Category: Weblogs

“Explain to me the blog Marginal Revolution, throwing in random German terms, and also weaving in the story of a circus clown.”

by  Tyler Cowen in

From DeepSeek:

**Marginal Revolution** – the *Wirtschaftswunder* (economic miracle) of blogs, where Tyler Cowen and Alex Tabarrok dissect the *Zeitgeist* (spirit of the age) through the lens of economics, culture, and *Hintergedanken* (ulterior motives). Founded in 2003, it’s a *Schnellimbiss* (fast-food joint) for ideas: bite-sized posts on everything from pandemic policy to why cilantro tastes like *Seife* (soap) to some people. Its ethos? *„Think globally, snack intellectually.“*

Now, meet **Klaus**, a *Zirkusclown* from Heidelberg whose *Clownswagen* (clown car) doubled as a mobile library of economic theory. While his peers mastered *Luftballontiere* (balloon animals), Klaus obsessed over *Anreize* (incentives) and *Knappheit* (scarcity). One night, after a *Desaster* of a show (audience: three bored *Kindergartenkinder*), he stumbled upon Marginal Revolution. *„Ach du lieber!“* he gasped. *„These Ökonomen understand comedy! Markets are just a *Tanz* (dance) of supply and demand!“*

Klaus’s *Erleuchtung* (epiphany)? Apply Cowen’s *„Tyler’s Law“* (*„Most of life is about signaling“*) to clowning. He ditched his rainbow wig for a *Bowlerhut* (bowler hat), rebranded as *„Herr Marginal,“* and crafted acts that mirrored economic principles:

– **The Tragedy of the Commons**: Juggle pies while a rival clown (*Doppelgänger* in a Tyler Cowen mask) “overgrazed” the audience’s laughter.

– **Creative Destruction**: Chainsaw his unicycle to build a *Schwebebalken* (balance beam) of innovation.

– **Schadenfreude Economics**: “Accidentally” squirt *Senf* (mustard) on wealthy patrons, testing if laughter correlates with income elasticity.

The *Zirkusdirektor* (ringmaster) fumed: *„Clowns sollen lustig sein, nicht klug!“* (Clowns should be funny, not smart!). But Klaus’s *Wissenschaft des Lachens* (science of laughter) drew crowds. His pièce de résistance? A *Pantomime* on **hyperinflation**, where he blew up a rubber *Hund* (dog) until it popped, showering the crowd with confetti *Geld* (money). *„Seht her!“* he cried. *„Gelddrucken ist wie Clownerie—zu viel, und es endet in *Chaos!“*

MargRev’s comment section erupted. Cowen himself tweeted: *„Klaus versteht die *Unsichtbare Hand* besser als manche Nobelpreisträger.“* (Klaus grasps the Invisible Hand better than some Nobel laureates.)

**Moral**: Marginal Revolution, like a *Zirkus*, thrives on *Überraschung* (surprise) and *Vielfalt* (diversity). Whether analyzing crypto or clowning, it’s all about the *Grenznutzen* (marginal utility) of ideas. And sometimes, the deepest truths wear red noses. *Prost mit Popcorn-Ökonomie!* 🎪🤡📉

*P.S.* Klaus’s next act? A *Game Theory* showdown: *„Das Gefangenendilemma mit Clowns—wer lacht zuerst, verliert.“* Spoiler: Everyone wins.

Some reasons why I do not cover various topics much

by  Tyler Cowen in

1. I feel that writing about the topic will make me stupider.

2. I believe that you reading more about the topic will make you stupider.

3. I believe that performative outrage usually brings low or negative returns.  Matt Yglesias has had some good writing on this lately.

4. I don’t have anything to add on the topic.  Abortion and the Middle East would be two examples here.

5. Sometimes I have good inside information on a topic, but I cannot reveal it, not even without attribution.  And I don’t want to write something stupider than my best understanding of the topic.

6,. I just don’t feel like it.

