Complexity and time

by  Tyler Cowen in

We provide experimental evidence that core intertemporal choice anomalies — including extreme short-run impatience, structural estimates of present bias, hyperbolicity and transitivity violations — are driven by complexity rather than time or risk preferences. First, all anomalies also arise in structurally similar atemporal decision problems involving valuation of iteratively discounted (but immediately paid) rewards. These computational errors are strongly predictive of intertemporal decisions. Second, intertemporal choice anomalies are highly correlated with indices of complexity responses including cognitive uncertainty and choice inconsistency. We show that model misspecification resulting from ignoring behavioral responses to complexity severely inflates structural estimates of present bias.

That is from a new NBER working paper by Benjamin Enke, Thomas Graeber, and Ryan Oprea.

Bike riding is falling in Portland

by  Tyler Cowen in

Overall, Portland bicycle traffic in 2022 dropped more than a third compared to 2019, to levels not seen since approximately 2005-2006 (Table 1). This is based on a comparison of people counted at the 184 locations that were counted in both 2022 and 2019. Volunteers recorded 17,579 people biking at those 184 locations in 2022, a 37% drop from the 27,782 counted at the same locations in 2019.  This reversion to earlier and lower volumes is also reflected in bicycle commute data, as well as for driving, walking, and using transit to commute. (Tables 5-6)  Looking at data from 2013-2019 we see that bicycling remained relatively flat between 2013 and 2016. However, bicycle counts dropped significantly between 2016 and 2019. This drop is also reflected in census commute data.

And it wasn’t all Covid:

While 2022 data is anomalously low, it is also a continuation of a trend of declining bicycle use in Portland. Both annual count data and Census data demonstrates that bicycle use in Portland peaked in the 2013-2015 period and has been declining since.

Here is the report, here is one abbreviated source.  Via Glenn Mercer.

Call me contrarian, but I have never been convinced that bicycles have a promising economic future in a truly Pigouvian city.  And as a side point, how popular would bicycles be if they were embedded with software, requiring each bicycle to respect the law, stop at red lights, and so on?

Indonesia observations (from my email)

by  Tyler Cowen in

These are from Khalil Manaf Hagerty:

I’m half Indonesian by ethnicity (one-quarter Bugis, one-quarter Minangkabau, half bule, what we refer to as ‘blasteran’ or mixed race) and have worked on and off there for the past 15 years. Here are some observations:

The internal market is enormous. Unlike many SE Asian countries Indonesia really isn’t dependent upon exports. Domestic demand is massive and the middle class is growing. Combined with a cultural life social structure that allows for upward mobility (more than, say, India), many Indonesians have seen and experienced significant improvements in the quality of life over the past 25 years, post-Suharto. They have a lot of democracy and increasing wealth.

So, adding to this: There are 17,000 islands and if someone wants to ‘make it’, they can quite easily go to Jakarta, a city of around 15 million people, depending on whose estimate you are using. Even within the less urbanised islands, there have still been significant rural agricultural opportunities for smallholder farmers operating on 10ha or so to meet domestic demand for food. So these are big improvements for many people and the success or changes in wealth are all relative.

Think of the narrative of President Jokowi: born and raised in a slum, now President.

On emigration: I’m sorry, but the West still tends to treat Indonesians as though they are Muslim terrorists. The immigration and visa requirements for Indonesians entering Australia for example are (informally) tougher than those entering from Malaysia, the Philippines, Thailand and Singapore (obviously), e.g. there is no easy-to-obtain 30-day holiday visa for Indonesians.

With foreign education, Indonesians are likely to go to Australia for higher ed, it’s cheaper and closer, and the objective is generally an English-language education. There’s a small number of wealthy folks that can afford the US system. There’s a generation of folks who were educated in the US system under the Colombo Plan and its successors, but that has thinned out. You will occasionally meet a guy who went to Purdue for this Masters.

Following on from this, why do Indonesians go home after their degree? Most folks will have very, very strong ties to their community in Jakarta, rural Indonesia or both. This often expresses itself in Islam but is present in Javanese/Sumatran/Malay culture more broadly.

On the entrepreneurial spirit, it very much exists in the country, but as noted above the growth is higher and the cultural barriers to entry are lower domestically. The Chinese community is arguably the best at this, but they see bigger or as many opportunities across the region — particularly through informal Chinese diaspora networks across Asia. Ethnic Chinese are much less persecuted now across the region than they were 25 years ago.

Finally, Indonesia is a big country and the sense of national identity is getting bigger. The US-China thing is a good example; Indonesians believe they can carve their own path without having to choose between the West (and there is still a great deal of resentment towards Europe after 1945-1949) and China. The country’s population is expected to overtake the US within a couple of decades.

If I was to summarise: opportunities at home are big, real and probably easier.

Here was my initial query.

