EU May Ban Payments for Milk, Sperm and Blood

BrusselsSignal: The European Parliament has approved a draft regulation banning payments for breast milk, sperm, blood and other “substances of human origin” (SoHO).

Billed as an attempt to increase safety across the bloc, the ban allegedly aims to ensure that those who are financially disadvantaged within the bloc are not subject to undue pressure to donate their cells and bodily fluids.

Hmmm. Why not ban the sale of labor to protect financially disadvantaged labor donors from undue pressure? Indeed, why not require that dangerous jobs like mining pay low wages so we can be sure that no one is induced to do these jobs by financial pressure?

More prosaically, the European Union falls short of producing all the blood plasma it needs to meet its demand for life-saving medicine. Consequently, the European Union depends on imports—primarily from compensated donors in the United States—to address its plasma deficit. Should the proposed EU legislation be enacted, the deficit is likely to get worse because Germany, Austria, Hungary, and the Czech Republic, currently permit financial compensation. Indeed the U.S. and these EU countries together account for 90% of the global plasma supply. A ban on paid donations within the EU will thus decrease the quantity of plasma supplied from Germany, Austria, Hungary, and the Czech Republic and force the EU to rely even more on imports from the US.

The US is also the world’s biggest exporter of human sperm because US sperm donors can be compensated and remain anonymous (depending on the state). US donors are also carefully screened for quality, in part due to US regulations and in part due to market demand for information about the donors. Denmark is also a major exporter of sperm, in part because it, too, allows financial incentives to donors. Reduced donations from Denmark will make the European Union increasingly dependent on U.S. sperm supplies. Indeed, after Canada banned paid sperm donors in 2004, the supply of Canadian donors plummeted to just 35 (!) and US sperm exports to Canada increased. Unintended consequences, eh?

Creating EU wide standards for testing of blood, sperm and breast milk to allow greater flows across borders is a good idea. Shortages of baby formula in the US, for example, led to a valuable increase in breast milk donations and sales but it would probably be better if more breast milk donations went through a qualified milk bank rather than through Facebook (and the same is also true for sperm banks and sperm donations). But there is no call for banning paid donation.

Paying donors of blood, sperm and breast milk is an ethical way to increase the quantity supplied and it can be done while ensuring that the donations are high-quality and safe.

IFOs

While strolling in the garden one day…a priest said to him, ‘Father Joseph, oh, how beautiful God has made heaven!’ Then Joseph, as if he had been called to heaven, gave a loud shriek, leapt off the ground, flew through the air, and knelt down atop an olive tree, and—as witnesses declared in his beatification inquest—that branch on which he rested waved as if a bird were perched upon it, and he remained up there about half an hour” (Paolo Agelli, Vita del Beato Giuseppe di Copertino, 1753).

What kind of nonsense is this? Who is this liar quoted above? Human beings can’t fly or kneel on slender tree limbs like little birds. So, how is it that in the sixteenth and seventeenth centuries—the very era that gave birth to aggressive skepticism and empirical science—countless people swore that they had witnessed such events? And how is it that some of these sworn testimonies are legal records, archived alongside lawsuits and murder trials, from all sorts of people, not just illiterate peasants but also elites at the apex of the social, intellectual, and political hierarchy?

…Levitation is one of the best of all entry points into the history of the impossible, principally because it is an event for which we have an overabundance of testimonies, not just in Western Christianity but throughout all of world history.

Carlos Eire argues in CommonWeal that these events should be taken seriously. Eire is cagey about what he means by take seriously but I agree that we can say something about the form such visions take and when and why they rise and fall in frequency. Eire notes, for example, that reporting of such events changed significantly with the Protestant Reformation.

…Protestants of all stripes also rejected the proposition that God had continued to perform miracles beyond the first century, a doctrine that came to be known as “the cessation of miracles” or “the cessation of the charismata.” The miracles mentioned in the Bible had really occurred, they argued, but such marvels became unnecessary after the birth of the early Church and would never happen again. Consequently, all of those miraculous supernatural phenomena associated with holiness throughout the Middle Ages, including levitation, could not be the work of God. But by designating these phenomena “false”—that is, not attributable to God—Protestants did not declare them impossible. As most Protestant Reformers and their later disciples saw it, ecstatic seizures, levitations, luminous irradiance, and all such phenomena did in fact occur, but they were all diabolical in origin.

