Category: Uncategorized
The American economy is showing its flexibility
That is the theme of my recent Free Press column on AI. Excerpt:
The more quickly the world changes, the more the quality of our capital markets matters. And the world is indeed changing quickly: AI will soon be present in virtually every job. Many of us already use it informally for legal and medical advice, research, and even companionship.
And to close:
From the point of view of an investor, it matters whether or not we’re in an AI bubble. But if you are seeking to understand long-term social and economic trends, the bubble question is primarily a matter of short-term interest and timing. It will not decide where the economy is headed long-term.
Instead, what we are seeing is that America, at the drop of a hat, can turn on a dime and reallocate capital on an unparalleled scale, to our great and enduring benefit. Unless you were around to witness World War II, none of us have seen anything like this before. Do not expect the ride to be smooth or predictable, but feel free to sit back and enjoy: This is history in the making.
By some estimates, at least three-quarters of the world’s compute is in the United States.
Supply is elastic, in a new and different setting
The longstanding debate over whether human capabilities and skills are shaped more by “nature” or “nurture” has been revitalized by recent advances in genetics, particularly in the use of polygenic scores (PGSs) to proxy for genetic endowments. Yet, we argue that PGSs embed not only direct genetic effects but also indirect environmental influences, raising questions about their validity for causal analysis. We show that these conflated measures can mislead studies of gene–environment interactions, especially when parental behavior responds to children’s genetic risk. To address this issue, we construct a new latent measure of genetic risk that integrates individual genotypes with diagnostic symptoms, using data from the National Longitudinal Study of Adolescent to Adult Health linked to restricted individual SNP-level genotypes from dbGaP. Exploiting multiple sources of variation—including the Mendelian within-family genetic randomization among siblings—we find consistent evidence that parents compensate by investing more in children with higher genetic risk for ADHD. Strikingly, these compensatory responses disappear when genetic risk is proxied by the conventional ADHD PGS, which also yields weaker—and in some cases reversed—predictions for long-run outcomes. Finally, we embed our latent measure of genetic endowments into a standard dynamic structural model of child development. The model shows that both parental investments and latent genetic risk jointly shape children’s cognitive and mental health development, underscoring the importance of modeling the dynamic interplay between genes and environments in the formation of human capital.
That is from a new NBER working paper, by
Monday assorted links
2. Interview with Aghion (in French). And he is now on Twitter.
3. Wigs in court now optional in Britain?
4. Baby Shoggoth is listening. Good piece.
5. Profile of Aria and Ilan Gur (Times of London).
6. Are the San Antonio Spurs the NBA’s first all “AI-native” team? By the way, I saw on Twitter that right now Wemby is favored to win MVP, DPOY, and also Most Improved Player.
Public housing and economic opportunity
This paper studies the long-term neighborhood effects of the American public housing program, one of the largest and most controversial American urban policies of the 20th century. I construct a new national dataset tracking the locations, completion dates, and characteristics of over 1 million public housing units built between 1935 and 1973, which I link to neighborhood-level data from 1930 to2010. Ifirstshowthatpublichousingprojects were systematically targeted towards initially poorer, more populated neighborhoods with higher Black population shares, reflecting the program’s slum clearance goals and racialized site selection politics. Using a stacked matched difference-in-differences approach, I estimate causal effects of public housing construction on neighborhood change by comparing treated neighborhoods to matched control areas within the same county based on pre-treatment characteristics that predict placement. Public housing neighborhoods experienced large, persistent increases in Black population and population shares and substantial declines in median incomes and rents. Geographic spillovers to nearby neighborhoods were limited: median incomes declined modestly, but demographic composition remained relatively stable on average. I find evidence consistent with neighborhood tipping dynamics: neighborhoods with initial Black shares in a plausible tipping range experienced substantial white population outflows in response to public housing construction. Linking to modern mobility data, I show that children from low-income families who grew up in public housing neighborhoods experienced significantly lower rates of upward mobility. These f indings demonstrate that, despite intentions of slum clearance and neighborhood revitalization, public housing reinforced existing patterns of economic and racial segregation and reduced long-run economic opportunity, although effects were largely confined to project neighborhoods themselves.
That is from a new paper by Beau Bressler at UC Davis. Beau is on the job market this year, here is his home page.
