Category: Uncategorized

*Redefining Global Health in the 21st Century*

by  Tyler Cowen in

While donor-driven programs undoubtedly saved millions of lives, they also created unintended distortions in national health priorities.  Many governments in sub-Saharan Africa and parts of Asia actually scaled back domestic health investments, as donor program filled key gaps in HIV/AIDS, maternal and child health, and infectious disease control.  In some cases, domestic health budgets shrank in real terms, even as external funding increased.  This phenomenon, often referred to as “fiscal substitution,” led to national health systems that were heavily donor-dependent, externally managed, and vulnerable to funding shocks.  Notably, this reliance emerged despite countries pledged to allocate at least 15% of their national budgets to health.  More than two decades later, only a handful has met this target.

That is from the new and useful book by Michael John Alastair Reid and Eric Paul Goosby.  But $150 for a not so thick volume!?  If the authors believe in aid, as they should, perhaps they could consider giving this book away for free rather than turning it over to Elsevier…?

An unprecedented weapon?

by  Tyler Cowen

I wonder if England had a “pause” movement back then:

Trebuchets reached the peak of their development in medieval times, probably the most famous example being Edward I’s massive machine, Warwolf.  This terrifying device was over sixty feet (18 meters) high and was capable of throwing a three-hundred-pound (140-kilogram) rock several hundred yards, projecting some five hundred kilojoules of energy, a thousand times the power of Roman ballistas and five thousand times as powerful as a single person.  Edward used it just once, in 1304 during his wars of conquest against the Scots, to attack Stirling Castle, the last stronghold of the Scottish armies.  The defenders were so petrified by the prospect of the attack that they sued for peace before Warwolf could be used, but Edward refused to let them surrender until he had tested the machine; in four days it totally destroyed one of the castle’s curtain walls.

That is from the new and interesting The Powerful Primate: How Controlling Energy Enabled us to Build Civilization, by Roland Ennos.

The Anatomy of Cyber Risk

by  Tyler Cowen

This paper uses computational linguistics to introduce a novel measure of firm-level cyber risk exposure based on the quarterly earnings calls of listed firms. Our measure covers more than 14,000 firms from over 90 countries between 2003 and 2025. The measure is validated using human auditors and a large language model. We show that cyber risk exposure affects stock returns and profits, is priced in the options market, predicts actual cyberattacks, and propagates from firm to sector level. Back-of-the-envelope estimates suggest that the global cost of cyber risk exposure is around $1 trillion per year.

That is from a recent paper by Rustam Jamilov, Hélène Rey, and Ahmed Tahoun, forthcoming in the Journal of Finance.

That the market prices cyber risk is a point we should not so readily forget.  Is anyone arguing that recent market declines are due to higher perceived cyber risk?  Does the distribution of these declines match that hypothesis?  (Are we possibly seeing the opposite of what that hypothesis might predict, namely that those companies with the best potential defenses are suffering the most?)  If the cyber risk cost per year had been about $1 trillion a year, what do we think it is now?  Surely members of the rationality community will defer to the scientific methods of investigating these claims…

Thursday assorted links

by  Tyler Cowen

1. Joshua Rothman on lookism.

2. Young adults are using AI to manage their social media feeds (WSJ).

3. What predicts an NBA Achilles tear?

4. LLM data set on changing cultural trends over the centuries.

5. Xi’an Famous Foods is coming to Clarendon.

6. If a German expressionist movie director had filmed a silent Odyssey in the 1920s.

7. Important NBER methods lecture at 3 p.m. eastern today.

The Endangered Species Act Reduces Housing

by  Alex Tabarrok

Max Tabarrok’s paper on the Endangered Species Act and housing (WP) has just been published in the Journal of Public Economics! It’s a clever paper: Max observed that the moment an animal is put on the endangered species list, developers face enhanced compliance costs and liability risk. But what’s important for an empirical economist is that this increased regulation isn’t national–it binds just where the species lives. Thus, the ESA creates many natural experiments, places where it binds and nearby places where it doesn’t and the list changes over time–there were 82 listings in 1970 and nearly 1500 today–and there are even some de-listings which reduce regulation.

Here, for example, is a picture of the habitat (red) and control areas (blue) for when the Northern Long Eared Bat was put on the endangered species list.

 

The bottom left panel measures annual housing permits per 1000 1980 pop in treatment (red) versus control (blue) areas. The bottom right is the event study coefficients. After the bat was put on the endangered species list, the number of new housing permits declined in areas where bats might live relative to control areas.

Here is what happened when the Peregrine falcon was delisted. Before the delisting, housing permits were lower in regions (red) where the falcon had habitat compared to controls areas but after the delisting the treatment areas caught up to the control areas.

Overall:

…this paper provides evidence that an additional endangered species listing reduces annual housing permit flows by 0.5 permits per thousand 1980 residents, about 10% of the average place’s permit flow. Accounting for spillovers and diminishing costs, my estimates suggest the aggregate effect of the ESA has been to reduce the national housing stock by…roughly 6.3 million missing units over 1980–2024, about 4% of the 2025 housing stock.