…Given the religious, social, political, and intellectual turmoil caused by the advent of Protestantism and its great paradigm shift, it is not at all surprising that miracles became a marker of difference between Catholics and Protestants, as well as a flash point of discord and a polemical weapon.

That’s right but the author would have done better to refer to the work of my GMU colleagues. GMU (oddly?) is a leading center of experts on witch trials. See most notably Leeson and Russ and Johnson and Koyama.

People don’t report seeing flying people the way they used to. Is that because people have become more rational or because the socially acceptable form of vision has changed?

India Gets Rid of its “Jones Act”

India has been liberalizing its cabotage laws over the past decade and now appears ready to end them completely:

Splash: India is planning to completely remove its cabotage laws which will allow foreign registered and flagged ships to work along its coast without obtaining a permit from the country’s Directorate General of Shipping.

This is seen as a massive move by the Narendra Modi-led government as the only ships currently allowed to work on local routes for carrying cargo are registered in India. Foreign ships can work along the coast only with an appropriate permit. When it came into force, the law was intended to protect domestic shipowners.

According to local media, this is seen as the biggest reform yet in the shipping sector but also a topic that will undoubtedly rile up Indian fleet owners.

The US’s Jones Act continues to raise shipping costs, increase fuel usage and harm the environment. We should follow India’s example.

Reminds me that there is no such thing as development economics.

They Got the Lead Out of Turmeric!

Last year in Get the Lead Out of Turmeric! I reported that adulteration of turmeric was a major source of lead exposure among residents of rural Bangladesh. Well there is good news: the lead is gone! Wudan Yan at UnDark reports the remarkable story of academic research quickly being translated into political action that improves lives.

The story begins (more or less) with PhD student Jenna Forsyth:

Jenna Forsyth knew nothing about the practice of adding lead chromate to turmeric in 2014, when she started her Ph.D. in environment and resources at Stanford University. Excited to continue her masters research on water and sanitation, she sought out working with Stephen Luby, a world expert on the subject. When she arrived, Luby instead pointed Forsyth to a conundrum he was encountering in his work in Bangladesh: In a rural part of the country, pregnant women and children had high levels of lead in their blood. There were none of the usual suspects of lead exposure. There were no nearby battery recycling plants and families didn’t paint their homes. How could this be?

After eliminating dozens of explanations, Forsyth eventually hit on turmeric contamination. But Forsyth and the team didn’t just analyze turmeric in the lab, they hit the ground in Bangladesh:

They visited mills, and sometimes found sacks of the pigment on-site. They sampled dust from the polishing machine and from the floors of the mill. If there was about one part of lead to chromium, it was a dead giveaway that the adulterant was being used. From interviews, they also understood the motive: Brighter roots led to more profit, and adulterating with a consistently bright paint agent could disguise poorer-quality roots. The findings from this study were published in 2019.

Then they took their results to the Bangladesh Food Safety Authority:

The team held a meeting with the Bangladesh Food Safety Authority. The agency’s chairman at the time, Syeda Sarwar Jahan, was immediately concerned. She decided to spearhead a massive public information campaign.

…Local and international news outlets disseminated the findings from Forsyth’s new studies to create public awareness. The researchers met with businesses to make them aware of the risks of lead in turmeric. BFSA posted notices in the nation’s largest wholesale spice market, Shyambazar. The flyers warned people of the dangers of lead and that anyone caught selling turmeric adulterated with lead would be subject to legal action.

Authorities also raided Shyambazar using a machine called an X-ray fluorescence analyzer which can quickly detect lead in spices. Nearly 2,000 pounds of turmeric was seized in the raid and two wholesalers were fined 800,000 taka, more than $9,000 USD.

…In late 2019, as part of the intervention against lead chromate use in turmeric, the Bangladesh Food Safety Authority printed and distributed an estimated 50,000 copies of green flyers, that they shared with traders and plastered around the market. Be skeptical of fingers that appear too bright and yellow, it advised, and if the yellow dusting from turmeric doesn’t come off easily, it’s likely you’ve been played.