Sunday assorted links
1. Being on Twitter boosts legal citations.
2. Sadly, there may be some truth to this: “I have a theory that the core of right-groyper and left-groyper trends is that the Internet is kind of culturally fascist and economically trends towards producing micro doses of race war propaganda.”
3. Interview with Hanno Lustig.
4. Tanzania on the wane, not long ago it was (supposedly) on a very good path.
5. Fra Angelico (NYT).
6. What happens when you try to have more than thirteen kids? (NYT)
7. Derya: “Earlier this year, I also said we should reduce PhD positions by at least half & shorten completion time. Only the most passionate should pursue a PhD. In the age of AI, steering many others toward this path does them a disservice given the significant opportunity costs.”
Go see Alexandre Kantorow (piano) live if you ever have the chance. Of all the pianists I have seen in concert, dating back to Vladimir Horowitz and further, he is the one who best captures what I imagine Franz Liszt might have been like.
The business of the culture war
We show that American cable television news emphasizes race, crime, gender, and other “culture war” issues. These issues are less prominent in broadcast news and appear in only a small fraction of politicians’ campaign advertisements, which overwhelmingly focus on jobs, healthcare, and the economy. We interpret these differences through a parallel tradeoff facing cable outlets, broadcast outlets, and politicians: choosing content best for “poaching” people who would otherwise choose competitors vs. “mobilizing” people who would otherwise not watch news/not vote. Using household-by-second smart TV data, we link cable news’ cultural focus to a distinctive business strategy emphasizing mobilization: we show that cultural coverage mobilizes (many) viewers who would otherwise watch entertainment programming, while economic coverage instead poaches (fewer) viewers who would otherwise watch competing news channels. Cable news outlets, maximizing audience size, therefore prefer cultural coverage. Politicians, instead maximizing vote share , value poaching an opponent’s voter twice as much as mobilizing a nonvoter; giving news outlets the same objective would close 40% of the observed content gap between news and politicians. Cable outlets’ incentives to center cultural conflict influence politics: constituencies exogenously more exposed to cable news assign greater importance to cultural issues, and politicians respond by supplying more cultural ads. Our results suggest that the economic incentives of cable news played a significant role in the growth of cultural conflict.
That is from the job market paper of Aakaash Rao of Harvard, here are Rao’s other papers.
Observations on browsing economics job market candidates
The number of people on the market seems much lower this year, perhaps because of the lag with Covid, as well as more general demographic trends. Even adjusting for the lower number of candidates, I found fewer interesting papers this year than usual, as research interests continue to narrow. There is too much emphasis on showing quality technique by answering a small question well, rather than addressing more important questions more imperfectly. Harvard had by far the most interesting students, as most of them were considering questions I cared about. LSE looked pretty good too. In terms of topics, I saw a lot of papers on educational testing, urban economics and mobility, and AI. Theory seems to be permanently on the wane. The number of co-authors continues to rise.
Overall I came away with a bad feeling from this year’s perusal, noting there are some departments I have not looked at yet. In the aggregate it did not seem vital enough or exciting enough to me?
I still will be putting up some more of the papers I found of interest.
Saturday assorted links
1. Who is most worried about AI threats to jobs?
2.. Anna Gát on mentorship and related matters.
4. Frank Dikötter, Red Dawn over China: How Communism Conquered a Quarter of Humanity is due out in February.
5. The effectiveness of mental health treatment guidelines.
“Gender without Children”
What would the lives of women look like if they knew from an early age that they would not have children? Would they make different choices about human capital or early career investments? Would they behave differently in the marriage market? Would they fare better in the labor market? In this paper, we follow 152 women diagnosed with the Mayer-Rokitanski-Kuster-Hauser (MRKH) type I syndrome. This congenital condition, diagnosed at puberty, is characterised by the absence of the uterus in otherwise phenotypically normal 46, XX females. Using granular health registries matched with administrative data from Sweden, we confirm that MRKH is not associated with worse health, nor with differential pre-diagnosis characteristics, and that it has a large negative impact on the probability to ever live with a child. Relative to women from the general population, women with the condition have better educational outcomes, tend to marry and divorce at the same rate, but mate with older men, and hold significantly more progressive beliefs regarding gender roles. The condition has also very large positive effects on earnings and employment. Dynamics reveal that most of this positive effect emerges around the arrival of children in women in the general population, with little difference before. We also find that women with MRKH perform as well as men in the labor market in the long run. Results confirm that “child penalties” on the labor market trajectories of women are large and persistent and that they explain the bulk of the remaining gender gap.