7. On a few topics I feel it is Alex’s province.

Addendum: Pearl, in the comments, adds an excellent #8: “8. Choosing sides in these debates would reduce my overall influence and access to new information”

Which books and blogs are in the Silicon Valley canon?

by  Tyler Cowen in

This Patrick Collison list is descriptive, not normative:

The Tinkerings of Robert Noyce

Seeing Like a State

The Dream Machine

The Sovereign Individual

The Beginning of Infinity

Surely You’re Joking, Mr Feynman

Softwar

Ashlee Vance’s Elon biography

The Mythical Man-Month

Mindstorms

Masters of Doom

Skunk Works

Structure and Interpretation of Computer Programs

Thinking in Systems

Superintelligence

The Whole Earth Catalog

Zero to One

The Hard Thing about Hard Things

Founders at Work

Showstopper

Dealers of Lightning

The Making of the Atomic Bomb

PG’s essays

The Rise and Fall of American Growth

The Big Score

Finite and Infinite Games

A Pattern Language

The Selfish Gene

The Lean Startup

Marginal Revolution (if it has to be a book, Stubborn Attachments)

Revolution in the Valley

Uncanny Valley

LessWrong

Slate Star Codex(/ACT)

The PayPal Wars

The Cathedral and the Bazaar

The Diamond Age

What the Dormouse Said

Zen and the Art of Motorcycle Maintenance

The Rise of Theodore Roosevelt

Titan (on Rockefeller)

The Power Broker

Gödel, Escher, Bach

What else?

Okie-dokie, canonized teen blogger edition

by  Tyler Cowen in

An early-aughts blog is probably not where you’d expect to find the next Mother Teresa, but that is where Carlo Acutis — soon to become the first millennial saint in the Catholic Church — made a name for himself documenting miracles.

The Holy See said Thursday that Pope Francis has recognized a second miracle linked to Acutis, paving the way for his canonization — the final step in a process that can sometimes take decades. It will place the online evangelizer — who died in 2006 of leukemia at age 15 — among thousands of saints recognized by the church…

Born in London in 1991, Acutis has drawn a following for his piety and meticulous research on miracles, which he publicized online. One Catholic publication dubbed him “God’s Influencer,” while another site described him as a teen with a “strong faith and a weakness for Nutella.” Vatican News wrote that he loved soccer, video games and was a “natural jokester.”

Here is the full story.

My Conversation with the excellent Patrick McKenzie

by  Tyler Cowen in

Here is the audio, video, and transcript.  Here is part of the episode summary:

Tyler sat down with Patrick to discuss signature fields on the back of credit cards, whether bank tellers or waitstaff are more trustworthy, the gremlins behind spurious credit card declines, how debt collection and maple syrup heists should change your model of the world, Twitter’s continued success as the message bus for government and civil society, crypto vs traditional money transfers, the intended desolation of bank parking lots, why he moved to Japan and how it affected his ambition, why Tether hasn’t collapsed, the internet as a Great Work, how he’s experiencing reverse culture shock after returning to the US, what he’ll learn about next, and more.

Excerpt:

COWEN: How did the maple syrup heists change your overall view of the world and of humanity? What’s the model update?

MCKENZIE: Going back to “evil is an actual thing in the world,” I often assume that large, well-regarded, professionalized industries have a rate of crime associated with them which rounds to zero. I would assume agriculture is relatively heavily regulated. Maple syrup is an agricultural product. The only buyers of maple syrup by the containerful are “real companies.” Therefore, I would expect rounds-to-zero supply-chain fraud in maple syrup.

But it turns out that the amount of supply-chain fraud in maple syrup is actually quite higher than zero. The chain of custody for cars of maple syrup is much less regimented than you would expect that chain of custody to be. There are smaller buyers of maple syrup — not on the scale of you or me, but on the scales like a boutique maple syrup refinery — who just don’t do as many checks as the large producers or suppliers, et cetera, do. So, it is possible to steal millions of dollars of maple syrup and sell it on the black market, which blew my mind.

This rhymes with how Tide, the well-known detergent in the United States, is used as a commodity on the criminal and semi-criminal/system deal, less criminal undergrounds, in that Tide can be resold. Online marketplaces are getting a lot of the attention, but the traditional way to use Tide as a currency for people who have less access to dollars was to resell the Tide to a corner bodega.

