Category: Education
ChatGPT
Here.
Told you so. And more to come soon.
MRU/Retainit sign-ups
Marginal Revolution University has partnered with a recent Emergent Ventures grantee to build ‘Duolingo for economics’. They’re building a mobile app to help you learn and think about economics more effectively (for free), starting with courses on the fundamentals. You can join the waitlist here.
That is from Michael Slade of Dublin.
AI and language learning
Rob asks:
I would love to see you write on how AI changes the value of language learning, at the margin.
Two thoughts:
The value of learning languages in order to “get” a culture more deeply probably doesn’t change much.
On the other hand, international students probably have much less incentive to learn English — they are mostly interacting with other non-native speakers anyway, there is little cultural knowledge to be gleaned from it.
What else?
(I’m thinking of this because I just moved to Paris with my French wife . . . and thinking about the value of improving my French)
Let’s say that soon we have universal translators as good as on Star Trek, except the words are spoken first in the foreign language and then repeated/translated by the AI (i.e., the AI can’t just make “Romulans speak perfect TV English”). There is then one obvious reason not to learn foreign languages, especially for short interactions and travel interactions. For short interactions, the doubling time for the verbal exchange isn’t a big deal. So instead of learning the foreign language, the AI does the work for you.
But under which conditions does this not hold?
Alternatively, let us say you wanted to be “matched” to the most appropriate person in the entire world on some topic. It could be a marriage match, a friendship match, or simply a “I need to spend many hours discussing Tibetan traditional music with this person” match. The doubling time for the exchange now is a big deal. “Yes we are married, but it is not so bad that everything is repeated by the AI — it limits the amount of time we have to talk to each other and it also slows down our arguments” –no, that just doesn’t cut it, perhaps only for Tyrone.
These ideal matches still will provide a robust reason to learn foreign languages, at least provided you know the language you wish to match into, or perhaps you simply wish to match into something. If the people you wish to match to speak decent English, however, that is again a reason not to learn.
You also might value the “perspectival” benefits of a foreign language more in a world with AI. Perhaps the humanities and multi-perspectival approaches will rise in value, given the ability of the AI to execute very well on technical tasks. Under those assumptions, AI increases the returns to learning the appropriate foreign languages.
Plus AI itself will make languages easier to learn — imagine having a companion to practice with, at any level of desired difficulty, all the time.
Since the short, travel-based interactions were never the main reason to learn foreign languages anyway, perhaps the demand to learn other languages will prove more robust than many are expecting?
What determines graduate admissions for economics?
We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.
That is from a new paper by
Videos from the Stanford academic freedom conference
Here they are, so many figures well-known to MR readers. The Peter Thiel talk was quite interesting, you can think of it as his concessions to Greta, with a new twist on the great stagnation and its causes. My ten-minute talk is in here, following Niall Ferguson and John Cochrane, and it was my favorite of the conference (not always the case). I had great fun trolling Steven Pinker, most of all.
What rises and falls in status through the FTX story?
More than one MR reader has requested this post, so here goes:
Rises
- Common-sense morality
- Common-sense investing rules
- American corporate governance
- Boards, and nervousness about related-party transactions
- Coinbase
- Seen as stodgy and bloated for much of the past year. But run in the US, listed in the US, and properly segregating customer funds.
- Elon Musk’s ability to judge character
- Vitalik and Ethereum
- Circle, Kraken, and Binance
- Anthony Trollope, Herman Melville, and the 19th century novel. Books more generally.
- U.S. regulation of domestic exchanges – it is one of the things we seem to do best, and they created little trouble during 2008-2009, or for that matter during the pandemic
- CBDC, and sadly so
- Crypto forensics
- Twitter and weird anon accounts
- When would the trouble have been exposed if not for Twitter? And much of the best coverage came from accounts with names like Autism Capital.
- Some critics (like Aaron Levie), too.
- Bitcoin
- After a cataclysm for the crypto sector, it’s down about 15% over the past month. That’s less than the S&P 500 lost during the worst month of the GFC.
