Most Reported School Shootings Never Happened

The headline sounds like something from a right-wing whack job but this is coming from NPR!

This spring the U.S. Education Department reported that in the 2015-2016 school year, “nearly 240 schools … reported at least 1 incident involving a school-related shooting.” The number is far higher than most other estimates.

But NPR reached out to every one of those schools repeatedly over the course of three months and found that more than two-thirds of these reported incidents never happened. Child Trends, a nonpartisan nonprofit research organization, assisted NPR in analyzing data from the government’s Civil Rights Data Collection.

We were able to confirm just 11 reported incidents, either directly with schools or through media reports.

Gambling Can Save Science

Nearly thirty years ago my GMU colleague Robin Hanson asked, Could Gambling Save Science? We now know that the answer is yes. Robin’s idea to gauge the quality of scientific theories using prediction markets, what he called idea futures, has been validated. Camerer et al. (2018), the latest paper from the Social Science Replication Project, tried to replicate 21 social-science studies published in Nature or Science between 2010 and 2015. Before the replications were run the authors run a prediction market–as they had done on previous replication research–and once again the prediction market did a very good job predicting which studies would replicate and which would not.

Ed Yong summarizes in the Atlantic:

Consider the new results from the Social Sciences Replication Project, in which 24 researchers attempted to replicate social-science studies published between 2010 and 2015 in Nature and Science—the world’s top two scientific journals. The replicators ran much bigger versions of the original studies, recruiting around five times as many volunteers as before. They did all their work in the open, and ran their plans past the teams behind the original experiments. And ultimately, they could only reproduce the results of 13 out of 21 studies—62 percent.

As it turned out, that finding was entirely predictable. While the SSRP team was doing their experimental re-runs, they also ran a “prediction market”—a stock exchange in which volunteers could buy or sell “shares” in the 21 studies, based on how reproducible they seemed. They recruited 206 volunteers—a mix of psychologists and economists, students and professors, none of whom were involved in the SSRP itself. Each started with $100 and could earn more by correctly betting on studies that eventually panned out.

At the start of the market, shares for every study cost $0.50 each. As trading continued, those prices soared and dipped depending on the traders’ activities. And after two weeks, the final price reflected the traders’ collective view on the odds that each study would successfully replicate. So, for example, a stock price of $0.87 would mean a study had an 87 percent chance of replicating. Overall, the traders thought that studies in the market would replicate 63 percent of the time—a figure that was uncannily close to the actual 62-percent success rate.

The traders’ instincts were also unfailingly sound when it came to individual studies. Look at the graph below. The market assigned higher odds of success for the 13 studies that were successfully replicated than the eight that weren’t—compare the blue diamonds to the yellow diamonds.

The Global Middle Class

Wash Post: The world is on the brink of a historic milestone: By 2020, more than half of the world’s population will be “middle class,” according to Brookings Institution scholar Homi Kharas.

Kharas defines the middle class as people who have enough money to cover basics needs, such as food, clothing and shelter, and still have enough left over for a few luxuries, such as fancy food, a television, a motorbike, home improvements or higher education.

It’s a critical juncture: After thousands of years of most people on the planet living as serfs, as slaves or in other destitute scenarios, half the population now has the financial means to be able to do more than just try to survive.

“There was almost no middle class before the Industrial Revolution began in the 1830s,” Kharas said. “It was just royalty and peasants. Now we are about to have a majority middle-class world.”

(Kharas’s definition of middle class takes into account differences in prices across countries.)

It’s interesting that middle class values are also expanding, especially in Asia, even as they may be declining in the United States:

According to the World Values Survey (2015), people in countries with burgeoning middle classes do not feel that governments are responsible for their
success, but rather that it is thrift, hard work, determination, and perseverance that count.

The Most Momentous Place?

The old city of Jerusalem is astonishingly small for a city with so many momentous places. One can walk from Christianity’s holiest site to the holiest site of Judaism, pausing to look at one of the holiest sites of Islam, in less time than it takes to walk from my office on the campus of George Mason University to the campus Starbucks. Jerusalem is actually smaller than the GMU campus. GMU has had a few big events to its credit–two Nobel Prizes, several presidential speeches and so forth–but few people come here on pilgrimage. GMU doesn’t compete with Jerusalem.