The economics of insuring quality and consistency in a Chinese restaurant

by  Tyler Cowen in

Different as they are, the sundry Chang restaurants, including NiHao in Baltimore and Mama Chang in Fairfax, share a common thread: consistency. I figure part of this is explained in the training cooks get from The Man Himself at the upscale Q by Peter Chang in Bethesda, the owner’s home base. Lydia Chang, the star chef’s daughter and spokesperson, says her family also “always over-staffs” in preparation for future restaurants and as a way to advance loyal employees. A case in point is Yabin He, who has known Peter Chang since the 1990s, when they cooked together in their native China on Yangtze River cruises. I’ve never seen the owner here, but He makes it taste as if the leader were ever-present.

Here is more from the Tom Sietsema Washington Post review of the new Peter Chang restaurant in Columbia, MD.

What is the single best way of improving your GPT prompts?

by  Tyler Cowen in

I have a nomination, and here is an excerpt from my new paper with Alex:

You often can get a better and more specific answer by asking for an answer in the voice of another person, a third party. Here goes: What are the causes of inflation, as it might be explained by Nobel Laureate Milton Friedman?

By mentioning Friedman you are directing the GPT to look at a more intelligent segment of the potential answer space and this directing will usually get you a better answer than if you just ask “What are the causes of inflation?” Similarly, you want all of the words used in your query to be intelligent-sounding. Of course, you may not agree with the views of Friedman on inflation. Here are a few economists who are well known and have written a lot on a wide variety of issues:

Paul Samuelson
Milton Friedman
Susan Athey
Paul Krugman
Tyler Cowen
Alex Tabarrok

But you don’t have to memorize that list, and it is not long enough anyway. When in doubt, ask GPT itself who might be the relevant experts. How about this?: “I have a question on international trade. Which economists in the last thirty years might be the smartest experts on such questions?” The model will be very happy to tell you, and then you can proceed with your further queries.

Of course this advice generalizes far beyond economics.  A friend of mine queried GPT-4 about Jon Fosse, a Norwegian author, and received a wrong answer.  He retried the same question, but asking also for an answer from a Fosse expert.  The response was then very good.

The title of my paper with Alex is “How to Learn and Teach Economics with Large Language Models, Including GPT,” but again most of the advice is generalizable to education with GPTs more generally.  Recommended, the paper is full of tips for using GPT models in more effective ways.

Imagine if humanity ends up divided into two classes of people: those who are willing/not embarrassed to tack on extra “silly bits” to their prompts, and those who are not so willing.  The differences in capabilities will end up being remarkable.  Are perhaps many elites and academics unwilling to go the extra mile in their prompts?  Do they feel a single sentence question ought to be enough?  Are they in any case constitutionally unused to providing extra context for their requests?

Time will tell.

Lots of announcements from Glen Weyl

by  Tyler Cowen in

Sunday assorted links

by  Tyler Cowen

1. Claims about Neom (speculative, three-minute video).

2. Keep your eye on the bank holding company.

3. This guy was described to me as “the Michael Orthofer of cinema.”

4. Explaining word embeddings in LLMs.

5. GPT-4’s multi-modal capabilities: a preview.

6. Daniel Gross/Nat Friedman podcast on using AI to decipher ancient scrolls.  With Brent Seales, recommended.

7. Orson Welles on innovation and creative control (short video).

8. Haitian art in Kassel.

Where are all the Indonesians?

by  Tyler Cowen

Here is an old reader email query from 2015:

I started by asking, why are there so few Indonesians in the US? The email subject is just a juicy comparison. Indonesians are outnumbered in the U.S. by 14 other Asian-American sub-groups. Most estimates give an answer of about 100,000 total, this from a country of 250+ million.

Theories:

History – Indonesia’s colonial experience is Dutch (although less than 500,000 live in the Netherlands). There do not seem to be many self-identifying South African Americans. The country has more recent independence/consolidation than some.

Religion – Islam reduces immigration demand and supply

Economics – Indonesians are very poor and/or less skilled for particular types of migrant labor. Perhaps why so many are in the Middle East (maybe 1.5 million in Saudi Arabia, although this seems more a recent phenomenon).

Internal markets – Indonesia is large and diverse. Opportunity and adventure are an island away, not a country.

Conflict – Sukharno/Suharto rule uniquely dampened emigration.

Reporting – The range of Indonesian ethnicities is not suitable to census counts. Ask Sir Jervoise Baines about this.

Some combination of the Philippines, Pakistan, India, and Myanmar nix all of the above. The more I think and ask others, the more my answer is “the sum of the valid remainder of all the other explanations.” It is not satisfying.

I am in Indonesia now and ask the question often. Most Indonesians don’t know that there are so few, relatively speaking. One told me about the roughly 500 Indonesians at her alma mater Ohio State University, home of the Center of SouthEast Asia Studies and Professor R. William Liddle (that is why she went there).

Bailouts of insolvent banks don’t lead to hyperinflation

by  Tyler Cowen

Let’s say there is a big hole in the solvency of a banking system.  Left unaddressed, that is radically deflationary.  Demand (and other) deposits will disappear, crushing aggregate demand.  Cascading financial failures will occur elsewhere, again with negative demand effects.  If a government “prints money,” or more likely creates new electronic bookkeeping entries, that offsets the deflationary pressures.  These bailouts may have other negative effects, such as on future moral hazard and rent-seeking, but they won’t bring hyperinflation.  If you wanted to create hyperinflation, the bailout would have to look something like “for every dollar you used to have in your bank account, the Fed says you now have five!”  But that is not on the agenda.