Getting rid of the lead isn’t just a cosmetic change. Lead can be so bad, especially for children, that removing it from spices improves lives at very low cost. Kate Porterfield writing at the EA Forum reports:

Despite being a preliminary assessment, this cost-effectiveness analysis (CEA) of this  intervention in Bangladesh presents an exceptionally encouraging outlook, with a cost per DALY-equivalent averted estimated at just under US$1. It is crucial not to overlook the profound significance of this outcome: US$1 represents a small investment for the equivalent of an additional year of life in optimal health.

Early results from Pure Earth’s Rapid Market Assessment project find that between 6 and 12 countries may have similar problems with contaminated spices.  Large parts of northern India (also highly populated) are similarly affected. Other lead salts are also highly colored, in reds and oranges, and found in other products. Programs to halt intentional contamination of spices and other foodstuffs are enormously impactful, and ought to be a first response in the fight against lead poisoning globally.

Finally, other significant sources of lead exposure (including leaded pottery and aluminum cookware, paint, medicines etc) require a similar regulatory response, and are likely to show cost benefit ratios that are also very strong.

Bangladesh has done it. It is time for Northern India to also eliminate lead from spices.

Big congratulations to Forsyth and the other Stanford researchers who documented the problem and who cared enough to follow up with a plan to work with charities and governments in Bangladesh to solve the problem. Big congratulations also to Givewell who supported the project.

The Bat the Ball and the Hopeless

You will no doubt be familiar with the bat and ball problem;

  • A bat and a ball cost $1.10 in total.
  • The bat costs $1.00 more than the ball.
  • How much does the ball cost? ____ cents.

In a paper in Cognition, Meyer and Fredrick test multiple versions of the bat and ball and related problems to try to uncover where people’s intuitions go wrong. The most remarkable two versions of which are shown below:

  • A bat and a ball cost $110 in total.
  • The bat costs $100 more than the ball.
  • How much does the ball cost?
  • Before responding, consider whether the answer could be $5.
  •  $_____

———–

  • A bat and a ball cost $110 in total.
  • The bat costs $100 more than the ball.
  • How much does the ball cost?
  • The answer is $5.
  • Please enter the number 5 in the blank below.
  •  $_____

Remarkably, even when told to consider $5, most people continue to answer $10. Even more shockingly, most people get the answer right when they are explicitly told the answer and instructed to enter it, yet 23% still get the answer wrong! Wow.

The authors conclude:

…this “hinted” procedure serves to partition respondents into three groups: the reflective (who reject the common intuitive error and solve the problem on the first try), the careless (who answer 10, but revise to 5 when told they are wrong), and the hopeless (who are unable or unwilling to compute the correct response, even after being told that 10 is incorrect)

…many respondents maintain the erroneous response in the face of facts that plainly falsify it, even after their attention has been directed to those facts….the remarkable durability of that error paints a more pessimistic picture of human reasoning than we were initially inclined to accept; those whose thoughts most require additional deliberation benefit little from whatever additional deliberation can be induced.

As an economist, I would have liked to see an incentivized version (maybe some people are pulling the authors legs) but I don’t actually think that explains the results. Quite a few people are indeed hopeless.

The Real Secret of Blue Zones

Netflix has a new documentary on Blue Zones, regions in the world such as Okinawa Prefecture, Japan; Nuoro Province, Sardinia, Italy; the Nicoya Peninsula, Costa Rica; Icaria, Greece; and Loma Linda, California, where people appear to live “extraordinarily long and vibrant lives.” What are the secrets of such blue zones and how can you live to be 100?

These blue zones first started to be discussed in the 2000s which means that people aged 100 or older were born sometime around 1900. What do we know about that period of history? It was before vital records were uniformly established. And what happens when state-wide certification goes into effect? Saul Justin Newman shows that the number of supercentarians [100+] drops sharply a hundred or so years later!

…the introduction of state-wide birth certification coincides with a sharp reduction in the number of supercentenarians born in each state. In total, 82% of the GRG supercentenarian records from the USA predate state-wide birth certification. Forty-two states achieved complete birth certificate coverage during the survey period. When these states transition to state-wide birth registration, the number of supercentenarians falls by 80% per year overall and 69% per capita when adjusted relative to c.1900 state population sizes.

The author goes on to show that in many countries the number of of extremely old people is positively correlated with poverty, shorter average life spans and illiteracy. All factors which are difficult to explain if we think these factors are causally related to health but which make sense if we think that the explanation is unreliable birth and death records. Supercentenarian birthdates also exhibit patterns such as age-heaping that are “strongly indicative of manufactured birth data.”