Now, you might say, ok this shows the ESA has costs. What about the benefits of the ESA? It’s hard to measure the benefits, of course, or even know if the ESA is effective. But Max shows using satellite data that there are quite a few places where the ESA binds on infill development.

…at the intensive margin of housing production, new developments are often replacing existing buildings or are filling in space in a highly developed area that could not host endangered species even if no new construction took place. On the intensive margin, the tradeoff with species protection does not bind, and may even be positive sum as it substitutes for less dense greenfield development. Therefore, whether and how much the ESA constrains development on the extensive vs intensive margin is relevant to the tradeoffs we face between housing production and species protection, and thus is relevant to the aggregate welfare effects of the law.

In this section I extend the main empirical specification of the paper to satellite data on land use from the National Land Cover Database (NLCD) (Multi-Resolution Land Characteristics Consortium, 2025) and to heterogeneity within the Building Permits Survey to assess where the effects of the Endangered Species Act are accruing.

The NLCD is a set of satellite images of the United States compiled and pre-classified by the U.S. Geological Survey. They classify 30-square-meter pixels into one of fifteen land use groups, including four levels of development, three types of forest, and two types of wetland. The NLCD has annual files going back to 1985. I overlap these pixels with the map of permit-issuing places in the BPS using constant 2024 borders, and track the changes to pixels within each place over time. The hazard rate of extensive margin or greenfield development is measured by the flow of non-developed pixels (e.g., forests or wetlands) into any of the four levels of developed land use, divided by the total area of greenfield land use.

He concludes:

The most urbanized 15% of places are responsible for 90% of total permit flows, while the highest-value endangered species habitat is well outside these developed areas. The Endangered Species Act seems to restrict infill development in these dense areas as much as it restricts greenfield development in exurban sprawl (Table 9, Table 10, Table 11). Relaxing the legal mechanism of the Endangered Species Act in already developed areas may increase permit flows in dense, energy- and land-efficient cities in California and on the East Coast at the expense of sprawling suburbs in the Sun Belt, increasing both housing supply and endangered species habitat.

The Trump administration is trying to limit the ESA, multiple lawsuits have already been filed. Max’s paper is thus timely and it points to a fix that might satisfy housing proponents and environmentalists: relax the ESA’s bite on infill and redevelopment in already-built-up areas, where the housing-versus-habitat tradeoff barely binds, rather than across the board.

Addendum: Obviously, I am pleased as punch to see this paper in print. Max began writing the paper before graduate school–he has only just finished his first year. He was fortunate to have had lots of great advice along the way, most notably from a superb pre-doc he did at Dartmouth under the auspices of Heidi Williams.

Forty interesting facts about Australia

by  Tyler Cowen in

Australia was the richest country on earth, per capita, for decades. After the 1850s gold rush, up until the 1890s depression, Australia had the highest per capita income in the world. In 1850, probably only the United Kingdom and the Netherlands sat above Australia, by about 20 per cent, with the United States 9 per cent below. After the gold rushes Australia passed both, and from 1860 to 1890 the gap over the United States ran at 25 or 30 per cent.

And:

A cow cost as much as £84 in 1796, about several years’ wages for an English labourer. Only government, or its military/civil officers, owned cattle and horses in 1796, which were extraordinarily hard to import in the first decade, having to survive the long distance from South Africa or India. In England, an ordinary cow would have cost around £10.

And:

John Stuart Mill and Harriet Taylor seriously discussed running off to Australia. Mill was an active supporter of the movement that founded South Australia, joining the South Australian Association. Harriet’s younger brother, Arthur Hardy, migrated to South Australia and became a pastoralist and politician there. Liberals hoped that South Australia would become a progressive leader in political and social equality. Indeed, South Australia became the first self-governing jurisdiction in the world to allow women to vote and stand for parliament, in 1895.

And:

Australia’s 1890s economic depression was worse than the 1930s Great Depression. Real GDP per capita fell by around 20 per cent over the 1890s, compared with a fall of only about 10 per cent over the 1930s. Unlike America, Australia’s banking system largely remained intact during the 1930s. In part, that is because Australian banks remembered the catastrophic banking collapse of the 1890s, fuelled by huge credit growth and lax standards, particularly in Victoria. Of the 64 deposit-taking institutions in Australia in 1891, 54 were closed by 1893. A severe drought made economic recover even more difficult.

All forty are interesting, by Andrew Kemp on his very good Australia Substack.

What should I ask Jared Diamond?

by  Tyler Cowen in

Yes, I will be doing a Conversation with him.  His whole career is fair game, though many of my questions will cover his forthcoming book Profits, Prophets, Coaches, and Kings (When) Do Leaders Matter?

From the Amazon summary: “Now, in Profits, Prophets, Coaches and Kings, he studies leaders throughout time to answer the question: do the actions of individuals truly influence history? Or is humanity subject to larger historical, technological, cultural, geographical forces, far beyond the influence of individuals, no matter how powerful they may seem?”

So what should I ask him?

