Why vaccine passports are a welfare-dominated approach

Use monetary rewards (or penalties) if need be.  Here is Joshua Gans applying some game theory to the vaccine passport idea:

Vaccine hesitancy is modelled as an endogenous decision within a behavioural SIR model with endogenous agent activity. It is shown that policy interventions that directly target costs associated with vaccine adoption may counter vaccine hesitancy while those that manipulate the utility of unvaccinated agents will either lead to the same or lower rates of vaccine adoption. This latter effect arises with vaccine passports whose effects are mitigated in equilibrium by reductions in viral/disease prevalence that themselves reduce the demand for vaccination.

A “utility tax” is rarely a good idea.  Besides what happens if you lose your smart phone?  Don’t have one to begin with?  Arrive from another country with an incompatible information/verification system?

With cases falling in both the UK and Netherlands, the vaccine passport idea, at the governmental level, is looking worse and worse.  That said, I am all for private entities making their own decisions on these issues, and generally I am happy when I see employers require vaccination.

Addendum: Here is a Gans tweet storm on the paper.

Growing Oligopolies, Prices, Output, and Productivity

The real monopoly problems in our economy are not the firms that push up some very particular concentration indices, rather they are the small, local monopolies, hospitals, and the public education system.  Here is a new investigation (AEA gate) from Sharat Ganapati, you will note that the bold emphasis has been added by yours truly:

American industries have grown more concentrated over the last 40 years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. With US census data from 1972 to 2012, I use price data to disentangle revenue from output. Industry-level estimates show that concentration increases are positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor’s revenue share. I rationalize these results in a simple model of competition. Productive industries (with growing oligopolists) expand real output and hold down prices, raising consumer welfare, while maintaining or reducing their workforces, lowering labor’s share of output.

That is from the new issue of American Economic Journal: Microeconomics.  Rooftops!  Other research has pointed in the same direction.  Pennsylvania, Ave.: please do not split up America’s best and most productive firms.

Do looks matter for an academic career in economics?

It seems they do:

We document appearance effects in the economics profession. Using unique data on PhD graduates from ten of the top economics departments in the United States we test whether more attractive individuals are more likely to succeed. We find robust evidence that appearance has predictive power for job outcomes and research productivity. Attractive individuals are more likely to study at higher ranked PhD institutions and are more likely to be placed at higher-ranking academic institutions not only for their first job, but also for jobs as many as 15 years after their graduation, even when we control for the ranking of PhD institution and first job. Appearance also predicts the success of research output: while it does not predict the number of papers an individual writes, it predicts the number of citations for a given number of papers, again even when we control for the ranking of the PhD institution and first job. All these effects are robust, statistically significant, and substantial in magnitude.

That is from a recent paper by Galina Hale, Tali Regev, and Yona Rubinstein.  Via John Chilton.

They modeled this — why women might see fewer STEM ads

Women see fewer advertisements about entering into science and technology professions than men do. But it’s not because companies are preferentially targeting men—rather it appears to result from the economics of ad sales.

Surprisingly, when an advertiser pays for digital ads, including postings for jobs in science, technology, engineering and mathematics (STEM), it is more expensive to get female views than male ones. As a result, ad algorithms designed to get the most bang for one’s buck consequently go for the cheaper eyeballs—men’s. New work illustrating this gap is prompting questions about how that disparity may contribute to the gender gap in science jobs.

…As a result of that optimization, however, men saw the ad 20 percent more often than women did…

Tucker ran $181 worth of advertising via Google, for example, saying she was willing to pay as much as 50 cents per click. It ended up costing 19 cents to show the ad to a man versus 20 cents to show that same ad to a woman. These investments resulted in 38,000 “impressions”—industry-speak for ad views—among men, but only about 29,000 impressions among women.

Similarly, on Twitter it cost $31 to get about 52,000 impressions for men but roughly $46 to get 66,000 impressions for women. And on Instagram it cost $1.74 to get a woman’s eyeballs on the ad but only 95 cents to get a man’s.

Here is the full Scientific American article, via Luke Froeb, and do note those differentials may vary considerably over time.  Gender issues aside, I would say this reflects a broader problem with having a very high value of time — it becomes harder to maintain a relatively high proportion of people showing you valuable things you wish to see (as opposed to people bugging you, grifting you, etc.).

Swedish study will pay people to get vaccinated

Swedish volunteers will be paid £17 each to be immunised in Europe’s largest test of whether small cash incentives can improve vaccine uptake…

The Swedish study, led by Erik Wengstrom, an economics professor at Lund University, uses gentler methods.

Over the next few weeks 8,200 unvaccinated people under the age of 60 will be split into different groups. Some will be given a voucher worth 200 Swedish kronor (£17) that can be used in most shops if they are vaccinated.

The money is a fraction of the sums being discussed in other countries, but Wengstrom said there was evidence from the US that as little as $25 (£18) was enough to persuade people.

He said: “People might have the intention to get vaccinated, but maybe there’s a little bit of hassle involved and something always gets in the way, so a small incentive might help.”