Falls
- Effective Altruism
- A totalizing worldview that has enabled some undesirable weirdness in different places.
- Valorizing “scope sensitivity” and expected value leads people violently astray.
- Being unmarried (and male) above the age of 30
- Being on the cover of magazines
- And if you see “the next Buffett”, run.
- Appearing with blonde models
- Buying Super Bowl ads and sponsoring sports and putting your name on arenas
- “Earn to give” as both a concept and a phrase
- Mrs. Jellyby
- The concept of self-custody
- Weird locations for corporate offices
- Venture capital
- Our ability to see crazes for what they are in the moment
- This is not just, or even mainly, about crypto
- Drugs
- Adderall and modafinil, perhaps stronger stuff also played a role.
- The children of influential faculty
- Do they grow up witnessing low-accountability systems and personality behaviors?
What else? I thank several individuals for their assistance with this post.
How to process the FTX news — a test
Here is one MR comment that illustrates my point:
The Folk Economics of Housing is Folked Up
When confronted with a puzzle, economists instintively look for an explanation based on the incentives of rational people acting within institutional constraints. The economic approach is humble–rather than assuming that something is wrong with other people, the economists begins to unravel a puzzle by assuming that there is something the economist doesn’t understand. The economic approach is respectful of other people’s preferences and the constraints that they operate under. The economic approach is egalitarian, it looks for an answer that amounts to, “ah, now that I understand this, if I were in the same position I would do as these people are doing.” The economic approach is powerful but it can be taken too far. Sometimes people aren’t rational. As Larry Summer said, “There are idiots. Look around.”
In Folk Economics and the Persistence of Political Opposition to New Housing Clayton Nall, Chris Elmendorf, and Stan Oklobdzija look around at the housing market and declare there are idiots. Well, they are more polite but that’s the gist. Did we really need a 96 page paper to tell us this? Well, I didn’t. I was convinced of the problem years ago when after giving a rational explanation of why it’s difficult to get new housing approved, Bryan Caplan remarked wryly “yeah, that’s all true but renters are also opposed to new housing!” What this paper shows is that Bryan was right and that it matters.
Using two nationally representative surveys of urban and suburban residents, with embedded experiments, we show that about 30%-40% of Americans believe, contrary to basic economic theory and robust empirical evidence, that a large, exogenous increase in their region’s housing stock would cause rents and home prices to rise. This finding is robust to variations in the source of the supply shock, the manner in which price predictions are elicited, and the stated assumptions about counterfactual future prices in the absence of the shock. Moreover, by comparing homeowners and renters, by relating price predictions to self-reported confidence in the prediction, by comparing the predicted effects of more- and less-popular supply-shock scenarios, and by exploiting a survey experiment, we are able to discount motivated reasoning or guessing as explanations for these responses.
The authors do have new results which I wouldn’t have predicted. People are idiots about housing especially but not about rutabagas.
Housing “Supply Skepticism” is not just a manifestation of general economic ignorance. We show that the public understands the implications of supply and demand in markets for agricultural commodities, for labor, and even for cars, a durable consumer good that, like housing, trades in new and second-hand markets. There is also overwhelming agreement about how home prices and rents are locally affected by changes in neighborhood quality, by in-migration of rich people, by expansions of employment, by demolition of affordable homes, by new construction of expensive housing next door to more affordable homes, and (perhaps more questionably) by corporate ownership.
A deep problem is that people tend to blame developers of housing for high prices, i.e. they blame high prices on the one group most responsible for lowering prices! We see the same thing in other markets, of course, but in housing this effect appears especially strong.
…we observe a very strong tendency to blame housing providers (developers) for high housing prices. Conversely, actors whose stock in trade is opposing new development (environmentalists, anti-development activists) are almost never blamed. Incumbent owners who rent out their property (landlords) are commonly blamed, whereas incumbent owners who occupy it (homeowners) are not, even though both groups have a similar economic interest in supply restrictions. The pattern of blame attribution is very similar for homeowners and renters, except that renters hold landlords more responsible and homeowners are slightly more likely to list developers in their top three.
