Category: Uncategorized
Are sports bettors overly optimistic?
Corrective policy in sports betting markets is motivated by concerns that demand may be distorted by behavioral bias. We conduct a field experiment with frequent sports bettors to measure the impact of two biases, overoptimism about financial returns and self-control problems, on the demand for sports betting. We find widespread overoptimism about financial returns. The average participant predicts that they will break even, but in fact loses 7.5 cents for every dollar wagered. We also find evidence of significant self-control problems, though these are smaller than overoptimism. We estimate a model of biased betting and use it to evaluate several corrective policies. Our estimates imply that the surplus-maximizing corrective excise tax on sports betting is twice as large as prevailing tax rates. We estimate substantial heterogeneity in bias across bettors, which implies that targeted interventions that directly eliminate bias could improve on a tax. However, eliminating bias is challenging: we show that two bias-correction interventions favored by the gambling industry are not effective.
That is from a new paper by Matthew Brown, Nick Grasley, and Mariana Guido. Matthew Brown is a job market candidate from Stanford, and has a very interesting broader portfolio.
I do not, by the way, favor a ban on sports betting, but it is worth asking, when appropriate, what is the utilitarian cost of one’s libertarianism. On this particular issue, I would say “rising!”
The evolution of nepotism in academia, 1088-1800
We have constructed a comprehensive database that traces the publications of father–son pairs in the premodern academic realm and examined the contribution of inherited human capital versus nepotism to occupational persistence. We find that human capital was strongly transmitted from parents to children and that nepotism declined when the misallocation of talent across professions incurred greater social costs. Specifically, nepotism was less common in fields experiencing rapid changes in the knowledge frontier, such as the sciences and within Protestant institutions. Most notably, nepotism sharply declined during the Scientific Revolution and the Enlightenment, when departures from meritocracy arguably became both increasingly inefficient and socially intolerable.
That is from a new paper by David de la Croix & Marc Goñi. Via the excellent Kevin Lewis.
Thursday assorted links
My Conversation with the excellent Christopher Kirchhoff
Here is the audio, video, and transcript. Here is the intro:
Christopher Kirchhoff is an expert in emerging technology who founded the Pentagon’s Silicon Valley office. He’s led teams for President Obama, the Chairman of the Joint Chiefs of Staff, and CEO of Google. He’s worked in worlds as far apart as weapons development and philanthropy. His pioneering efforts to link Silicon Valley technology and startups to Washington has made him responsible for $70 billion in technology acquisition by the Department of Defense. He’s penned many landmark reports, and he is the author of Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War.
Tyler and Christopher cover the ascendancy of drone warfare and how it will affect tactics both off and on the battlefield, the sobering prospect of hypersonic weapons and how they will shift the balance of power, EMP attacks, AI as the new arms race (and who’s winning), the completely different technology ecosystem of an iPhone vs. an F-35, why we shouldn’t nationalize AI labs, the problem with security clearances, why the major defense contractors lost their dynamism, how to overcome the “Valley of Death” in defense acquisition, the lack of executive authority in government, how Unit X began, the most effective type of government commission, what he’ll learn next, and more.
Excerpt:
COWEN: Now, I never understand what I read about hypersonic missiles. I see in the media, “China has launched the world’s first nuclear-capable hypersonic, and it goes 10x the speed of sound.” And people are worried. If mutual assured destruction is already in place, what exactly is the nature of the worry? Is it just we don’t have enough response time?
KIRCHHOFF: It’s a number of things, and when you add them up, they really are quite frightening. Hypersonic weapons, because of the way they maneuver, don’t necessarily have to follow a ballistic trajectory. We have very sophisticated space-based systems that can detect the launch of a missile, particularly a nuclear missile, but right then you’re immediately calculating where it’s going to go based on its ballistic trajectory. Well, a hypersonic weapon can steer. It can turn left, it can turn right, it can dive up, it can dive down.
COWEN: But that’s distinct from hypersonic, right?
KIRCHHOFF: Well, ICBMs don’t have the same maneuverability. That’s one factor that makes hypersonic weapons different. Second is just speed. With an ICBM launch, you have 20 to 25 minutes or so. This is why the rule for a presidential nuclear decision conference is, you have to be able to get the president online with his national security advisers in, I think, five or seven minutes. The whole system is timed to defeat adversary threats. The whole continuity-of-government system is upended by the timeline of hypersonic weapons.
Oh, by the way, there’s no way to defend against them, so forget the fact that they’re nuclear capable — if you want to take out an aircraft carrier or a service combatant, or assassinate a world leader, a hypersonic weapon is a fantastic way to do it. Watch them very carefully because more than anything else, they will shift the balance of military power in the next five years.
