everything Alaska regulatory arbitrage edition, tribal qualifier added
The shrinking village of Karluk, on the western shore of Kodiak Island, is trying to keep its school viable. So it’s willing to pay a couple of families with three or four children apiece to move there of a year, so that it can draw down state education funds.
Public schools in Alaska need to maintain an enrollment of 10 students to get state funding. Karluk, which had a population of 37 during the 2010 U.S. Census, is now down to about 21 people. The demographics are Native American: 82.14%; two or more races: 17.86%; White: 0%; Black or African American: 0%.
Karluk Tribal Council’s ad says that it will pay a couple of families with enough kids — three or four — to move to the village, all expenses paid, for a year, and will even provide jobs. That money, without question, is passed through from the U.S. and State taxpayer, to pay families so that the village can draw down more government money and open its school.
If this were any other kind of enterprise other than a tribe, these definitions for acceptable applicants would be considered a federal equal opportunity violation. But this is a tribe.
Here is the full story, including means for contacting the village. Via Martin Kennedy.
Saturday assorted links
1. Janan Ganesh on the Americanisation of Britain (FT).
2. “You Hurt My Feelings” is a good Hansonian movie about how most people are mediocre at their jobs, and how society deals with that fact, and what happens when those protective mechanisms break down. The starring role of Julia Louis-Dreyfus also makes for good meta-commentary on Seinfeld, a show where the characters speak the brutal, honest truth to each other.
3. Austin Vernon update on geothermal.
4. The world’s largest gas station has 120 pumps.
5. TikTok will enter book publishing? (NYT)
People Hire Phone Bots to Torture Telemarketers
Whitebeard has a bad habit of talking in circles. That is by design. Whitebeard is a digital contraption that only sounds human. He is the creation of Roger Anderson, a real-life 54-year-old in Monrovia, Calif., who employs chatbots and AI to frustrate and waste the time of telemarketers and scammers.
“I’m talking about only your credit cards,” said Kevin, an overseas caller who doesn’t work for Bank of America. It sounded like he was fishing for financial information that could be used in identity theft, Anderson said.
“I’m sorry. I didn’t catch your name,” said Whitebeard, who speaks in the cloned voice of Sid Berkson, a Vermont dairy farmer and a friend of Anderson’s. “What’s your name, buddy?”
Whitebeard stalls for time at the start of phone calls, using chatbot inanities about TV remotes and the like to give a couple of minutes for GPT-4, the OpenAI software, to process the telemarketer’s spiel and generate responses. Once ready, the AI text is fed into a voice cloner, which carries on the conversation.
Here is the full WSJ article.
Canada is Poaching US Talent!
Here is Noahpinion on Canada’s recent immigration policies and how Canada is poaching US talent!
[I]n recent years, the Canadian government has begun to set hard targets for immigration, such as last year’s target of 1.5 million more by 2025. And the country is deliberately encouraging more people to come, with one of the world’s most aggressive recruitment strategies.
First, let’s just take a look at the results Canada is achieving. The country’s population has just passed 40 million — a 14% increase from when Doug Saunders published Maximum Canada. The national statistics agency loudly celebrated the achievement. And the country’s population growth rate has just shot up to over 3.5%, which is among the world’s fastest:
This isn’t quite Maximum Canada yet, but it’s clearly headed in that direction.
…And Canada’s zeal for greater population inflows is matched by its determination to recruit the best and the brightest en masse. The country’s points-based immigration system, the Federal Skilled Worker Program, is well-known, as is the Provincial Nominee Program that allows individual Canadian provinces to recruit immigrant workers to specific locations. But the country keeps adding more programs for grabbing talent. Its latest idea includes an offer of permanent residency to people working in the United States on H-1B visas — basically, poaching America’s own skilled immigrants!
Happy Canada Day!
Hat tip: Carl Close.
*The Monetarists*, by George S. Tavlas
The key here is the subtitle The Making of the Chicago Monetary Tradition, 1927-1960. Have you wondered about the oft-underrated macroeconomics of Frank Knight, Jacob Viner, Lloyd Mints, Paul Douglas, Clark Warburton, and many more? By no means did monetarism start with Milton Friedman, and this is the new go-to book on the topic.
*The Ruble: A Political History*
That is the new, highly useful, and thorough book by Ekaterina Pravilova, here is one excerpt:
Reutern was adamant about exterminating private currencies, but not everyone in the government shared his view. The minister of justice, Konstantin Pahlen, argued, for instance, that the right to issue private notes should be granted “to all Russian subjects.” Anyone willing to issue private monetary units should simply inform that local governor about the amount of issue, denominations, and the place these notes could be exchanged for state credit bills. The issue should also place an “exchange fund” consisting of state money or securities at the disposal of the local administration and order the printing of notes at the Expedition for the Production of State Papers, which would guarantee them against counterfeiting. In other words, private money should mirror the system of state credit bills and compensate for their deficit…
The debate between the opponents and the proponents of private money revealed an interesting ideological paradox. Private money in Russia stood for the ideological legacy of serfdom: a system that substituted an entire structure of local administration, p olice and judicial authority, and financial management, all concentrated in the figure of one landowner.
Of course most of the rest of the book covers the rather different directions that we taken. You can buy it here.