Data on Chinese innovation

by  Tyler Cowen in

China’s technological progress in recent decades has been viewed with admiration, alarm, and (in some cases) doubt. To better understand the Chinese innovation ecosystem, we compile a dataset of almost 14 million domestic Chinese patent publications. We focus on the subset of critical technologies identified by the U.S. Department of Defense. Several surprising patterns emerge from the data: Chinese patenting is strongly associated with other measures of innovative progress; patents are not concentrated in corporate giants such as Huawei; universities have played a key role in innovation, much greater than state-owned enterprises or government-owned facilities; and fewer than one in ten Chinese critical technology patents involves an inventor with U.S. experience or training. Finally, using four text-based measures of patent quality, we show that the rise of Chinese patenting in critical technologies has not been associated with a decline in quality relative to the U.S. awards.

That is from a recent paper by Josh Lerner, Namrate Narain, Dimitris Papanikolaou, Amit Seru, and Zunda Winston Xu.  Via the excellent Kevin Lewis.

Congratulations to Ross D. and others

by  Tyler Cowen in

Ross Douthat, an opinion columnist at The New York Times, is leaving to join the CBS News program “60 Minutes” as a correspondent, the show’s executive producer said in a memo to staff on Tuesday.

Mr. Douthat is among a group of journalists joining for the show’s 59th season, which will premiere on Sept. 13. The writer Sebastian Junger and Gianna Toboni, a former Vice News correspondent, will become contributors, along with Trevor Phillips, a British journalist who joined CBS last month. Norah O’Donnell, the former anchor of “CBS Evening News,” will be a correspondent as well.

They are the first significant hires at the long-running Sunday program since CBS’s new editor in chief, Bari Weiss, orchestrated a shake-up that led to the departure of three top correspondents this spring, including the veteran journalist Scott Pelley.

Here is the full NYT story.

Tuesday assorted links

by  Tyler Cowen

1. The economics of personal holding companies, including in the Nordics.

2. Jongkuch Mach is a good name for a very tall basketball player.

3. Can AI predict who will be the most important philosopher in 2046?  For economics, the top pick of GPT Pro is Ludwig Straub, second choice is Stefanie Stantcheva.  I like those selections, but perhaps they are more 2036 than 2046?

4. “Pope Clement’s Cafe”?

5. Roon is a good writer.

6. Emily Wilson on Nolan.

The Confucian fertility paradox

by  Tyler Cowen in

Total fertility rates in East Asia have fallen to levels without historical precedent, even though the region’s Confucian heritage long placed extraordinary emphasis on family continuity and large families. We argue that this “Confucian Fertility Paradox” dissolves once we separate two strands of the tradition and recognize that modernization affected them very differently. The pro-natal strand, built on lineage continuity, ancestor worship, and reliance on sons for old-age support, was gradually switched off as child mortality fell, incomes rose, women entered the labor force, and state pensions replaced the family as the main source of security in old age. What survived was the second strand: the veneration of education and of status won through examination success, rooted in the imperial examination tradition. Under modern conditions this surviving strand reverses sign with respect to its effect on fertility. Where the historical examination system rewarded having many sons so that one might succeed, the modern single-ranking tournament rewards concentrating resources on one or two intensively educated children, and the quantity/quality tradeoff turns a once pro-natal culture into a powerful engine of low fertility. Drawing on recent empirical evidence from China and Korea, we show how education competition becomes the channel through which traditional values now suppress childbearing. We explain why standard pro-natalist policies, such as removing birth restrictions or offering cash subsidies, accomplish little when the underlying problem is a competitive equilibrium in parental investment, and we argue that policies aimed at the source of the distortion, such as structural reform of educational pathways, hold more promise.

Here is the paper by Hanming Fang and Chang Liu.  Usually I am suspicious of such explanations, as the low birth rates typically apply also to families who do not face such education/career considerations.  Thailand?  Indians in Singapore?  Ethnic minorities in China?  But I pass this along nonetheless, due to the importance of the topic.  Via Glenn Mercer.

*Liberal Worlds: James Bryce and the Democratic Intellect*

by  Tyler Cowen in

A very good book, here is one excerpt that bears directly on a conversation I was just having:

He [Bryce] regretted the low quality of the Indian Civil Service: they were hard-working and motivated by a desire to promote the welfare of the Indian people, but ‘rather wanting in imagination and sympathy, less inspired by the extraordinary and unprecedented phenomena of the country than might have been expected.’  He went on: “Since the unhappy so-called Ilbert Bill there has been a marked change in the attitude of Europeans to natives, especially in Bengal; and the natives complain bitterly that the civilians as well as the military & the planters, treat them with arrogance & make them feel their social inferiority as well as political subordination.”  He continued by saying that all he had seen made him certain that he had made the right decision in not pursuing a career in the Indian Civil Service.

The author is H.S. Jones, and I also learned a good deal about Bryce’s work on behalf of Armenia, a topic I had known nothing about.  I am a big fan of Bryce’s The American Commonwealth book as an analysis of democracy, though of course I do not agree with all of the particulars.  Bryce also was an early NIMBY proponent (even then), and played a large role in debates over the humanities, basically defending liberal education.  He served as ambassador to the U.S. as well.  His long (overlong?) Modern Democracies is in my Kindle queue to read.