Other participants will be subjected to “nudge” techniques — attempts to influence people’s behaviour by guiding them towards a particular choice.

Some will be given leaflets about the vaccines’ benefits and side effects; others will be asked to think of the best argument to persuade others to have the vaccine. A third group will be told to draw up a list of their loved ones. “That’s basically encouraging them to think about how the vaccination might protect others,” Wengstrom said.

Here is the full London Times story.  Here is further information from Sweden.

Sunday assorted links

1. Anecdotal: “But Herring’s refusal to give up his @Tennessee handle, federal prosecutors say, led to a night in which the shocking and confusing sight of police with their guns drawn outside his home caused the computer programmer to suffer a massive heart attack that killed him. His death in Bethpage, Tenn., was triggered by “swatting” — the illegal practice of calling in fake life-threatening emergencies to provoke a heavily-armed response from police.”  Bizarre throughout.

2. What would actually happen if a major asteroid were headed toward earth?

3. RNA breakthrough to boost agricultural productivity?

4. Machtverfall — on Merkel’s final term.  And here is Tony Barber in today’s FT: “Above all, the floods have exposed weaknesses in Germany’s disaster response systems and opened up a debate about the long years of under-investment in infrastructure under Merkel. They indicate that Germany’s much-admired federal model of government can fail the people if the politicians in charge are complacent or slow to act.”  Yes people, I do know that Germany has better bread, streetcars, vacations, whatever.  The point remains that German political norms are not working well any more.  It is time to wake up to this fact.

5. Why is Japan vaccinating so badly?

6. Do data from books indicate we are becoming more depressed over time?

Mark Zuckerberg and the metaverse

And I actually would go so far as to say that I think that might be one of, if not the biggest technological challenge that our industry will face in the next decade. We tend to really celebrate things that are big, right? But I actually think miniaturizing things and getting a supercomputer to fit into a pair of glasses is actually one of the bigger challenges. But once you have that, so you have those glasses and you have your VR headset, I think that’s going to enable a bunch of really interesting use cases.

So, one is you will be able to, with basically a snap of your fingers, pull up your perfect workstation. So anywhere you go, you can walk into a Starbucks, you can sit down, you can be drinking your coffee and kind of wave your hands and you can have basically as many monitors as you want, all set up, whatever size you want them to be, all preconfigured to the way you had it when you were at your home before. And you can just bring that with you wherever you want.

If you want to talk to someone, you’re working through a problem, instead of just calling them on the phone, they can teleport in, and then they can see all the context that you have. They can see your five monitors, or whatever it is, and the documents or all the windows of code that you have, or a 3D model that you’re working on. And they can stand next to you and interact, and then in a blink they can teleport back to where they were and kind of be in a separate place.

So I think for focus time and individual productivity, I think being able to have your ideal setup, we call this “infinite office.”

Here is the full interview, interesting throughout.  Via Fergus McCullough.

Why do they keep the books wrapped in Mexican bookstores?

Yes, wrapped in clear shrink wrap.  So you can’t page through them and see what the book might be like.  I can think of a few hypotheses:

1. They don’t want you standing in the bookstore reading the thing, rather than buying it.  A bit like some U.S. comics news stands in days past.  Yet this doesn’t seem so plausible for longer books or most novels.

2. They want the books to look nicer and less grimy.

3. How about price discrimination?

Imagine there are two classes of readers.  The first is poorer, and only buys books when he or she knows the book is truly desired.  Harry Potter might be an example of such a book.   You want to read what everyone else is reading, to talk about it at school, and you don’t need to scrutinize p.78 so closely before deciding to purchase.

The second class of buyer is wealthier and usually will be buying (and reading) more books, indeed for those people book-buying is a significant habit.  That buyer wants to be on top of current trends, wants to have read whichever book is “best” that year amongst the trendy set, and so on.  If book quality is uncertain, such individuals will end up paying a de facto, quality-adjusted higher per unit price per book.  If you can’t sample the books in advance, you will end up buying some lemons, and you can’t just pick out the cherries.

Wrapped books thus extract more surplus from the second class of buyer and do not much discourage the first class.  The general point is related to the economic analysis of bundling and also block-booking — you have to buy a whole bunch of items to get the things you want.

I wonder if they would mind if I removed the wrapping to take a look before purchasing?  Maybe the store employees would be indifferent, but how about the retail outlet CEO?  The publisher?  The author?  Model this!

Or maybe that is just the way they do things.

How to find the best food in Oaxaca

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

First, if you do it right, most of your best meals will be eaten before 3 p.m., sometimes even before 10 a.m. Most “comida popular,” as it is called, is sold in the earlier parts of the work day, as the evening meal is typically eaten at home with family. Those are the supply chains you wish to catch, because they will have the freshest food and ingredients. Treat your dinner as an afterthought, but plan the earlier part of your day carefully.

Start by getting up fairly early and avoiding the hotel breakfast, which is rarely excellent even in the fanciest places.