Addendum: Lots of folks are commenting in the comments.
The persistence of Jim Crow effects
This paper studies the long-run effects of slavery and Jim Crow on Black Americans’ economic outcomes. We trace each Black family’s linked census and administrative records between 1850 and 2000 to measure how long they were enslaved and where they lived during Jim Crow. We show that Black families who were enslaved until the Civil War have considerably lower education, income, and wealth today than Black families who were free before the Civil War. The disparities between the two groups have persisted because most families enslaved until the Civil War lived in states with strict Jim Crow regimes after slavery. In a regression discontinuity design based on ancestors’ enslavement location, we show that states’ Jim Crow regimes sharply reduced Black families’ economic progress in the long run, largely by limiting their access to education. Using quasi-experimental variation, we show that gaining school access closed 80 percent of the gap in human capital caused by exposure to strict Jim Crow regimes.
That is from a new paper by Lukas Althoff and Hugo Reichardt. Althoff is on the job market from Princeton, Reichardt is a third-year student from LSE. Also a reminder that Garett Jones’s new book on Deep Roots, The Culture Transplant, is about to come out…
Another University of Austin update
In place of large, on-campus administrative bureaucracies, UATX plans to make administration remote, outsourcing positions abroad. Not only will this arrangement save university funds, Howland noted, but it would also pay foreign workers livable, US-level wages. Further, the school will forgo—along with competitive varsity sports—what he called “club-med amenities”: climbing gyms, student recreation centers with ball pits and golf simulators, napping stations, private pools, and the like. UAustin has even rethought the principle of reserving classroom space for each academic department—at UATX, departments will have control over their budgets and bid for classrooms in a market. The money saved by this and other initiatives, Howland said, will go towards instruction.
Here is more from The Dartmouth Review. It also seems there will be no tenure, but low course loads and competitive salaries, with an adjudicative body to assess disputes between administrators and faculty. Might I also note that sending staff abroad greatly weakens their internal position in university politics?
*Yellen*
The author is Jon Hilsenrath, and the subtitle is The Trailblazing Economist Who Navigated an Era of Upheaval. I very much enjoyed this book and read it straight through without stopping, and so I am happy to recommend it heartily. Most of all it is a wonderful account of the economics profession and its evolution over the last few decades.
But we are here to be honest, right? I came away from the book with the impression that Yellen (whom, to be clear, I never have interacted with) is not all that interesting, and that the book worked because it was enlivened with other more colorful characters. Excerpt:
Yellen’s lectures had a slow, steady cadence. Her answers to student questions were always detailed, thought-out, and sometimes exhausting. She had a tendency to analyze questions from every possible angle. She differed from Tobin in one respect: where he was uniformly serious, she had a light side, one that included a disarming belly laugh that rose inside her and could stream out in tears and howls over drinks with the graduate students she was teaching.
One of her students in macroeconomics was a rising star in the field, a young man named Lawrence Summers…He didn’t stand out in Yellen’s class, perhaps because he already knew the material so well and didn’t see much to challenge or question in her carefully prepared presentations.
This part I found informative:
Elite visitors sometimes got the toughest treatment. Fischer Black, a mathematician whose theories about asset prices and stock options sparked wave of Wall Street innovation, visited in the early 1970s to challenge Friedman’s ideas about money and inflation. Friedman introduced Black by saying, “We all know that the paper is wrong.” We have two hours to work out why it is wrong.”
I very much hope there will be more books like this, definitely recommended. You can buy it here.
Why talent sorting in Germany is flawed
I won’t double indent, but this is all from Simon Grimm:
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German academia doesn’t have world-class universities and is self-avowedly egalitarian.
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Without a clear top university, many talented students instead enter highly competitive medical schools to prove their ability.
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But, as argued here, medical school is a bad default choice for these students if you care about accelerated scientific, material, and moral progress. This is for four reasons:
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Entering many different universities instead of one top college, talented students do not generate and thus do not profit from local agglomeration effects.
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Medical students aren’t allowed the intellectual flexibility to explore ideas and projects independently.
