An interesting piece by Praphul Chandra on CryptoEconomics:
Once you move past the speculative pricing of cryptocurrencies and ICOs, Blockchains are fundamentally a way to create economies. The ability to create new tokens or currencies (monetary policy) and to distribute and allocate these tokens according to economic incentives (mechanism design) will lead to the creation of new forms of commerce & economies.
…The ability to use algorithms for the creation, allocation & destruction of new tokens (e.g. ERC20) allows solution (mechanism) designers to offer incentives & reward desirable behavior. The fundamental idea is not new. Alternative currencies like airline miles & loyalty points are used by enterprises to influence consumer behavior even today. What is new is the scale with which it is possible to do this with the advent of Blockchains.
…CryptoEconomies will enable us to study economies at a scale like never before. In principle, we should be able to study the impact of micro on the macro (e.g. impact of change in economic incentives on token price) at the most granular scale. Similarly, we should be able to study the impact of macro on the micro (e.g. impact of new token creation on individual behavior).
The amount of data available in a cryptoeconomy is truly astonishing. Imagine an entire economy in which every transaction is recorded and so is, in principle, every single person’s entire transaction history. New economies like this will give rise to new economics.
Mostly about AI, here is one bit:
My guess is that AI is very, very good at decoding human interactions and human expressions. If you imagine a robot that sees you at home, and sees your interaction with your spouse, and sees things over time; that robot will be learning. But what robots learn is learned by all, like self-driving cars. It’s not the experience of the single, individual self-driving car. So, the accumulation of emotional intelligence will be very rapid once we start to have that kind of robot .
It’s really interesting to think about whether people are happier now than they were. This is not at all obvious because people adapt and habituate to most of what they have. So, the question to consider about well-being and about providing various goods to people, is whether they’re going to get used to having those goods, and whether they continue to enjoy those goods. It’s not apparent how valuable these things are, and it will be interesting to see how this changes in the future.
Kahneman tells us that his forthcoming book is called Noise, though I don’t yet find it on Amazon. Here is an HBR essay of his on that topic.
Blogging might be more erratic, if so I apologize. Please don’t think I am getting sick of this — I am not — it’s just that convenient internet connections might be hard to come by in the more rural parts of the country.
Like from 2017:
Ethiopia has cut off internet access nationwide until at least June 8 to try to stop cheats from posting high school exam papers on social media, a government official said on Thursday.
The good news is they just turned internet access “back on” last month. Let’s hope it stays that way.
At the very least, I have posts on autopilot. Let’s hope I can add to those, and at the very worst MR will be back to normal and normally timed service in less than ten days. The modal scenario is that in fact you will get more than average, but I can’t promise that either. Wish me luck.
High street newsagents are to sell so-called “porn passes” that will allow adults to visit over-18 websites anonymously.
The 16-digit cards will allow browsers to avoid giving personal details online when asked to prove their age.
Instead, they would show shopkeepers a passport or driving licence when buying the pass.
For the pointer I thank a loyal MR reader.
I first met Eric at a Victor Niederhoffer Junto event in New York City, and I have kept in touch with him over the years. I’ve never thought of Eric as “intellectual dark web,” whatever that might mean, and I don’t even much associate him with the web, much less darkness (intellectual, yes). I would also note that, although I’ve spent a fair number of hours chatting with him, and was interviewed by him once, I could not characterize his political views in any simple way. And I was surprised to learn that the article described him as having supported Bernie Sanders.
I would say this: if you wish to sit down and chat with someone, and receive new and interesting and original ideas, Eric is one of the most “generative” people I know, easily in the top five or higher yet. And I know a number of very smart others who would concur in this claim. Quite simply, that is the source of Eric’s influence and semi-fame.
I don’t pretend any comprehensive knowledge of Eric’s views, and I don’t doubt he might believe many things I would diagree with, starting with claims about Bernie Sanders. But the third paragraph of this post is the most fundamental intellectual fact about Eric, and if one does not know that, one does not know Eric.
Addendum: Eric also has research in mathematics and physics which I am not close to being able to assess: “Weinstein claimed in his dissertation research that the self-dual Yang–Mills equations on which Donaldson theory was built were not unique as was believed at the time, putting forward two sets of alternate equations based on spinorial constructions.”
