Category: Uncategorized

The impact of the Dodd-Frank Act on small business

There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the DFA disproportionately reduced the incentives for all banks to make very modest loans and reduced the viability of small banks, whose small-business share of C&I loans is generally much higher than that of larger banks. Despite an economic recovery, the small loan share of C&I loans at large banks and banks with $300 or more million in assets has fallen by 9 percentage points since the DFA was passed in 2010, with the magnitude of the decline twice as large at small banks. Controlling for cyclical effects and bank size, we find that these declines in the small loan share of C&I loans are almost all statistically attributed to the change in regulatory regime. Examining Federal Reserve survey data, we find evidence that the DFA prompted a relative tightening of bank credit standards on C&I loans to small versus large firms, consistent with the DFA inducing a decline in small business lending through loan supply effects. We also empirically model the pace of business formation, finding that it had downshifted around the time when the DFA and the Sarbanes-Oxley Act were announced. Timing patterns suggest that business formation has more recently ticked higher, coinciding with efforts to provide regulatory relief to smaller banks via modifying rules implementing the DFA. The upturn contrasts with the impact of the Sarbanes-Oxley Act, which appears to persistently restrain business formation.

That is from Michael D. Bordo and John V. Duca.

Monday assorted links

1. What kind of vacation can the wealthy buy for 150k?

2. Let’s scrape MR.

3. Thomas Friedman on Iran and Syria (NYT).

4. Retail job openings.

5. Subprime mattered less than you thought.

6. “China’s yuan has appreciated vs. US dollar by +3.7% so far this year, and has risen +10.7% since Trump took office. – US dollar has fallen by about -1% so far this year, on a broad trade-weighted basis.” Link here.

Might he have been a decent teacher?

Why did I go into teaching? Looking back it was crazy that I would do that. But I’d been through high school and college without getting caught – so being a teacher seemed a good place to hide. Nobody suspects a teacher of not knowing how to read.

I taught a lot of different things. I was an athletics coach. I taught social studies. I taught typing – I could copy-type at 65 words a minute but I didn’t know what I was typing. I never wrote on a blackboard and there was no printed word in my classroom. We watched a lot of films and had a lot of discussions.

I remember how fearful I was. I couldn’t even take the roll – I had to ask the students to pronounce their names so I could hear their names. And I always had two or three students who I identified early – the ones who could read and write best in the classroom – to help me. They were my teaching aids. They didn’t suspect at all – you don’t suspect the teacher.

Here is the full story, with other interesting 2/3 throughout, via the excellent Samir Varma.

Indian population bottlenecks

…we found that West Eurasian-related mixture in India ranges from as low as 20 percent to as high as 80 percent…

Groups of traditionally higher social status in the Indian caste system typically have a higher proportion of ANI [Ancestral North Indians] ancestry than those of traditionally lower social status, even within the same state of India where everyone speaks the same language.  For example, Brahmins, the priestly caste, tend to have more ANI ancestry than the groups they live among, even those speaking the same language.

It also seems that a disproportionate share of the ANI genetic input came from males.  Furthermore:

Around a third of Indian groups experienced population bottlenecks as strong or stronger than the ones that occurred among Finns or Ashkenazi Jews.

Many of the population bottlenecks in India were also exceedingly old.  One of the most striking we discovered was in the Vysya of the souther Indian state of Andhra Pradesh, a middle caste group of approximately five million people whose population bottleneck we could date…to betweenthree thousand and two thousand years ago.

The observation of such a strong population bottleneck among the ancestors of the Vysya was shocking.  It meant after the population bottleneck, the ancestors of the Vysya had maintained strict endogamy, allowing essentially no genetic mixing into their group for thousands of years.

And the Vysya were not unique.  A third of the groups we analyzed gave similar signals, implying thousands of groups in India like this…long-term endogamy as embodied in India today in the institution of caste has been overwhelming important for millennia.

…The truth is that India is composed of a large number of small populations.

That is all from David Reich’s superb Who We Are and How We Got Here: Ancient DNA and the New Science of the Human Past.  Here is my earlier post on the book.

Sunday assorted links

1. Jupyter vs. Mathematica, by Paul Romer.

2. The cost of being a “charismatic” animal.

3. IRS Says Fewer Than 100 People Have Reported Bitcoin Holdings So Far.

4. Should publishing move out of London to the north?

5. [India] declare[s] that a small amount of plagiarism—10% of a thesis, article, book, research paper, or other document—is acceptable, but that more extensive copying will result in increasingly severe punishments.” Link here.