COWEN: Do you think they shift the power to China in particular, or to larger nations, or nations willing to take big chances? At the conceptual level, what’s the nature of the shift, above and beyond whoever has them?
KIRCHHOFF: Well, right now, they’re incredibly hard to produce. Right now, they’re essentially in a research and development phase. The first nation that figures out how to make titanium just a little bit more heat resistant, to make the guidance systems just a little bit better, and enables manufacturing at scale — not just five or seven weapons that are test-fired every year, but 25 or 50 or 75 or 100 — that really would change the balance of power in a remarkable number of military scenarios.
COWEN: How much China has them now? Are you at liberty to address that? They just have one or two that are not really that useful, or they’re on the verge of having 300?
KIRCHHOFF: What’s in the media and what’s been discussed quite a bit publicly is that China has more successful R&D tests of hypersonic weapons. Hypersonic weapons are very difficult to make fly for long periods. They tend to self-destruct at some point during flight. China has demonstrated a much fuller flight cycle of what looks to be an almost operational weapon.
COWEN: Where is Russia in this space?
KIRCHHOFF: Russia is also trying. Russia is developing a panoply of Dr. Evil weapons. The latest one to emerge in public is this idea of putting a nuclear payload on a satellite that would effectively stop modern life as we know it by ending GPS and satellite communications. That’s really somebody sitting in a Dr. Evil lair, stroking their cat, coming up with ideas that are game-changing. They’ve come up with a number of other weapons that are quite striking — supercavitating torpedoes that could take out an entire aircraft carrier group. Advanced states are now coming up with incredibly potent weapons.
Intelligent and interesting throughout. Again, I am happy to recommend Christopher’s recent book Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War, co-authored with Raj M. Shah.
How Low Socioeconomic Status Hinders Organ Donation
Past studies find that lower socioeconomic status (SES) individuals are less likely to donate organs. Building on the extended self literature, we propose that this effect occurs in part because the body is more central to the sense of self of lower-SES individuals. We test our predictions across seven studies (N = 8,782) conducted in different countries (United States and Brazil) with qualitative, observational, and experimental data in controlled and field settings. Results show that lower-SES individuals ascribe a greater weight to their bodies in forming their self-concept, which reduces their willingness to donate organs.
That is from a new paper by Yan Vietes and Chiraag Mittal. Via the excellent Kevin Lewis.
Wednesday assorted links
1. “The study shows that users with many more criminal verdicts, more time spent in foster care, better primary school grades, and higher childhood socioeconomic status are more hostile on social media, in part, because such factors predict online engagement in political discussions, which is a major correlate of hostility.” Link here.
2. Is annoyance the essence of love?
3. Mark Skousen on Gross Output and national income accounting.
5. “…the paper also describes seven pragmatic near-term reforms to promote anti-aging medicines.”
6. Daniel Ellsberg was a consistent doomster, made no excuses.
Dialogue between an economist and a physicist
Interesting, but I think highly flawed on both sides. Here is one excerpt from the physicist:
Physicist: True enough. So we would likely agree that energy growth will not continue indefinitely. But two points before we continue: First, I’ll just mention that energy growth has far outstripped population growth, so that per-capita energy use has surged dramatically over time—our energy lives today are far richer than those of our great-great-grandparents a century ago [economist nods]. So even if population stabilizes, we are accustomed to per-capita energy growth: total energy would have to continue growing to maintain such a trend [another nod].
Second, thermodynamic limits impose a cap to energy growth lest we cook ourselves. I’m not talking about global warming, CO2 build-up, etc. I’m talking about radiating the spent energy into space. I assume you’re happy to confine our conversation to Earth, foregoing the spectre of an exodus to space, colonizing planets, living the Star Trek life, etc…
At that 2.3% growth rate, we would be using energy at a rate corresponding to the total solar input striking Earth in a little over 400 years. We would consume something comparable to the entire sun in 1400 years from now. By 2500 years, we would use energy at the rate of the entire Milky Way galaxy—100 billion stars! I think you can see the absurdity of continued energy growth.
I think it is easy enough for the economist to argue that energy, at some margin, has diminishing returns for creating utility. So we then have dematerialized economic growth, not an ever-growing population (oscillation back and forth?), and thus we do not fry the planet, or for that matter the galaxy. A general lesson of national income statistics is that if you play out exponentials for long enough, over centuries you are simply talking about very different things, rather than a simple exponential growth of present conditions.