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Medical school takes six years, offering no intermediate degree. This locks in students’ choice of study, even if they change their minds.
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Lastly, practicing medicine offers small impact at the margin (i.e., talented medical students can’t add much to an already highly advanced medical system).
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Instead, talented individuals could study subjects and enter jobs that allow them to do much more good.
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Changing this status quo is difficult, as i) strong competition between universities is probably disliked by university administrations and ii) reforming existing universities is famously hard through entrenched bureaucratic decision-making and ensuing vetocracy. Thus, change might only be possible through affluent outsiders who launch a new, better university.
Chronic School Absenteeism
SFStandard: Chronic absenteeism in the San Francisco Unified School District has more than doubled from pre-pandemic levels, rising from 14% to 28%, according to preliminary data for 2021-22. A student is considered chronically absent when they miss 10% of the 180-day school year.
Chronic Absentism doubled for most students–chronic absenteeism among Asians, for example, doubled from 4% to 9%–but among African Americans chronic absenteeism increased from 38% to a stunning 64%. As a result, some schools with a large percentage of African American students have 80% or more of their student body chronically absent.
Further evidence on role models
Leveraging the Tennessee STAR class size experiment, we show that Black students randomly assigned to at least one Black teacher in grades K–3 are 9 percentage points (13 percent) more likely to graduate from high school and 6 percentage points (19 percent) more likely to enroll in college compared to their Black schoolmates who are not. Black teachers have no significant long-run effects on White students. Postsecondary education results are driven by two-year colleges and concentrated among disadvantaged males. North Carolina administrative data yield similar findings, and analyses of mechanisms suggest role model effects may be one potential channel.
That is from a new AER paper by Seth Gershenson, Cassandra M. D. Hart, Joshua Hyman, Constance A. Lindsay and Nicholas W. Papageorge, “The Long-Run Impacts of Same-Race Teachers.” Here are various ungated versions. Just to be clear, I don’t consider this a justification for any particular set of policies. I do see it as extra reason for the successful to be visible and to work hard!
Do students choose majors rationally?
And if not, what kind of errors do they make?
Students appear to stereotype majors, greatly exaggerating the likelihood that they lead to their most distinctive jobs (e.g., counselor for psychology, journalist for journalism, teacher for education). A stylized model of major choice suggests that stereotyping boosts demand for “risky” majors: ones with rare stereotypical careers and low-paying alternative jobs…The same model predicts—and the survey data confirm—that students also overestimate rare non-stereotypical careers and careers that are concentrated within particular majors. The model also generates predictions regarding role model effects, with students exaggerating the frequency of career-major combinations held by people they are personally close to.
That is all from the job market paper of John Conlon, Business Economics at Harvard University.
From MR commentator Ineffective Grifterism.
I would say if the FTX debacle first leads you to increase your condemnation of EA, utilitarianism, philosophy, crypto, and so on that is a kind of red flag for your thought processes. They probably could stand some improvement, even if your particular conclusion might be correct. As I’ve argued lately, it is easier to carry and amplify damning sympathies when you can channel your negative emotions through the symbolism of a particular individual. Especially when others are doing the same — do not forget Girard!
It is better to simply file the data point away and add it to your mental regressions, but not right now to get too emotional or condemnatory about it.
If you would like, here are a few better questions for occupying your time:
1. Which 19th century novel does this story most resemble?
2. If you had to flee the Bahamas, and sought out a locale with no extradition treaty, which one would you choose? (Indonesia, for me, not Dubai.)
3. What kind of love story exactly is that of Sam and Caroline? I mean this query seriously and I am not looking for a hostile or sarcastic answer.
4. Which parts of the SBF worldview remain correct and will end up undervalued?
5. What does the scenario look like where this is good for crypto as a whole?
6. How should remaining EA philanthropists rethink their giving and also their PR?
7. How will this affect economic development in the Bahamas?
You can work yourself on completing this list. My claim is that, over time, you will end up much smarter if you focus on questions like these rather than “reliving” collective condemnations like those of Ineffective Grifterism. Nominative determinism occasionally does hold!