Is there another parcel of land of similar size to the old city of Jerusalem that can lay claim to being similarly momentous? The signing of the Declaration of Independence in Philadelphia was pretty important but not much has happened there since. Cape Canaveral gets a nod but doesn’t span multiple fields of endeavor. Rome was important for a long time but its momentous events have faded compared to those that occurred in Jerusalem.

My best guess for a momentous parcel of land of similar size to old Jerusalem would be Cambridge University in the UK. Cambridge can lay claim to being the place of Newton, Darwin, Maxwell, Babbage, Turing, Oppenheimer, and Crick and Watson and many others in the fields of politics, literature and the social sciences including economists such as Keynes, Marshall and Sen. Overall, Cambridge gives Jerusalem a run for its money. Jerusalem had its momentous period between say the building of the first temple in 957 BCE and Muhammad’s night journey around 621 CE, a period of roughly 1600 years, while Cambridge has had only an 800 year run since being built in 1231 so controlling for a time a case can be made that Cambridge beats Jerusalem. Perhaps you disagree but then Cambridge is still racking up momentous events while Jerusalem hasn’t had much in the past 1400 years so Cambridge is certainly catching up. Of course, one big event could put Jerusalem back on top.

Aside from Cambridge, cases can be made for other universities such as Oxford, Harvard and even newcomer Chicago. But it’s interesting that universities come to mind as perhaps the only places in real competition with Jerusalem. Are there others?

Airbnb Has Implemented Smart Property

In one of Nick Szabo’s classic papers on smart contracts he gives an example of smart property:

Smart property might be created by embedding smart contracts in physical objects. These embedded protocols would automatically give control of the keys for operating the property to the party who rightfully owns that property, based on the terms of the contract. For example, a car might be rendered inoperable unless the proper challenge-response protocol is completed with its rightful owner, preventing theft.

Airbnb is close to achieving smart property. On a recent trip, for example, I booked online. Shortly before I was to take control of the residence I received a code which opened an on-site lockbox with a key. I left the key in the lockbox when I left–never having met the owner or any employee. At a hotel that I stayed in on the same trip, I still had to wait in line to check-in. The Airbnb process is more convenient and cheaper because there is no need to have staff to man a front desk.

The Airbnb process typically uses physical keys but I have also stayed at places that use electronic keys and digital door locks. An electronic key is more secure since it can be a one-time use that opens the door only during the rental period.

All of this may seem somewhat ordinary but that is the point. Smart property is becoming ordinary.

Addendum: The more automated the process becomes the more a decentralized protocol or platform becomes a competitive option. Smart property that can reach out to say a matching protocol and an identity protocol could rent itself.

Airbnb is a very good company that provides valuable services at reasonable prices so a decentralized platform may not have significant advantages but as more base protocols are laid down and stabilized (“primitives”) it will become easier and more natural to create these kinds of decentralized services. See my post Blockchains and the Opportunity of the Commons.

Sexy Selfies as Competition Strategy

Publicly displayed, sexualized depictions of women have proliferated, enabled by new communication technologies, including the internet and mobile devices. These depictions are often claimed to be outcomes of a culture of gender inequality and female oppression, but, paradoxically, recent rises in sexualization are most notable in societies that have made strong progress toward gender parity. Few empirical tests of the relation between gender inequality and sexualization exist, and there are even fewer tests of alternative hypotheses. We examined aggregate patterns in 68,562 sexualized self-portrait photographs (“sexy selfies”) shared publicly on Twitter and Instagram and their association with city-, county-, and cross-national indicators of gender inequality. We then investigated the association between sexy-selfie prevalence and income inequality, positing that sexualization—a marker of high female competition—is greater in environments in which incomes are unequal and people are preoccupied with relative social standing. Among 5,567 US cities and 1,622 US counties, areas with relatively more sexy selfies were more economically unequal but not more gender oppressive. A complementary pattern emerged cross-nationally (113 nations): Income inequality positively covaried with sexy-selfie prevalence, particularly within more developed nations. To externally validate our findings, we investigated and confirmed that economically unequal (but not gender-oppressive) areas in the United States also had greater aggregate sales in goods and services related to female physical appearance enhancement (beauty salons and women’s clothing). Here, we provide an empirical understanding of what female sexualization reflects in societies and why it proliferates.