6. Reputation inflation, or why the value of ratings tends to erode over time.

7. Do same-sex couples run a greater risk of poverty?

Saturday assorted links

Friday assorted links

The importance of local milieus

Using data on the entire population in combination with data on almost all individuals in Sweden listed as inventors, we study how the probability of being listed on a patent as inventor is influenced by the density of other future inventors residing in the same region. In this process, we control for demographic and sector effects along with the educational characteristics of parents. This approach allows us to trace how location history influences individuals’ inventive capacity. We focus on three types of influences: (a) future inventors in the municipality around the time of birth, (b) future inventors around the time of graduation from high school and (c) future inventors at graduation from higher education. We find suggestive evidence that co-locating with future inventors may impact the probability of becoming an inventor. The most consistent effect is found for place of higher education; some positive effects are also evident from birthplace, whereas no consistent positive effect can be derived from individuals’ high school location. Therefore, the formative influences mainly deriving from family upbringing, birth region and from local milieu effects arising from a conscious choice to attend a higher education affect the choice of becoming an inventor.

Here is the article, “How important are local inventive milieus: The role of birthplace, high school and university education,” by Olof Ejermo and Høgni Kalsø Hansen, via Ben Southwood.

Why are so many graduate students depressed?

PhD and master’s students worldwide report rates of depression and anxiety that are six times higher than those in the general public (T. M. Evans et al. Nature Biotech. 36, 282–284; 2018). The report, based on the responses of 2,279 students in 26 nations, found that more than 40% of respondents had anxiety scores in the moderate to severe range, and that nearly 40% showed signs of moderate to severe depression.

That is from this summary statement.  Here is the original piece.  So what might be going on here?

1. The ordeal of studying and possibly finishing is extreme, and extreme ordeals depress people.  This seems inconsistent with other evidence, however, namely rising (reported) rates of depression in prosperous, comfortable societies.

2. The task of studying and possibly finishing is correlated with a kind of extreme lassitude, and that in turn is correlated with depression.

3. Graduate students become depressed as they realize they have chosen poor life paths.

4. Graduate students become depressed as they realize, a’la Caplan, that it is mostly about signaling.

5. Graduate students are undergoing a transformation of their personalities, and being turned into intellectual elites, but this process is traumatic in several regards, thus leading to frequent depression.  The chance of depression is part of the price of admission to a select club.

6. Our graduate institutions serve women poorly (women in graduate school experience depression at higher rates — 41% vs 35% for the men).

7. It’s all just sample bias, as depressed graduate students have nothing better to do than respond to this survey.

What else?  And how much should we regard these results are symptoms of a deeper malaise?  Or is the problem confined mainly to academic life?

Malthusian dog markets in everything

An effort that animal rescuers began more than a decade ago to buy dogs for $5 or $10 apiece from commercial breeders has become a nationwide shadow market that today sees some rescuers, fueled by Internet fundraising, paying breeders $5,000 or more for a single dog.

The result is a river of rescue donations flowing from avowed dog saviors to the breeders, two groups that have long disparaged each other. The rescuers call many breeders heartless operators of inhumane “puppy mills” and work to ban the sale of their dogs in brick-and-mortar pet stores. The breeders call “retail rescuers” hypocritical dilettantes who hide behind nonprofit status while doing business as unregulated, online pet stores.

But for years, they have come together at dog auctions where no cameras are allowed, with rescuers enriching breeders and some breeders saying more puppies are being bred for sale to the rescuers.

Here is more from Kim Kavin at WaPo, substantive throughout with photos and video.  In essence, somebody has solved for the equilibrium.

For the pointers I thank Tom Vansant and Alexander Lowery.

Thursday assorted links

Software engineer and psychologist wanted

AI Grant (aigrant.org) is a distributed AI research lab. Their goal is to find and fund the modern day Einsteins: brilliant minds from untraditional backgrounds working on AI.

They need a software engineer. The qualifications are twofold: an intrinsic interest in the problem of identifying talented people across the world, and a demonstrated ability to ship software projects without much supervision. This doesn’t have to be through traditional means. It could just be side-projects on Github.

They’re also looking for a psychologist with experience in personality and IQ modeling.

Bay Area location is a big plus, but not a requirement. If you’re interested in learning more, email team@aigrant.org with information about yourself.