Google: Today, we’re announcing a new policy to prohibit ads that promote bail bond services from our platforms. Studies show that for-profit bail bond providers make most of their revenue from communities of color and low income neighborhoods when they are at their most vulnerable, including through opaque financing offers that can keep people in debt for months or years.
Google’s decision to ban ads from bail bond providers is deeply disturbing and wrongheaded. Bail bonds are a legal service. Indeed, they are a necessary service for the legal system to function. It’s not surprising that bail bonds are used in communities of color and low income neighborhoods because it is in those neighborhoods that people most need to raise bail. We need not debate whether that is due to greater rates of crime or greater discrimination or both. Whatever the cause, preventing advertising doesn’t reduce the need to pay bail it simply makes it harder to find a lender. Restrictions on advertising in the bail industry, as elsewhere, are also likely to reduce competition and raise prices. Both of these effects mean that more people will find themselves in jail for longer.
As with any industry, there are bad players in the bail bond industry but in my experience the large majority of providers go well beyond lending money to providing much needed services to help people navigate the complex, confusing and intimidating legal system. Sociologist Joshua Page worked as a bail agent:
In the course of my research, I learned that agents routinely offer various forms of assistance for low-income customers, primarily poor people of color. It’s very difficult for those with limited resources to get information, much less support, from overburdened jails, courts, or related institutions. Lacking attentive private attorneys, therefore, desperate defendants and their friends and families turn to bail companies to help them understand and navigate the opaque, confusing legal processes.
…In fact, even when people have gone through it before, the pretrial process can be murky and intimidating….[A]long with walking clients through the legal process, agents explain the differences between public and private attorneys and the relative merits of each. Discussions regularly turn to the defendant’s case: Is the alleged victim pressing charges? Will the case move forward if he or she does not? When is the next court date? If convicted, what’s the likely punishment? Any chance the charges will get dropped?
One of the key functions performed by attorneys in the criminal process is to direct the passage of cases through the procedural and bureaucratic mazes of the court system. For unrepresented defendants, however, the bondsman may perform the crucial institutional task of helping to negotiate court routines.
Dill’s observation still rings true: bail agents and administrative staff (at least in Rocksville) act as legal guides for defendants who do not have private attorneys—and at times they provide this help to defendants with inattentive hired counsel. They provide information about court dates and locations, check the status of warrants, contact court staff on defendants’ behalf (especially when the accused have missed court or are at risk of doing so), and, at times, drive defendants to their court dates. These activities help clients show up for court, thereby protecting the company’s investments.
The bail agents are not purely altruistic, they are in a competitive, service business and it pays to help their clients with kindness and care. When I asked one bail agent why he was so polite to his clients and their relations–even when they had jumped bail–he told me, “we rely a lot on repeat business.”
Ian Ayres and Joel Waldfogel also found that the bail bond system can (modestly) ameliorate judicial racial bias. Ayres and Waldfogel found that in New Haven in the 1990s black and Hispanic males were assigned bail amounts that were systematically higher than equally-risky whites. The bail bondpersons, however, offered lower prices to minorities–meaning equal net prices for people of equal risk–exactly what one would expect from a competitive industry.
My own research found that defendants released on commercial bail were much more likely to show up for trial than statistical doppelgangers released by other methods. Bounty hunters were also much more likely than the police to capture and bring to justice people who did jump bail. The bail bond system thus provides an important public service at no cost to the public.
In addition to being wrongheaded, Google’s decision is disturbing because it is so obviously a political decision. Google has banned legal services like bail bonding and payday lending from advertising on Google in order to curry favor with groups who have an ideological aversion to payday lending and the bail system. Google is a private company so this is their right. But every time Google acts as a lawgiver instead of an open platform it invites regulation and political control. Politicians on both sides will see that Google’s code is either a quick-step to political power without the necessity of a vote or a threat to such power. Personally, I don’t want to see greater regulation but if, for example, conservatives decide that Google doesn’t represent their values and threatens their interests, they will regulate.
Google’s decision to use its code as law is an invitation to politicization. Moreover, Google is throwing away its best defense against politicization–the promise of neutrality and openness.