From a new paper in PNAS.

The paper looks mostly at cross-sectional relationships but social media has increased the reach of sexy selfies so the payoff to advertising in this manner has gone way up. Furthermore, sexy selfies have launched more than one billionaire in recent years and not only through marriage so we would expect the trend to continue.


Studio Drift had a great exhibit at the Stedelijk Museum in Amsterdam featuring drifter, a monolithic block that levitates, rotates and moves around and in space.

Drifter personifies Arthur C. Clarke’s adage that “Any sufficiently advanced technology is indistinguishable from magic.” Seeing it is magical. I can tell you that it’s 3-dimensional not a projection. You can see under, above and around it. There are no strings. You can see a video here. Music plays as the block moves. I’m pretty sure that isn’t an accident. I can guess how it was done but really the point is that this was an art work that fulfilled it’s promise

Drifter calls on the viewer to reconsider our relationship with our living environment, which is often accepted as static and lifeless. It creates a sense of disbelief and displacement, creating tension between humanity versus nature and chaos versus order. Disconnected from our expectations, it floats between the possible and impossible.

Drifter will be at the Stedelijk until August 26. Look for it elsewhere.

PreFab Housing

A four-story building built in four days with apartments that include closets, a kitchenette, a sofa that converts to a queen-size bed, and a flat-screen TV? We are used to seeing that kind of thing in China but this development was in, of all places, Berkeley.

Berkeleyside: This new 22-unit project from local developer Patrick Kennedy (Panoramic Interests) is the first in the nation to be constructed of prefabricated all-steel modular units made in China. Each module, which looks a little like sleekly designed shipping containers with picture windows on one end, is stacked on another like giant Legos.

Cost savings on the housing itself were significant but local assembly was still expensive. Organized labor isn’t very happy:

Organized labor also dislikes that these MicroPADs are manufactured abroad.

“We’d rather they be constructed here instead of China so they don’t undercut wages and conditions,” said Michael Theriault, secretary-treasurer of the San Francisco Building and Construction Trades Council, in 2016 to the San Francisco Chronicle. “And we want them built under local building code and inspected by local inspectors.”

Cost savings won’t be passed on to consumers if the quantity of housing supplied isn’t increased so this isn’t a solution to high-prices in quantity-constrained cities. Nevertheless, construction costs rather than land supply are an important constraint elsewhere in the country. Moreover, it’s good to see experiments in improving construction productivity, one of our most important but productivity lagging sectors.

Airplane Maintenance is Offshored

Where are most airplanes fixed? In foreign countries where the price of skilled labor is lower than in the United States.

US Airways and Southwest fly planes to a maintenance facility in El Salvador. Delta sends planes to Mexico. United uses a shop in China. American still does much of its most intensive maintenance in-house in the U.S., but that is likely to change in the aftermath of the company’s merger with US Airways.

Vanity Fair had a piece on this “Disturbing Truth” a few years ago. The VF piece presents a few anecdotes of safety violations at foreign maintenance facilities to stoke up fear. Naturally, no comparison to safety violations at US maintenance facilities is given. More serious data doesn’t bear out the worries of Vanity Fair. Worldwide airline safety is at an all time-high. Consider this amusing bit:

Even engine repairs and overhaul—the highly skilled aircraft-maintenance work that has remained largely in the U.S. and Europe—may follow heavy maintenance to the developing world. Emirates, the airline owned by the Gulf states, is constructing a $120 million state-of-the-art engine-repair-and-overhaul facility in Dubai.

Amusing because the world’s safest airline according to the German JACDEC (Jet Airliner Crash Data Evaluation Centre) is Emirates based in Dubai. Etihad the UAE’s second largest airline follows up closely. Chinese and South American airlines such as Sichuan Air score above most US airlines and Avianca, the El Salvador-Columbia airline, also scores highly. Of course, crashes are so rare that none of these rankings should be taken very seriously except in the sense that all of these airlines are very safe. Thus, I don’t worry much about where maintenance occurs. Indeed, if maintenance can be done for less we ought to buy more, so less expensive can mean safer.