This is not a paid ad, but I am seeking to do a favor for the excellent and highly talented Daniel Gross (and perhaps for you), with whom you would get to work.  Do please mention MR if you decide to apply!

Wednesday assorted links

My Conversation with Agnes Callard

She is a philosopher at the University of Chicago, here is the transcript and audio.  We covered Plato and Socrates, what Plato is on about at all, the virtues of dialog and refutation, whether immortality would be boring, Elena Ferrante, parents vs. gangsters and Beethoven vs. Mozart, my two Straussian readings of her book, Jordan Peterson, Shakespeare’s Hamlet, the best defense of reading the classics, and the Agnes Callard production function (physics to classics to philosophy), all in suitably informationally dense fashion.

Here is one excerpt:

COWEN: I have a friend who’s interested in longevity research…and he tells me there’s maybe a 10 percent chance that I actually will live forever due to possible scientific advances. I’m skeptical, but let’s just say I were to live forever. How bored would I end up, and how do you think about this question?

CALLARD: [laughs] I think it depends on how good of a person you are.

COWEN: And the good people are more or less bored?

CALLARD: Oh, they’re less bored. One thing is that you’re kind of having to live with yourself for a very long time if you’re immortal, or even just live for a couple thousand years, and a bad self, I think, is hard to live with. By bad, I don’t just mean sort of, let’s say, cruel to people or unjust. I also mean not attuned to things of eternal significance.

I think you can get by in a 100-year life not being too much attuned to things of eternal significance because there’s so much fascinating stuff out there, and one can go from one thing to the next and not get bored. But if we’re talking about eternity, or even thousands of years, you’d better find something to occupy you that is really riveting in the way that I think only eternal things are.

I think that what you’re really asking is something like, “Could I be a god?” And I think, “Well, if you became godlike, you could, and then it would be OK.”

COWEN: Let me give you a hypothesis. You can react to it. That which is cultural, say, listening to music, I would get bored with, even though wonderful music maybe continually will be created. But those activities which are more primeval, more biological — parenting, sex, food, sleep, maybe taking a wonderful shower — that are quite brute, in a way, maybe I would substitute more into those as an immortal? Yes?

CALLARD: I don’t see why you wouldn’t get just as bored of bodily pleasures.

COWEN: You’re programmed for those to be so immediate and riveting, right? You evolve to be maybe an 80-year-old being, or perhaps even a 33-year-old being, so you are riveted on things like reproduction and getting enough sleep. And that stays riveting, even when you’re on this program to live 80,000 years.

CALLARD: I think that at least some of those activities stay riveting for us over the course of our lives because their meaning changes…

And:

COWEN: Let’s turn now to your new book, Aspiration: The Agency of Becoming. There’s a sentence from the book. Let me read it, and maybe you can explain it. “Proleptic reasons allow you to be rational even when you know that your reasons aren’t exactly the right ones.” What’s a proleptic reason?

This was my favorite part, though perhaps few of you will get the joke:

COWEN: On aspiration, what do you think of Jordan Peterson?

CALLARD: I had this odd feeling. He only became known to me quite recently, in the past couple of weeks. I was listening to him talk, and I was thinking he sounds a little bit like Socrates, but not Socrates. I was like, “Who is that? Who is he reminding me of?” And it’s Xenophon’s Socrates.

Here you can buy her just-published book Aspiration: The Agency of Becoming.  You cannot follow her on Twitter.

Was there a supply overhang before the housing crash?

Kevin Erdmann has a revisionist take, namely no:

How bad was the supply overhang? Surprisingly, the answer may be that there never was one.

We can think about this in terms of stock (the number of homes in the United States) or flow (the rate at which new homes were being built).

In terms of stock, the Census Bureau maintains estimates of both US population and the number of housing units. As shown in figure 1, the ratio of homes to adults in the United States rose in the 1980s as a result of factors such as changing marriage norms. The ratio then declined in the 1990s. The relative number of housing units increased somewhat from 2000 to 2005 but remained below the previous peak level. After the crisis, the decline continued.

…The Census data provide surprisingly little support for the claim that there were too many homes in 2005…

Contrary to Chairman Bernanke’s assumption, at the national level there was no overhang of housing supply that needed to be worked off in 2011. Indeed, even in 2005 there was no national oversupply of housing. Rather, the American economy was burdened by a shortage of housing, especially in the Closed Access cities.

Not surprisingly, three of the worst six “closed” cities are in California (San Francisco, San Diego, and San Jose).

Here is the full study.