That is from recent work by Tatiana Pazem, with co-authors Camille Landais, Peter Lundberg, Erik Plug & Johan Vikstrom. Tatiana is on the job market from LSE, with her main job market paper being “Pension Reforms and Consumption in Retirement: Evidence from French Transactions and Bank Data.”
Does economics make you more sexist?
We provide direct evidence on explicit and implicit biases against women among students in economics relative to other fields. We conducted a large scale survey among undergraduates in Chile, among both entering first-year students and students in years 2 and above, combining a wide battery of measures to create an index of gender bias. Economics students are more biased than students in other fields. There is some evidence that economics students are more biased already upon entry, before exposure to economics classes. The gap becomes more pronounced among students in years 2 and above, especially for male students.
That is from a newly published paper by Valentina Paredes, M. Daniele Paserman, and Francisco J. Pino.
Friday assorted links
Why did we think wages are rigid for all those years?
Thelarge spike at zero in the distribution of year-to-year nominal wage changes in household surveys is often seen as evidence of nominal wage rigidity. But measurement error—especially from workers rounding their reported wages—can exaggerate this spike. Using U.S. Current Population Survey data, we adjust for potential rounding behavior and find that the zero-change spike falls from 15–20 percent to 7–12 percent, aligning closely with recent estimates from administrative data.
That is from See-Yu Chan, Stephan Hobler, and Thijs van Rens. Note that Hobler, from LSE, is on the job market this year (with a different job market paper).
*The Master of Contradictions*
The author is Morten Jensen, and the subtitle is Thomans Mann and the Making of The Magic Mountain. An excellent introduction to Mann’s tome, and it many fine discussions. Here is one excerpt:
It becomes possible, then, to read The Magic Mountain as a novel partly about the limits and failures of the more positivistic strain of nineteenth-century liberalism — a triumphalist worldview that failed to recognize or halt Europe’s drift toward nationalism, reaction, and the industrial carnage of the First World War. Settembrini, the noveläs representative of this worldview, shares its myriad flaws, beliving, for instance, that self-perfection is the ultimate goal of humankind. And like so many nineteenth-century liberal utopians, he celebrates technology as “the most dependable means by which to bring nations closer together, furthering their knowledge of one another, paving the way for people-to-people exchanges, destroying prejudices, and leading at last to the universal brotherhood of nations.
…More than just a vessel for a philosophical point of view, however, Settembrini is, or becomes, one of The Magic Mountain’s most endearing characters. One cannot help but smile a little — half with affection, half with pity — whenever he enters the stage. It’s one of the novel’s great distinctions that its central characters are never merely reducible to the philosophical worldview they represent; Settembrini, even when Mann is at his most sarcastic, is always first and foremost Settembrini, as if Mann were gradually convinced by his fictional creation as a dynamic individual rather than a static representation.
Recommended.
Technological Change and the Market for Books, 1450-1550
Abstract: This paper considers how movable-type printing’s economic features shaped the early modern book market using product-level data. Building on a lively medieval tradition of manuscript production, Gutenberg’s innovation did not simply reduce costs; it introduced new incentives and constraints that altered both the product’s nature and the market’s structure. First, printing’s business model encouraged the production of shorter and simpler books targeting a poorer and less literate audience. Second, its cost structure led to product differentiation and prolific trade rather than direct competition and localized production, making available a greater variety of products offering diverse information and perspectives. Rather than simply making medieval books cheaper and more abundant, these changes may represent printing technology’s true contribution to European economic development.
That is from the job market paper of Qiyi Charlotte Zhao, who is on the market this year from Stanford. Excellent topic.
Thursday assorted links
1. J.D. Vance models the UAP world.
2. “…wages at 50 are better predicted by cognitive skills at 16 than by cognitive skills at 50.”
3. Mississippi River fact of the day.
4. NYT profile of Helen DeWitt.
5. Do food stamps increase spending on food?
6. “More than 100 people have been injured by bears in Japan this year, and 11 have died, a record. Now the government is preparing to dispatch the military to one hard-hit area to help deal with the problem.” (NYT)