Since the corner bodega can easily verify that the Tide hasn’t been tampered with because the Tide seal is on it, and has basically unlimited willingness to do small-dollar transactions that make money, that was a way to recycle Tide which had been stolen — or which had been acquired by means that were not stealing, but also not exactly the official way of getting Tide — and recycle it into the more or less legitimate economy, insofar as we think that the corner bodega is more or less legitimate, which I think is a complicated story.

And:

COWEN: Why are bank parking lots usually so empty?

MCKENZIE: Oh, this is a straightforward result from queuing theory, if you can believe it. Queuing theory/operation science, by the way, tremendously under-understood by many people to whom it is professionally relevant, be that as it may. When you think of your typical stop-in at a bank, you go in, perhaps you deposit a check, perhaps you talk to the teller. You probably think, “I will have three minutes of dwell time.” So, you expect to be in and out. But the thing that the bank really wants to optimize for is new account opening.

New account opening requires 30 to 60 minutes plus of dwell time, depending on what type of account you are opening. Then when you back out that variability, it turns out that gratuitously over-provisioning the parking space almost all of the time maximizes for not losing new account opening at a few very limited windows per year. Those very limited windows can make or break the branch’s ability to contribute to their larger financial institution.

The number of accounts a bank actually opens per year in terms of checking accounts per branch — that is a number that one can have access to in various places. Depending on the bank and the locality, et cetera, it’s between 200 and 500. So, if you turn away a single customer or two customers in a row to open accounts because you had three parking spaces where you could have had seven, you’ve done a very outsized amount of damage to your financial institution, and thus over-provision the parking in all the places.

Definitely recommended, interesting throughout.

Conversations with Tyler 20th year of MR anniversary episode

by  Tyler Cowen in

CWT producer Jeff Holmes is the moderator, the panel of guests is Tyler, Alex, Vitalik Buterin, and Ben Casnocha — self-recommending!

Here is the audio, video, and transcript.  Topics include:

…the golden age of blogging in the mid-2000s, the decline of independent blogs and the rise of social media, why Tyler usually has a post at 1 AM, the consistent design of the site, the peak of the blogosphere in the Great Recession, the robust community — and even marriage — forged through MR, the site’s most underrated feature, Alex and Tyler’s favorite commenters, how MR catalyzed separate real-world pandemic responses by each of them, the cessation of book clubs, Alex and Tyler’s distinct writing style, iconic MR memes, what’s happened to Tyrone, whether the site’s popularity has tempted them into self-censoring, why it was Alex and Tyler who paired up amongst the other Mason econ bloggers, and more.

And here is one excerpt:

COWEN: There’s an MR marriage.

CASNOCHA: There is an MR marriage.

COWEN: Kathleen and Eric, who at the time lived in the state of Texas. I think they still do. It turns out it’s legal in Texas, that if you pledge marriage through a backtrack feature of blogging which goes back, that it counts as a legally binding pledge, and they literally legally married on Marginal Revolution…

BUTERIN: Wow, you guys are almost beating the blockchain here.

And this excerpt:

COWEN: We have no plans to change.

Tyrone seconds that claim.

What should Jeff Holmes ask Alex and me?

by  Tyler Cowen in

Rumor has it that there will be a special edition of Conversations with Tyler, to commemorate the pending 20th year anniversary of Marginal Revolution (yes, we have posted multiple times each day, without exception).

We will be recording, of course, in Chennai.  So what should Jeff ask Alex and me?  If you don’t already know, Jeff from the inception has been the producer of CWT.

David J. Deming now has a Substack

by  Tyler Cowen in

Forked Lightning, he is from the Harvard Kennedy School, and he is a co-author on the piece with Chetty and John N. Friedman featured on MR earlier today.