In addition, cross-country comparisons don’t make much sense if we focus on health:

In 1900 the UK had eight million more inhabitants than Italy, a 1.22-fold larger population. Citizens of the UK also enjoyed 2.5 times the GDP per capita, earned 3.5 times higher wages in real terms, had 1.25 times lower income inequality, received 2.2 times the average education (with just 5.3 years of schooling), were four times less likely to be murdered, were 3.8cm taller, and lived 5.3 years longer on average than people in Italy. Given these indicators and the long history of birth records in both countries, it is difficult to reconcile why the healthier, wealthier, better-educated, taller, and longer-lived population of the UK produced roughly a quarter as many SSCs per capita. One explanation is that remarkable age records result, not from better health or greater longevity, but from the historical accumulation of illiteracy-driven errors and the modern dynamics of poverty-driven fraud.

Thus, in Blue Zones, people aren’t necessarily living longer lives; they’re just experiencing a ‘senior moment’ with their date of birth.

Hat tip: The always skeptical, Paul Kedrosky.

Misandry

John Tierney lets loose in a well-researched piece:

Scholars, journalists, politicians, and activists will lavish attention on a small, badly flawed study if it purports to find bias against women, but they’ll ignore—or work to suppress—the wealth of solid research showing the opposite. Three decades ago, psychologists identified the “women-are-wonderful effect,” based on research showing that both sexes tended to rate women more positively than men. This effect has been confirmed repeatedly—women get higher ratings than men for intelligence as well as competence—and it’s obvious in popular culture.

“Toxic masculinity” and “testosterone poisoning” are widely blamed for many problems, but you don’t hear much about “toxic femininity” or “estrogen poisoning.” Who criticizes “femsplaining” or pretends to “believe all men”? If the patriarchy really did rule our society, the stock father character in television sitcoms would not be a “doofus dad” like Homer Simpson, and commercials wouldn’t keep showing wives outsmarting their husbands. (When’s the last time you saw a TV husband get something right?) Smug misandry has been box-office gold for Barbie, which delights in writing off men as hapless romantic partners, leering jerks, violent buffoons, and dimwitted tyrants who ought to let women run the world.

Numerous studies have shown that both sexes care more about harms to women than to men. Men get punished more severely than women for the same crime, and crimes against women are punished more severely than crimes against men. Institutions openly discriminate against men in hiring and promotion policies—and a majority of men as well as women favor affirmative-action programs for women.

The education establishment has obsessed for decades about the shortage of women in some science and tech disciplines, but few worry about males badly trailing by just about every other academic measure from kindergarten through graduate school. By the time boys finish high school (if they do), they’re so far behind that many colleges lower admissions standards for males—a rare instance of pro-male discrimination, though it’s not motivated by a desire to help men. Admissions directors do it because many women are loath to attend a college if the gender ratio is too skewed.

Gender disparities generally matter only if they work against women. In computing its Global Gender Gap, the much-quoted annual report, the World Economic Forum has explicitly ignored male disadvantages: if men fare worse on a particular dimension, a country still gets a perfect score for equality on that measure. Prodded by the federal Title IX law banning sexual discrimination in schools, educators have concentrated on eliminating disparities in athletics but not in other extracurricular programs, which mostly skew female. The fact that there are now three female college students for every two males is of no concern to the White House Gender Policy Council. Its “National Strategy on Gender Equity and Equality” doesn’t even mention boys’ struggles in school, instead focusing exclusively on new ways to help female students get further ahead.

Read the whole thing.

A Diamond Pricing Puzzle

In our textbook, Modern Principles of Economics, Tyler and I predicted that lab grown diamonds would break the DeBeers cartel. Well, it’s finally happening.

Bloomberg: One of the world’s most popular types of rough diamonds has plunged into a pricing free fall, as an increasing number of Americans choose engagement rings made from lab-grown stones instead.

…the scale and speed of the pricing collapse of one of the diamond industry’s most important products has left the market reeling.

…De Beers has cut prices in the category by more than 40% in the past year…The impact on De Beers was clear…first half profits plunged more than 60% to just $347 million, with its average selling price falling from $213 per carat to $163 per carat.