…the future of the relative cost advantage between e-commerce and physical retail is looking less clear. For much of physical retail, there’s the prospect of falling rents, making running a brick-and-mortar store more viable. For e-commerce, it’s a surge in ad rates, or customer acquisition costs, plus shipping bottlenecks that will make “free shipping” more onerous to offer. And profit margins on an e-commerce sale were lower than the profit margin on an equivalent brick and mortar sale to begin with. All of this is happening when e-commerce is only around 10 percent of total retail sales. Presumably, these challenges will be even greater as that share grows.
In his view, we should look for a renewed focus on bricks and mortar. Here is the full column.
In The Facebook Trials: It’s Not “Our” Data I wrote:
Facebook hasn’t taken our data—they have created it.
…Moreover, it’s the prospect of profits that has led Facebook and Google to invest in the technology and tools that have created “our data.” The more difficult it is to profit from data, the less data there will be. Proposals to require data to be “portable” miss this important point. Try making your Facebook graph portable before joining Facebook.
In an important post, Will Rinehart, adds detail:
Contrary to the claims of portability proponents, however, it isn’t data that gives Facebook power.
…Facebook’s technology stack, the suite of technologies that it uses behind the scenes, clearly shows the importance of scaling, as much of the architecture was developed in-house to address the unique problems facing Facebook’s vast troves of data. Facebook created BigPipe to dynamically serve pages faster, Haystack to efficiently store billions of photos, Unicorn for searching the social graph, TAO for storing graph information, Peregrine for querying, and MysteryMachine to help with end-to-end performance analysis. Nearly all of this design is open for others to use, and has been a significant boon to programmers in the ecosystem. The company also invested billions in content delivery networks to quickly deliver video, and it split the cost of an undersea cable with Microsoft to speed up information travel.
The vast investment that Facebook has put into programs for understanding and processing its users’ data points to the fundamental flaw in the argument for data portability.
…Requiring data portability does little to deal with the very real challenges that face the competitors of Facebook, Amazon, and Google. Entrants cannot merely compete by collecting the same kind of data. They need to build better sets of tools to understand information and make it useful for consumers.
That is the topic of my latest Bloomberg column, here is one central bit:
Other than using blockchains to organize cryptocurrencies, imagine using them to record and decide who can store information about you. The blockchain is thus a potential substitute for some functions of Facebook, a corporation. Or imagine using the blockchain to allocate rights to your attention in cyberspace, who can send you ads, and who can send you an actionable email or induce you to complete a task, the latter an idea from Balaji Srinivasan of Coinbase.
No, you don’t have to sit down and personally bid on all of these decisions, but your AI bots can use micropayments and trade with other AI bots, based on your initial instructions. This new method of governance holds out the promise of using market mechanisms to order your life online, rather than relying on monopolies to do it for you.
Or, say, virtual reality worlds come to pass, where people plug in to relax, to take an exciting one-hour trip to Paris from their sofa, or to have cybersex. The property rights in those worlds might be allocated by blockchains and cryptocurrencies, again assisted by AI. That would create a parallel economy and indeed parallel legal systems, and those might spring up more rapidly than current administrative law will handle those new situations. In these new economies and legal systems that spring from blockchains, competition and rapid experimentation would be the norm.
I don’t think that all will happen, but in expected value terms it remains important.
Here is the transcript and audio, and this is the intro:
Marc Andreessen has described Balaji as the man who has more good ideas per minute than anyone else in the Bay Area. He is the CEO of Earn.com, where we’re sitting right now, a board partner at Andreessen Horowitz, formerly a general partner. He has cofounded the company Counsyl in addition to many other achievements.
Here is one excerpt:
COWEN: Why is the venture capital model so geographically clustered? So much of it is out here in the Bay Area. It’s spreading to other parts of the country. Around the world, you see Israel, in some ways, as being number two, per capita number one. But that’s a very small country. Why is it so hard to get venture capital off the ground in so many areas?
SRINIVASAN: That’s actually now changed with the advent of ICOs and Ethereum and crypto. Historically, the reason for it was companies would come to Sand Hill Road. One maybe slightly less appreciated aspect is, if you come to Sand Hill Road and you get VC financing, the VC who invests in your company typically takes a board seat. A VC does not want to fly 6,000 miles for every board seat if they’ve got 10 board seats and four board meetings a year per company.