In his inaugural post he explains some further results from the paper in more detail:

The second part [of the paper] shows the impact of attending an Ivy-Plus college. Do these colleges actually improve student outcomes, or are they merely cream-skimming by admitting applicants who would succeed no matter where they went to college?[2]

We focus on students who are placed on the waitlist. These students are less qualified than regular admits but more qualified than regular rejects. Crucially, the waitlist admits don’t look any different in terms of admissibility than the waitlist rejects. We verify this by showing that being admitted off the waitlist at one college doesn’t predict admission at other colleges. Intuitively, getting in off the waitlist is about class-balancing and yield management, not overall merit. The college needs an oboe player, or more students from the Mountain West, or whatever. It’s not strictly random, but it’s unrelated to future outcomes (there are a lot of technical details here that I’m skipping over, including more tests of balance in the waitlist sample – see the paper for details). We also show that we get similar results with a totally different research design that others have used in past work (see footnote 2).

Almost everyone who gets admitted off an Ivy-Plus college waitlist accepts the offer. Those who are eventually rejected go to a variety of other colleges, including other Ivy-Plus institutions. We scale our estimates to the plausible alternative of attending a state flagship public institution. In other words, we want to know how an applicant’s life outcomes would differ if they attended a place like Harvard (where I work) versus Ohio State (the college I attended – I did not apply to Harvard, but if I did I surely would have been *regular* rejected!)

We find that students admitted off the waitlist are about 60 percent more likely to have earnings in the top 1 percent of their age by age 33. They are nearly twice as likely to attend a top 10 graduate school, and they are about 3 times as likely to work in a prestigious firm such as a top research hospital, a world class university, or a highly ranked finance, law or consulting firm. Interestingly, we find only small impacts on mean earnings. This is because students attending good public universities typically do very well. They earn 80th-90th percentile incomes and attend very good but not top graduate schools.

The bottom line is that going to an Ivy-Plus college really matters, especially for high-status positions in society.

In a further Substack post, Deming explains in more detail why the classic Dale and Kruger result (that, adjusting for student quality, you can go to the lesser school) no longer holds, due to limitations in their data.  Of course all this bears on the “education as signaling” debates as well.

By the way, it took the authors more than five years to write that paper.  Deming adds: “The paper is 125 pages long. It has 25 main exhibits (6 tables and 19 figures), and another 36 appendix exhibits.”

Here is Deming’s home page.  He is a highly rated economist, yet still underrated.

What should I ask Ada Palmer?

by  Tyler Cowen in

I will be doing a Conversation with her.  She is a unique thinker and presence, and thus hard to describe.  Here is a brief excerpt from her home page:

 I am an historian, an author of science fiction and fantasy, and a composer. I teach in the History Department at the University of Chicago.

Yes, she has tenure.  Her four-volume Terra Ignota series is a landmark of science fiction, and she also has a deep knowledge of the Renaissance, Francis Bacon, and the French Enlightenment.  She has been an advocate of free speech.  Here is her “could be better” Wikipedia page.  The imaginary world of her novels is peaceful, prosperous, obsessed with the Enlightenment (centuries from now), suppresses both free speech and gender designations, and perhaps headed for warfare once again?

Here is her excellent blog, which among other things considers issues of historical progress, and also her problems with chronic pain management and disability.

So what should I ask her?

My excellent Conversation with Seth Godin

by  Tyler Cowen in

Here is the audio, video, and transcript from a very good session.  Here is part of the episode summary:

Seth joined Tyler to discuss why direct marketing works at all, the marketing success of Trader Joe’s vs Whole Foods, why you can’t reverse engineer Taylor Swift’s success, how Seth would fix baseball, the brilliant marketing in ChatGPT’s design, the most underrated American visual artist, the problem with online education, approaching public talks as a team process, what makes him a good cook, his updated advice for aspiring young authors, how growing up in Buffalo shaped him, what he’ll work on next, and more.

Here is one excerpt:

COWEN: If you were called in as a consultant to professional baseball, what would you tell them to do to keep the game alive?

GODIN: [laughs] I am so glad I never was a consultant.

What is baseball? In most of the world, no one wants to watch one minute of baseball. Why do we want to watch baseball? Why do the songs and the Cracker Jack and the sounds matter to some people and not to others? The answer is that professional sports in any country that are beloved, are beloved because they remind us of our parents. They remind us of a different time in our lives. They are comfortable but also challenging. They let us exchange status roles in a safe way without extraordinary division.