The puzzle, however, is why has it taken so long? The diamond market does have some peculiar features. Buyers of engagement rings don’t necessarily benefit from lower-prices per se as a diamond ring is a signal. If the cost of the signal goes down, people need to spend more to send the same message. An inexpensive engagement ring is thus something of a contradiction in terms, so price shopping is less intense. Nevertheless, the early buyers of lab-grown diamond rings should still benefit because the rings can’t be distinguished by the naked eye. Neither the bride, nor her friends, have to know the $10,000 ring only cost $5,000, right? Right?

Well maybe not right. DeBeers also produces lab-grown diamonds and they have a very strange pricing strategy:

De Beers started selling its own lab-grown diamonds in 2018 at a steep discount to the going price, in an attempt to differentiate between the two categories. The company expects lab-grown prices to continue to tumble, in what it sees as a tsunami of more supply coming on to the market, Rowley said. That should create an even bigger delta in prices between natural diamonds and lab grown, helping differentiate the two products, he said.

What? Ordinarily, the bigger the price between a competitor and its substitute the greater pressure on the competitor to lower prices! Yet DeBeers is gambling that the bigger the difference in price between natural and lab grown diamonds the bigger the demand for natural diamonds! Strange. The only way I see this working is if the fiancée knows the price of the ring, which maybe they do! In that case, the buyer still has to spend 10k and doesn’t care whether it’s 10k on synthetic diamonds or 10k on natural grown diamonds. But 10k on synthetic diamonds will get you more carats so we need an equilibrium in which a smaller diamond signals more expensive. But that runs against hundreds of years of expectations! And remember natural and lab grown diamonds are indistinguishable by the naked eye. It’s one thing for the fiancée to know the price of the diamond but surely her friends judge by what they can see, namely the size of the ring. Which signal is the most important to send?

All of this goes to show how peculiar the signaling model can be. Keep diamonds in mind when thinking about the the market for higher-education. Harvard is never going to lower prices and might they even raise prices as state schools lower their price?

Proudhon: To be Governed

To be GOVERNED is to be watched, inspected, spied upon, directed, law-driven, numbered, regulated, enrolled, indoctrinated, preached at, controlled, checked, estimated, valued, censured, commanded, by creatures who have neither the right nor the wisdom nor the virtue to do so. To be GOVERNED is to be at every operation, at every transaction noted, registered, counted, taxed, stamped, measured, numbered, assessed, licensed, authorized, admonished, prevented, forbidden, reformed, corrected, punished. It is, under pretext of public utility, and in the name of the general interest, to be place under contribution, drilled, fleeced, exploited, monopolized, extorted from, squeezed, hoaxed, robbed; then, at the slightest resistance, the first word of complaint, to be repressed, fined, vilified, harassed, hunted down, abused, clubbed, disarmed, bound, choked, imprisoned, judged, condemned, shot, deported, sacrificed, sold, betrayed; and to crown all, mocked, ridiculed, derided, outraged, dishonored. That is government; that is its justice; that is its morality.

Pierre-Joseph Proudhon, “General Idea of the Revolution in the Nineteenth Century,” first published in French 1851; translated by John Beverly Robinson (1923), pp. 293-294.

Hat tip: Robert Higgs.

Towards a Platform for Dominant Assurance Contracts

Moyamo at LessWrong is committed to getting dominant assurance contracts, aka refund bonuses up and running.

Imagine a world with no ads or paywalls. A world where open-source software gets the same level of funding as proprietary software. A world where people can freely reuse ideas and music without paying royalties. A world where people get paid for writing book reviews. A world where Game-of-Thrones-quality shows are freely available on YouTube. A world where AI safety research gets the same-level of funding as AI capabilities research. Is this a fantasy world? No, this is the world where people use Dominant Assurance Contracts.

If you think this is a bad idea that no one will support, click on the donation link and make some money. If you think it’s a great idea with lots of potential, click on the donation link and be the one to make this public good a reality. Read the first link to find out more.

Driverless Cars May Already Be Safer Than Human Drivers

Tim Lee runs the numbers:

Waymo and Cruise have driven a combined total of 8 million driverless miles, including more than 4 million in San Francisco since the start of 2023.

And because California law requires self-driving companies to report every significant crash, we know a lot about how they’ve performed.