Rather than fearing the offshoring of airplane maintenance we ought to ask how we can expand the concept. Medical tourism, for example, is growing. If foreign airplane maintenance is good enough for Delta then foreign human maintenance is good enough for me. Why don’t more US health insurance companies pay for medical procedures performed abroad? If a major medical insurer started to test and rate foreign providers and count some of them as in-service this could great alleviate fear increasing demand, lower costs, and put price pressure on US providers. Of course, we could also let in more foreign trained physicians and airplane mechanics.

Hat tip: Connor.

Sequestered Capital

Sequestered capital is capital that is hidden or unseen by the market. R&D is often sequestered capitaI. New goods in production can be sequestered capital. Sequestered capital is special because it doesn’t inform price signals. In a series of papers, McClure and Thomas use the idea of sequestered capital to explain market anomalies. In this paper they look at sequestered capital and the Dutch tulipmania.

Framing tulipmania in terms of sequestered capital – capital whose quantities, usages and future yields are hidden from market participants – offers a richer and more straightforward explanation for this famous financial bubble than extant alternatives. Simply put, the underground planting of the tulip bulbs in 1636 blindfolded seventeenth-century Dutch speculators regarding the planted quantities and their development and future yields. The price boom began in mid November 1636, coinciding with the time of planting. The price collapse occurred in the first week of February 1637, coinciding with the time of bulb sprouting – signaling bulb quantities, development and future yields. Also consistent with our explanation is the initial price collapse location, in the Dutch city of Haarlem, where temperature and geography favored early sprouting and sprout visibility.

In a working paper (with Steve Horwitz) they look at sequestered capital and closed end funds. Sequestered capital is an interesting idea perhaps with many other applications.

Presumed Consent in Wales Falls Short

In 2003, Johnson and Goldstein published what would become a famous paper in Science, Do Defaults Save Lives? The paper featured a graph which showed organ donor consent rates in opt-in countries versus those in opt-out countries. The graph is striking because it seems to suggest that a simple change in the default rule can create a massive change in organ donor rates and thus save thousands of lives.

The graph, however, does NOT show organ donor rates. It shows that in opt-in countries few people explicitly opt-in and in presumed consent countries few people explicitly opt-out. But when a potential organ donor dies the families of people in opt-in countries who did not opt-in are still asked whether they would like to donate their loved one’s organs and many of them say yes. Similarly, in the presumed consent countries the families of people who did not opt-out are still typically asked whether they would like to donate their loved one’s organs and some of them say no.

The actual difference in organ donation rates between opt-in and presumed consent countries is much smaller than the differences in the graph, as Johnson and Goldstein made clear later in their paper. Nevertheless, the simple story in the graph encouraged many people to put excess weight on presumed consent as the solution to low organ donor rates.

The best estimates of presumed consent suggested that switching to presumed consent might increase organ donor rates by 25%. 25% isn’t bad! But we don’t have many examples of countries that have switched from one system to another so that estimate should be taken with a grain of salt.

The latest evidence comes form Wales which switched to presumed-consent in 2013. Unfortunately, there has been no increase in donation rates.

The most significant analysis of the new system is the Impact Evaluation Report, released by the Welsh Government in November 2017. Whilst focusing on the positives, such as increased understanding among medical staff, the report cannot escape the donation statistics, which clearly show no improvement. Covering the period from January 2010 or January 2011 to September 2017, all donation data show no change since the legislation’s introduction. The 21-month period before the Act came into effect saw 101 deceased donors, whereas the same period after showed 104; an increase, but one that can be properly attributed to expected annual fluctuation.

I still favor presumed consent or better, mandated choice, but I don’t think the binding constraints on organ donation are default rules. More important are preferences and fears about donation, the existence of a professional system using people who are trained to ask for donations, an institutional organization that can use donations when they are available (minimizing waste), and, of course, incentives.

Hat tip: Frank McCormick.