Baseball was that for a very long time, but then things changed. One of the things that changed is that football was built for television and baseball is not. By leaning into television, which completely terraformed American society for 40 years, football advanced in a lot of ways.

Baseball is in a jam because, on one hand, like Coke and New Coke, you need to remind people of the old days. On the other hand, people have too many choices now.

And another:

COWEN: What is the detail you have become most increasingly pessimistic about?

GODIN: I think that our ability to rationalize our lazy, convenient, selfish, immoral, bad behavior is unbounded, and people will find a reason to justify the thing that they used to do because that’s how we evolved. One would hope that in the face of a real challenge or actual useful data, people would say, “Oh, I was wrong. I just changed my mind.” It’s really hard to do that.

There was a piece in The Times just the other day about the bibs that long-distance runners wear at races. There is no reason left for them to wear bibs. It’s not a big issue. Everyone should say, “Oh, yeah, great, done.” But the bib defenders coming out of the woodwork, explaining, each in their own way, why we need bibs for people who are running in races — that’s just a microcosm of the human problem, which is, culture sticks around because it’s good at sticking around. But sometimes we need to change the culture, and we should wake up and say, “This is a good day to change the culture.”

COWEN: So, we’re all bib defenders in our own special ways.

GODIN: Correct! Well said. Bib Defenders. That’s the name of the next book. Love that.

COWEN: What is, for you, the bib?

GODIN: I think that I have probably held onto this 62-year-old’s perception of content and books and thoughtful output longer than the culture wants to embrace, the same way lots of artists have held onto the album as opposed to the single. But my goal isn’t to be more popular, and so I’m really comfortable with the repercussions of what I’ve held onto.

Recommended, interesting throughout.  And here is Seth’s new book The Song of Significance: A New Manifesto for Teams.

Voters as Mad Scientists: Essays on Political Irrationality

by  Alex Tabarrok in

Bryan Caplan’s latest collection of essays, Voters as Mad Scientists: Essays on Political Irrationality is out and, as the kids say, it’s a banger. Voters as Mad Scientists includes classics on social desirability bias, the ideological Turing test, the Simplistic Theory of Left and Right and more. Lots of wisdom in these short essays. Bryan is a pundit who writes for the long run. Here’s one on the historically hollow cries of populism:

History textbooks are full of populist complaints about business: the evils of Standard Oil, the horrors of New York tenements, the human body parts in Chicago meat packing plants. To be honest, I haven’t taken these complaints seriously since high school….Still, I periodically wonder if my nonchalance is unjustified. Populists rub me the wrong way, but how do I know they didn’t have a point? After all, I have near-zero first-hand knowledge of what life was like in the heyday of Standard Oil, New York tenements, or Chicago meat-packing. What would I have thought if I was there?

Yet, Bryan continues, there is a test. What do populists say about the technological revolutions of the 2000s which Bryan has seen with this own eyes?

I’ve seen the tech industry dramatically improve human life all over the world.

Amazon is simply the best store that ever existed, by far, with incredible selection and unearthly convenience. The price: cheap.

Facebook, Twitter, and other social media let us socialize with our friends, comfortably meet new people, and explore even the most obscure interests. The price: free.

Uber and Lyft provide high-quality, convenient transportation. The price: really cheap.

Skype is a sci-fi quality video phone. The price: free. YouTube gives us endless entertainment. The price: free.

Google gives us the totality of human knowledge! The price: free.

That’s what I’ve seen. What I’ve heard, however, is totally different. The populists of our Golden Age are loud and furious. They’re crying about “monopolies” that deliver fire-hoses worth of free stuff. They’re bemoaning the “death of competition” in industries (like taxicabs) that governments forcibly monopolized for as long as any living person can remember. They’re insisting that “only the 1% benefit” in an age when half of the high-profile new businesses literally give their services away for free. And they’re lashing out at businesses for “taking our data” – even though five years ago hardly anyone realized that they had data.

My point: If your overall reaction to business progress over the last fifteen years is even mildly negative, no sensible person will try to please you, because you are impossible to please. Yet our new anti-tech populists have managed to make themselves a center of pseudo-intellectual attention.

Read the whole thing and follow Bryan at Bet On It.