The best thing to do is to walk or take a cab to a food market around 8 or 9 a.m. Look for a lone woman selling tamales, and don’t be afraid to ask around for her, since her place in the market will not be so obvious. Everyone in the market, however, will know her station. In Oaxaca, you might try 20 de Noviembre market or Mercado de Abastos, but tamales can be found in other locations as well, sometimes also in the parks or in various neighborhoods, carried around in baskets.

Then order as many tamales as you can; you won’t find it easy to spend more than $5 on your meal. Of particular interest are the tamales de mole, tamales de amarillo (the word means yellow, but they’re actually orange), and the tamales de rana with tomatoes. In addition to the fillings, you can enjoy the thrilling experience of eating corn near the locations where corn was first bred and engineered by indigenous Mexicans before the Spanish conquest. You’ll feel like you’ve never tasted corn before.

…Don’t worry about sanitation; the tamales have been steamed at high temperatures and kept hot, and they are served promptly. They’re typically gone by 10 a.m., a sign of both their quality and their safety.

Recommended, there are further tips at the link, including about the world’s best barbecue, which is in Mexico, not Texas or North Carolina.

Saturday assorted links

1. New Kalshi prediction markets in beta form.

2. The Austin Vernon blog.  Or better link here.

3. The game theory of the infrastructure bill.

4. Should doctors be on first name terms?  And U.S. rules that Bezos and Branson are not “astronauts.”

5. Using lottery winner results to predict that effects of UBI.

6. Interview in Spanish about Covid issues.  And this far into the pandemic and the CDC still is systematically failing us.

7. Leopold on Germany’s and Europe’s political stupor.

Why current American politics is less screwed up than you think

There is no better way to show this point than to look at Germany, which has highly reasonable political dialogue and at least in the center German politics is not so ideological.  And there is indeed a center!  Furthermore, politicians address their voters like adults and offer reasonable reasons for the policies they are proposing.

But in terms of discovery and resolution there is a significant downside:

What’s more, coalitions that used to be unthinkable, such as between the Christian Democrats and the Greens, are now the norm in many states — and may well be the only option after September’s elections. Parties, understandably, are reluctant to forcefully campaign against one another. Why make an enemy of a future friend?

Here is the full piece by Anna Sauerbrey.  For all its reasonableness, German politics has been a major failure point over the last twenty (?) years.  The country has a mediocre infrastructure, mediocre primary education system, it is far behind the curve on tech, it is unwilling to pay to defend itself and meet NATO standards, its foreign policy is partly captured by Russia, it is moving away from nuclear power, it responded poorly to the recent floods, it was slow to line up vaccines and relied on awful EU procurement policies, among numerous other failings.  It has enough wealth and accumulated cultural and social capital to withstand these failings, but it has consistently underperformed for some while now.  Matters rarely get settled in an innovative direction and they are masters of complacency and can-kicking.  But at least the major parties do not criticize each other too much.

I would in fact much prefer the policy landscape of the United States, where the two parties are hardly afraid to attack each other, often in the most ridiculous of terms.  Just keep this comparison in mind the next time you despair over the course — and aesthetics — of U.S. politics.

Why has the Indian diaspora been so successful?

Dwarkesh writes to me:

Why do you think the Indian diaspora has been so successful? Just selection of the best immigrants from a large pool of candidates or something else too?

Yes, there are plenty of Indians, and surely that matters, but I see several others factors at work:

1. The Indian diaspora itself is large, estimated at 18 million and the single largest diaspora in the world.

2. A significant portion of the better-educated Indians are hooked into English-language networks early on, including through the internet.  The value of this connection has been rising due to the rising value of the internet itself.  That is a big reason to be bullish on the Indian diaspora.

3. India has been growing rapidly enough so that people understand the nature and value of progress, yet the country remains poor enough that further progress seems urgent.

4. Many Indian parents seem intent on expecting a great deal from their children.  The value of this cannot be overemphasized.  This effect seems to be stronger in India than in say Indonesia.

5. There is especially positive selection for Indians coming to America.  You can’t just run across a border, instead many of the ways of getting here involve some specialization in education and also technical abilities.  Virtually all migrated in legal manners, and here is some interesting data on how the various cohorts of Indians arriving in America differed by wave.

6. More speculatively, I see a kind of conceptual emphasis and also a mental flexibility resulting from India’s past as a mixing ground for many cultures.  Perhaps some of this comes from the nature of Hinduism as well, even for non-Hindu Indians (just as American Jews are somewhat “Protestant”).  Indians who move into leadership roles in U.S. companies seem to do quite well making a very significant cultural leap.  I cannot think of any other emerging economy where the same is true to a comparable extent.  In any case, the intellectual capital embedded in Indian culture is immense.

7. Those Indians who leave seem to retain strong ties to the home country, which in turn helps others with their subsequent upward mobility, whether in India or abroad.  In contrast, Russians who leave Russia seem to cut their ties to a higher degree.

8. I feel one of the hypotheses should involve caste, but I don’t have a ready claim at hand.

Here is the take of Stephen Manallack.  Here is Times of India.  (And by the way, here is Shruti’s piece on India’s 1991 reforms, not irrelevant to the diaspora.)

What else?