For this story, I read through every crash report Waymo and Cruise filed in California this year, as well as reports each company filed about the performance of their driverless vehicles (with no safety drivers) prior to 2023. In total, the two companies reported 102 crashes involving driverless vehicles. That may sound like a lot, but they happened over roughly 6 million miles of driving. That works out to one crash for every 60,000 miles, which is about five years of driving for a typical human motorist.

These were overwhelmingly low-speed collisions that did not pose a serious safety risk. A large majority appeared to be the fault of the other driver. This was particularly true for Waymo, whose biggest driving errors included side-swiping an abandoned shopping cart and clipping a parked car’s bumper while pulling over to the curb.

Cruise’s record is not impressive as Waymo’s, but there’s still reason to think its technology is on par with—and perhaps better than—a human driver.

Human beings drive close to 100 million miles between fatal crashes, so it’s going to take hundreds of millions of driverless miles for 100 percent certainty on this question. But the evidence for better-than-human performance is starting to pile up, especially for Waymo. And so it’s important for policymakers to allow this experiment to continue. Because at scale, safer-than-human driving technology would save a lot of lives.

Driverless cars never break the speed limit, the driver is never drunk, nor distracted by their cell phone or the fight they had with their spouse. Another advantage that people might not think of is that these cars are far better for cyclists as Parker Conrad notes:

It’s so, so obvious to anyone riding a bike in SF that autonomous vehicles are WAY safer for bicyclists than human drivers. They see me every time; human drivers constantly turn right into the bike lane without thinking.

Why? Because driverless cars literally have eyes in the back of their heads.

Driverless cars are in general less good at edge cases but the advantages add up.

I would qualify this only slightly by noting that some locations are more difficult than others and while San Francisco is quite difficult terrain, Phoenix, Arizona was chosen because of flat terrain and sunny weather. Still, the bottom line is absolutely correct. Driverless cars are safer and more capable than many people think and we should always measure their defects relative to realistic alternatives and not to some idealized notion of perfection.

The Relentless Rise of Stablecoins

1. In 2022, stablecoins settled over $11tn onchain, dwarfing the volumes processed by PayPal ($1.4tn), almost surpassing the payment volume of Visa ($11.6tn), and reaching 14% of the volume settled by ACH and over 1% the volume settled by Fedwire. It is remarkable that in just a few years, a new global money movement rail can be compared with some of the world’s largest and most important payment systems.

2. Over 25mm blockchain addresses hold over $1 in stablecoins. Of these, ~80%, or close to 20mm addresses, hold between $1 and $100. For a sense of scale, a US bank with 25mm accounts would rank as the 5th largest bank in the US by number of accounts. The massive number of small-dollar stablecoin holdings indicates the potential for stablecoins to provide global financial services to customers underserved by traditional financial institutions.

3. Approximately 5mm blockchain addresses send stablecoins each week. This number provides a very rough proxy for global users regularly interacting with stablecoins. These ~5mm weekly active addresses send ~38mm stablecoin transactions each week, representing an average of over 7 weekly transactions per active address.

4. Stablecoin usage has decoupled from crypto exchange volumes, indicating that significant stablecoin transaction volumes may be driven by non-trading/speculative activity. Since December 2021, centralized exchange volumes are down 64%, and decentralized exchange volumes are down 60%. During this period, stablecoin volumes are down only 11%, and weekly active stablecoin addresses and weekly stablecoin transactions are up over 25%.

5. Of the ~5mm weekly active stablecoin addresses, ~75% transact less than $1k per week, indicating that small/retail users likely represent the majority of stablecoin users.

6. The outstanding supply of stablecoins has grown from less than $3bn five years ago to over $125bn today (after peaking at over $160bn) and has shown resilience to the market downturn with the market cap of stablecoins currently down ~24% from its peak, compared with a ~57% decline for the overall crypto market cap.

7. Less than 1/3rd of stablecoins are held on exchanges. Most are held in externally owned accounts (not exchanges or smart contracts).

8. The majority of stablecoin activity uses Tether (USDT). Tether represents 69% of stablecoin supply, and YTD has accounted for 80% of weekly active addresses, 75% of transactions, and 55% of volumes.

9. Most stablecoin activity occurs on the Tron and BSC blockchains. Year-to-date, the Tron and BSC blockchains collectively account for 77% of weekly active addresses, 75% of transactions, and 41% of volumes.