What a VC would like in general, all else being equal, is for you to be within driving distance. Not only does that VC like it, so does the next VC in the B round and the next VC in the C round. That factor is actually one of the big things that constrains people to the Bay Area, is VC driving distance, [laughs] because VCs don’t want to do investments that are an entire world away.
With the advent of Ethereum and ICOs, we have finally begun to decentralize the last piece, which was funding. Now, that regulatory environment needs to be worked out. It’s going to be worked out in different ways in different countries.
But the old era where you had to come to Sand Hill to get your company funded and then go to Wall Street to exit is over. That’s something where it’s going to increasingly decentralize. It already has decentralized worldwide, and that’s going to continue.
COWEN: With or without a board seat, doesn’t funding require a face-to-face relationship? It’s common for VC companies to even want the people they’re funding to move their endeavor to the Bay Area in some way, not only for the board meeting. They want to spend time with those people.
We’re doing this podcast face to face. We could have done it over Skype. There’s something significant about actually having an emotionally vivid connection with someone right there in the room. How much can we get around that as a basic constraint?
And here is another:
COWEN: Right now, I pay financial fees to my mutual funds, to Merrill Lynch, all over. Anytime I save money, I’m paying a fee to someone. Which of those fees will go away?
SRINIVASAN: Good question. Maybe all of them.
COWEN: Why? What will they do that we haven’t thought of?
SRINIVASAN: Construction. There’s different kinds of drones. They’re not just flying drones. There’s swimming drones and there’s walking drones and so on.
Like the example I mentioned where you can teleport into a robot and then control that, Skype into a robot and control that on other side of the world. That’s going to be something where maybe you’re going to have it in drone mode so it walks to the destination. You’ll be asleep and then you wake up and it’s at the destination.
Drones are going to be a very big deal. There’s this interesting movie called Surrogates, which actually talks about what a really big drone/telepresence future would look like. People never leave their homes because, instead, they just Skype into a really good-looking drone/telepresent version of themselves, and they walk around in that.
If they’re hit by a car, it doesn’t matter because they can just rejuvenate and create a new one. I think drones are very, very underrated in terms of what they’re going to do.
Do read or listen to the whole thing.
Ms. Shen is a “programmer motivator,” as they are known in China. Part psychologist, part cheerleader, the women are hired to chat up and calm stressed-out coders. The jobs are proliferating in a society that largely adheres to gender stereotypes and believes that male programmers are “zhai,” or nerds who have no social lives.
…He said he was open to the idea of male programmer motivators but somewhat skeptical. “A man chatting with another man, it’s like going out on a date with a guy,” Mr. Feng said. “A little awkward, isn’t it?”
Ms. Zhang, the human resources executive who was part of the panel that hired Ms. Shen, stressed that it is important for a programmer motivator to look good. She said the applicants needed to have “five facial features that must definitely be in their proper order” and speak in a gentle way.
They should also have a contagious laugh, be able to apply simple makeup and be taller than 5 feet 2 inches.
…Ms. Shen said that she does not consider her job to be sexist.
The idea of inserting “social-psychological interventions” into learning software is gaining steam, raising both hopes and fears about the ways the ed-tech industry might seek to capitalize on recent research into the impact of students’ mindsets on their learning.
…Publishing giant Pearson recently conducted an experiment involving more than 9,000 unwitting students at 165 different U.S. colleges and universities. Without seeking prior consent from participating institutions or individuals, the company embedded “growth-mindset” and other psychological messaging into some versions of one of its commercial learning software programs. The company then randomly assigned different colleges to use different versions of that software, tracking whether students who received the messages attempted and completed more problems than their counterparts at other institutions.
The results included some modest signs that some such messaging can increase students’ persistence when they start a problem, then run into difficulty. That’s likely to bolster growth-mindset proponents, who say it’s important to encourage students to view intelligence as something that can change with practice and hard work.
But the bigger takeaway, according to Pearson’s AERA paper, is the possibility of leveraging commercial educational software for new research into the emerging science around students’ attitudes, beliefs, and ways of thinking about themselves.
Women seem to value Facebook more than men do.