Saturday assorted links

by  Tyler Cowen

1. Who should next run the NIH?

2. Did 18th century British firefighters just let buildings burn if they hadn’t paid up?  Short video.

3. “Developers demolished a historic pub. They must rebuild from the rubble.”  The heritage culture that is England.  I recommend the photo of the pile of rubble.  Was the original building so attractive in the first place?

4. “The Microsoft Copilot “future of work” demo is incredible. Your boss will soon be able to ask their Copilot to create a summary of who does the least work on average and have their termination letter already drafted in Outlook.”  Here is the Sam Hammond tweet.

5. Ethan Mollick paper on effective teaching strategies with GPT.  And GPT-4 is playing chess at an OK level, though it was never taught that skill.

6. Is Microsoft adding a crypto wallet to its Edge browser?

What do I think of the economists’ Israel petition?

by  Tyler Cowen in

It is signed by many luminaries, and it opens with this:

The governing coalition in Israel is considering an array of legislative acts that would weaken the independence of the judiciary and its power to constrain governmental actions. Numerous Israeli economists, in an open letter that some of us joined, expressed concerns that such a reform would adversely affect the Israeli economy by weakening the rule of law and thereby moving Israel in the direction of Hungary and Poland. Although we significantly vary in our views on public policy and on the challenges facing Israeli society, we all share these concerns. A strong and independent judiciary is a critical part of a system of checks and balances. Undermining it would be detrimental not only to democracy but also to economic prosperity and growth.

I would say I haven’t made up my mind on the substantive issue, as I have seen credible (not saying they are true, I don’t know) arguments that the current Israeli judiciary has too much power.  The proposed reforms still might be a badly timed and significant overreach, but my intuition is that the arguments are more complicated than this petition is making them out to be.  As economists, are they not at least obliged to tell us what the relevant trade-off is?

I also wonder if these outside voices have influence in Israeli politics, or whether they might occasion backlash.  Again, I don’t know, but I do see an argument for reserving collective petitions for very clear cut cases when the transmitted signal will be positive.  Is the binding constraint here “not having enough elite academic foreigners in opposition to Netanyahu”?

More generally and perhaps most importantly, will this petition be effective?  Many kinds of petitions should be saved up for when they will change something.  If they are not going to matter, in essence the signers are signaling their weakness rather than their strength.  They are spending down their reputational capital, rather than building it up.  And in those cases, why have the petition at all?

Steven Pinker on existential risk

by  Tyler Cowen in

He is harsh, but my view is not far from his:

The AI-existential-threat discussions are unmoored from evolutionary biology, cognitive psychology, real AI, sociology, the history of technology and other sources of knowledge outside the theater of the imagination. I think this points to a meta-problem. The AI-ET community shares a bad epistemic habit (not to mention membership) with parts of the Rationality and EA communities, at least since they jumped the shark from preventing malaria in the developing world to seeding the galaxy with supercomputers hosting trillions of consciousnesses from uploaded connectomes. They start with a couple of assumptions, and lay out a chain of abstract reasoning, throwing in one dubious assumption after another, till they end up way beyond the land of experience or plausibility. The whole deduction exponentiates our ignorance with each link in the chain of hypotheticals, and depends on blowing off the countless messy and unanticipatable nuisances of the human and physical world. It’s an occupational hazard of belonging to a “community” that distinguishes itself by raw brainpower. OK, enough for today – hope you find some of it interesting.

That is by no means the only harsh paragraph.  Here is the entire dialogue with Richard Hanania.  And be careful what you write in the MR comments section, the AIs are reading you!

What should I ask Jonathan Swift?

by  Tyler Cowen in

Yes, I would like to do a Conversation with Jonathan “G.P.T.” Swift.  Here is Wikipedia on Swift, excerpt:

Jonathan Swift (30 November 1667 – 19 October 1745) was an Anglo-Irish satirist, author, essayist, political pamphleteer (first for the Whigs, then for the Tories), poet, and Anglican cleric who became Dean of St Patrick’s Cathedral, Dublin, hence his common sobriquet, “Dean Swift”.

Swift is remembered for works such as A Tale of a Tub (1704), An Argument Against Abolishing Christianity (1712), Gulliver’s Travels (1726), and A Modest Proposal (1729). He is regarded by the Encyclopædia Britannica as the foremost prose satirist in the English language.[1] He originally published all of his works under pseudonyms—such as Lemuel Gulliver, Isaac Bickerstaff, M. B. Drapier—or anonymously. He was a master of two styles of satire, the Horatian and Juvenalian styles.

His deadpan, ironic writing style, particularly in A Modest Proposal, has led to such satire being subsequently termed “Swiftian”.

So what should I ask him?  I thank you in advance for your suggestions.