10. The Ethereum blockchain is used for higher value transactions (on average). Despite accounting for just 6% of active wallets and 3% of transactions, the Ethereum blockchain is home to 55% of stablecoin supply and settles close to 50% of weekly stablecoin $ volume.

These are all from a Bevan Howard report, The Relentless Rise of Stablecoins (requires email).

E Pluribus Unum: Out of Many, One

In Unity in Diversity? How Intergroup Contact Can Foster Nation Building, Bazzi, Gaduh, Rothenberg, and Wong use a nation-wide natural experiment to test when diversity leads to unity and strength and when it leads to disunity and weakness.

Indonesia consists of 17,000 islands with thousands of distinct ethnic groups and hundreds of languages. The post-Colonial leaders understood the difficulty of creating a nation from such diversity and to try to birth a nation they implemented several bold policies. One such policy was creating a national language that was not the language of the majority or any large plurality. Indeed, the Indonesian national language was spoken as a mother tongue by only 5% of the native citizens but its use is required in schools and official communications. The second bold policy was the transmigration experiment. The transmigration experiment moved millions of people from the more densely populated islands to the less densely populated islands. The policy was big, between 1979 and 1984, for example, 2.5 million people were moved.

One goal of the program was to relieve population pressures and give more Indonesians their own plot of land but another goal was the creation of a unified nation.

[T]he Minister of Transmigration stated “By way of transmigration, we will try to . . . integrate all the ethnic groups into one nation, the Indonesian nation. The different ethnic groups will in the long run disappear because of integration and there will be one kind of man, Indonesian” (Hoey, 2003).

The program was voluntary. Migrants received plots of lands assigned by lottery in new villages. The way the program worked was that people of many different ethnicities and languages volunteered and (more or less, see the paper for details) lined up haphazardly to be assigned to a new village on a new island. The migrants could not choose their new village. Thus, the new villages varied in diversity: some of them were highly fractionalized (a high probability of two randomly chosen people in the village having different mother tongues) but due to bunching in the entry line, some of the villages had less diversity.

The authors show that people who for random reasons ended up in villages with a high fractionalizatin adoped more “national” or “unifying” behaviours. For example, people in high fractionalization villages were more likely to adopt the national language as the language spoken in their home (as opposed to speaking their mother tongue at home). In addition, the people in high fractionalization villages were more likely to intermarry and to give their children less ethnic names. Measures of social capital such as trust, tolerance and public goods provision were also higher in high fractionalization villages.

A simple way of summarizing these results is that people in high fractionalization villages adopted behaviours similar to those of people in cities.

Now, you might think; of course people in fractionalized villages adopt the national language because that was the only common language! There is something to that although it doesn’t explain why people adopt the national language as their home language. More importantly, the authors make a distinction between fractionalized and polarized villages. Polarized villages also have significant diversity but instead of many small groups there are a few large groups. People in polarized villages are less likely to adopt the national language as the language spoken in their home, are less likely to intermarry, less likely to give their children less ethnic names and measures of social capital such as trust, tolerance and public goods provision tend to be lower in high polarization villages.

My interpretation, which goes beyond what the authors say, is that diversity is good when it promotes individualism. A highly diverse society lets people break free from traditional constraints and develop as unique individuals. City air sets you free was a principle of law but also a recognition that in a city with many groups none could impose their will on all and thus social freedom blossomed. As Milton Friedman once said freedom promotes diversity and diversity protects freedom.

In contrast, diversity in the form of polarization, two or three big groups, makes tribalism even worse because the presence of multiple large groups increases the salience of group identity and makes people conform more and enforce conformity to their own group more, both as a kind of reactive self-defense.

One surprise is that the authors argue that ethnic segregation in high fractionalization villages tends to reduce the good effects of diversity but segregation in high polarization villages tends to ameliorate the costs of diversity; in other words, segregation significantly dampens the effects of both fractionalization and polarization. That’s surprising because other work argues that geographic segregation increases the salience of groups and group differences–if blacks and whites live in different parts of town or different castes live in different parts of town, for example, that increases the salience of racial or caste differences which might diminish if races and castes were more evenly distributed, even absent other changes.

In any case, this is a great paper taking advantage of a novel experiment in social engineering that, unusually, may have worked.