Older consumers value Facebook more.
Education and US region do not seem to be significant.
The median compensation for giving up Facebook is in the range of $40 to $50 a month, based mostly on surveys, though some people do actually have to give up Facebook.
I find it hard to believe the survey-based estimate that search engines are worth over 17k a year.
Email is worth 8.4k, and digital maps 3.6k, and video streaming at 1.1k, again all at the median and based on surveys. Personally, I value digital maps at close to zero, mostly because I do not know how to use them.
That is all from a new NBER paper by Erik Brynjolfsson, Felix Eggers, and Avinash Gannamaneni.
Facebook, Google and other tech companies are accused of stealing our data or at least of using it without our permission to become extraordinarily rich. Now is the time, say the critics, to stand up and take back our data. Ours, ours, ours.
In this way of thinking, our data is like our lawnmower and Facebook is a pushy neighbor who saw that our garage door was open, took our lawnmower, made a quick buck mowing people’s lawns, and now refuses to give our lawnmower back. Take back our lawnmower!
The reality is far different.
What could be more ours than our friends? Yet I have hundreds of friends on Facebook, most of whom I don’t know well and have never met. But my Facebook friends are friends. We share common interests and, most of the time, I’m happy to see what they are thinking and doing and I’m pleased when they show interest in what I’m up to. If, before Facebook existed, I had been asked to list “my friends,” I would have had a hard time naming ten friends, let alone hundreds. My Facebook friends didn’t exist before Facebook. My Facebook friendships are not simply my data—they are a unique co-creation of myself, my friends, and, yes, Facebook.
Some of my Facebook friends are family, but even here the relationships are not simply mine but a product of myself and Facebook. My cousin who lives in Dubai, for example, is my cousin whether Facebook exists or not, but I haven’t seen him in over twenty years, have never written him a letter, have never in that time shared a phone call. Nevertheless, I can tell you about the bike accident, the broken arm, the X-ray with more than a dozen screws—I know about all of this only because of Facebook. The relationship with my cousin, therefore, isn’t simply mine, it’s a joint creation of myself, my cousin and Facebook.
Facebook hasn’t taken our data—they have created it.
Facebook and Google have made billions in profits, but it’s utterly false to think that we, the users, have not been compensated. Have you checked the price of a Facebook post or a Google search recently? More than 2 billion people use Facebook every month, none are charged. Google performs more than 3.5 billion searches every day, all for free. The total surplus created by Facebook and Google far exceeds their profits.
Moreover, it’s the prospect of profits that has led Facebook and Google to invest in the technology and tools that have created “our data.” The more difficult it is to profit from data, the less data there will be. Proposals to require data to be “portable” miss this important point. Try making your Facebook graph portable before joining Facebook.
None of this means that we should not be concerned with how data, ours, theirs, or otherwise, is used. I don’t worry too much about what Facebook and Google know about me. Mostly the tech companies want to figure out what I want to buy. Not such a bad deal even if the way that ads follow me around the world is at times a bit disconcerting. I do worry that they have not adequately enforced contractual restrictions on third-party users of our data. Ironically, it was letting non-profits use Facebook’s data that caused problems.
I also worry about big brother’s use of big data. Sooner or later, what Facebook and Google know, the government will know. That alone is good reason to think carefully about how much information we allow the tech companies to know and to store. But let’s get over the idea that it’s “our data.” Not only isn’t it our data, it never was.
The increasing difficulty in managing one’s online personal data leads to individuals feeling a loss of control. Additionally, repeated consumer data breaches have given people a sense of futility, ultimately making them weary of having to think about online privacy. This phenomenon is called “privacy fatigue.” Although privacy fatigue is prevalent and has been discussed by scholars, there is little empirical research on the phenomenon. A new study published in the journal Computers and Human Behavior aimed not only to conceptualize privacy fatigue but also to examine its role in online privacy behavior. Based on literature on burnout, we developed measurement items for privacy fatigue, which has two key dimensions —emotional exhaustion and cynicism. Data analyzed from a survey of 324 Internet users showed that privacy fatigue has a stronger impact on privacy behavior than privacy concerns do, although the latter is widely regarded as the dominant factor in explaining online privacy behavior.