The Minimum Wage in an Online Job Market

John Horton has written a novel paper that uses an experiment and a policy change in an online job market to understand the effects of the minimum wage. The job market in question is something like the Upwork platform where firms can post jobs and workers from anywhere in the world can post offers to work at an hourly wage to do tasks such as computer programming, data entry, design and transcription. Typically workers are hired for a week or two.

Horton was able to implement a minimum wage by simply not allowing a worker to offer to work at less than the minimum wage for a randomly chosen set of jobs.

During the experimental period, firms posting an hourly job opening were immediately assigned to an experimental cell. The experiment consisted of four experimental cells: a control group with the platform status quo of no minimum wage, which received 75% of the sample (n = 121, 704), and three active treatment cells, which split the remaining 25% of the sample. A total of 159,656 job openings were assigned. Neither employers nor workers were told they were in an experiment. The active treatments had minimum wages of $2/hour in MW2 (n = 12, 442), $3/hour in MW3 (n = 12, 705), and $4/hour in MW4 (n = 12, 805).

Horton found that the minimum wage did reduce hiring, especially in low-wage job categories when the minimum wage was high relative to the median wage. The hiring reduction was measurable but, consistent with previous research, not large. All the work on the platform, however, is logged through the software so Horton also has very good data on hours worked and here the story is quite different. The minimum wage substantially reduced hours worked.

A higher minimum wage likely causes firms to scale back projects but that seems somewhat inconsistent with the small effect on hiring (fixed costs of hiring would suggest fewer hires and fewer hours but perhaps more hours per hire.) Horton finds another factor explains the reduction in hours worked. At a higher minimum wage, firms are careful to hire more productive workers. He finds that about half of the decline in hours can be explained by substitution towards higher productivity workers. Previous studies have found suggestive effects along these lines. For example, Giuliano 2013 found that the higher minimum wages could shift teenage employment to teenagers from more affluent regions who were likely more skilled and less likely to quit. Horton finds similar demographic effects as hiring shifts away from Bangladeshi workers and towards US workers but since his data on productivity is much cleaner than in previous studies there is less need to rely on demographic correlates of productivity.

In part (it seems) due to the experiment, the job-platform later instituted a $3 per hour minimum wage for all jobs. Horton is thus able to supplement his experimental results with analysis of a policy change in the same environment. Consistent with the experimental result, the imposition of the minimum wage across the board caused substantial declines in hours worked with little effect on hiring overall but a big effect on the lowest-wage workers who found that their probability of being hired dropped substantially after the minimum wage was imposed.

Every law is violent

Stephen Carter’s great column, written after the killing of Eric Garner who was being arrested for selling loose cigarettes, needs to be read and reread and periodically shouted from the rooftops:

…Every law is violent.  We try not to think about this, but we should.  On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.

This is by no means an argument against having laws.

It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal. Behind every exercise of law stands the sheriff – or the SWAT team – or if necessary the National Guard. Is this an exaggeration? Ask the family of Eric Garner, who died as a result of a decision to crack down on the sale of untaxed cigarettes. That’s the crime for which he was being arrested. Yes, yes, the police were the proximate cause of his death, but the crackdown was a political decree.

The statute or regulation we like best carries the same risk that some violator will die at the hands of a law enforcement officer who will go too far. And whether that officer acts out of overzealousness, recklessness, or simply the need to make a fast choice to do the job right, the violence inherent in law will be on display. This seems to me the fundamental problem that none of us who do law for a living want to face.

But all of us should.

I thought of this column today after reading about Santa Barbara’s ban on plastic straws:

On Tuesday, the Santa Barbara City Council unanimously passed a bill that prohibits restaurants, bars, and other food service businesses from handing out plastic straws to their customers. …Santa Barbara… has banned even compostable straws, permitting only drinking tubes made from nonplastic materials such as paper, metal, or bamboo. The city also has made a second violation* of its straw prohibition both an administrative infraction carrying a $100 fine and a misdemeanor, punishable by a maximum fine of $1,000 and up to six months in jail. Each contraband straw or unsolicited plastic stirrer counts as a separate violation, so fines and jail time could stack up quickly.

…Assistant City Attorney Scott Vincent tells me criminal charges would be pursued only after repeat violations and if there were aggravating circumstances.