Don’t bet against the dollar
That is the topic of my latest Bloomberg column, here is one point of several:
The crypto revolution also seems to be heading in some dollar-friendly directions. Much recent crypto growth has come in the area of stablecoins, as evidenced by Stripe’s acquisition last week of Bridge. Most stablecoins are denominated in dollars, and typically they are backed by dollar-denominated securities, if only to avoid exchange-rate risk. If “programmable monies” have a future, which seems likely, that will further help the dominant currency — namely, the US dollar.
You might think that other monies will become programmable too. But since stablecoins often are most convenient for international transactions, as well as for internet-connected transactions, the most likely scenario is that stablecoins concentrate interest in the dollar. The US has by far the most influence of any nation over how the internet works.
The piece has other points of note.
The robustness of coal?
Coal consumption in 2030 is now estimated 6% higher than only a year ago. That may sound small, but it amounts to adding the equivalent of the consumption of Japan, the world’s fourth-largest coal burner. By 2030, the IEA now believes coal consumption will remain higher than it was back in 2010…
One notable statistic: Two-thirds of the total increase in energy demand in 2023 was met by fossil fuels, according to the IEA.
Here is more from Javier Blas at Bloomberg. Via Nicanor.
New report on nuclear risk
Phil Tetlock is part of the study, from the Forecasting Research Institute. Obviously this is very importnt. From Tetlock’s email to me:
“In brief, this study is the largest systematic survey of subject matter experts on the risk posed by nuclear weapons. Through a combination of expert interviews and surveys, 110 domain experts and 41 experienced forecasters predicted the likelihood of nuclear conflict, explained the mechanisms underlying their predictions, and forecasted the impact of specific tractable policies on the likelihood of nuclear catastrophe.
Key findings include:
- We asked experts about the probability of a nuclear catastrophe (defined as an event where nuclear weapons cause the death of at least 10 million people) by 2045, the centenary of the bombings of Hiroshima and Nagasaki. Experts assigned a median 4.5% probability of a nuclear catastrophe by 2045, while experienced forecasters put the probability at 1%.
a. Respondents thought that a nuclear conflict between Russia and NATO/USA was the adversarial domain most likely to be the cause of a nuclear catastrophe of this scale, however risk was dispersed relatively evenly among the other adversarial domains we asked about: China/USA, North Korea/South Korea, India/Pakistan, and Israel/Iran.
- We asked participants about their beliefs on the likely effectiveness of several policy options aimed at reducing the risk of a nuclear catastrophe. Two policies emerged as clear favorites for most participants: a crisis communications network and nuclear-armed states implementing failsafe reviews. The median expert thought that a crisis communications network would reduce the risk of a nuclear catastrophe by 25%, and failsafe reviews would reduce it by 20%.”
You will find the report here.
Assorted links
1. How much do homeowners dislike density?
2. The views of the American public on AI.
3. Centaur is an AI that mimics human behavior, rather trying to be as smart as possible.
4. Nicholas Decker on how to learn economics.
5. Ezra interviews Vivek (NYT).
The Health and Employment Effects of Employer Vaccination Mandates
Health care facilities considering mandating staff vaccination face a difficult tradeoff. While additional vaccination coverage will directly reduce disease transmission within the facility, the imposition of a mandate may also cause vaccine-hesitant staff to quit, which could harm patient care. To study this tradeoff, we leverage comprehensive administrative data covering virtually all US nursing homes, including payroll-based records on approximately 500 million daily nurse shifts and weekly data on COVID transmission and mortality at each facility. We use a difference-in-differences framework to estimate the impact of employer-imposed vaccine mandates at 581 nursing homes on disease spread, employment outcomes, and several patient care metrics. While mandates did slightly increase staff turnover, the effects were concentrated on staff working less than 20 hours per week, and resulted in a reduction of less than two minutes per patient-day. Furthermore, there is only limited evidence of lower levels of care at mandate facilities in typically-monitored conditions such as patient falls, pressure ulcers, or urinary tract infections. In contrast, implementing a vaccine mandate led to large increases in staff vaccinations at mandate facilities, which directly led to less transmission of and lower patient mortality from COVID. We estimate that vaccine mandates saved one patient life for every two facilities that enacted a mandate, a large effect given the typical facility has around 100 beds. Our results suggest that the health benefits of mandates far outweigh the costs in terms of reduced patient care from staff turnover.
Yup. For some of you, it is time to read it and weep. Here is the full paper by
Apologies, the great Frank Fukuyama still lives!
Good.
Monday assorted links
Apologies, the great Frank Fukayama still lives!
Good!