Modern Principles of Economics!
A nice endorsement from a fellow who knows something about writing great books of economics. Ready to adopt a new principles of economics textbook? Modern Principles has got you covered with everything from tariffs to price controls to pandemics! MP also comes with Achieve, a powerful course management system, and over 100 high-quality, professionally produced videos.
Economics coauthorships in the aftermath of MeToo
We study changes in coauthorships in economics, after the MeToo movement, using NBER and CEPR working papers between January 2004 and December 2020. We identify three main shifts in collaboration patterns. First, compared to pre-MeToo levels, collaborations across genders in an author’s seniority group increased: we estimate a 12.3% increase of women coauthors per 100 men-authored papers. Second, coauthorship shares of senior with junior economics declined by 3.0%, indicating a shift towards sorting of collaborations by seniority. Third, shares of new coauthorships declined by 5.4%, driven by drops in senior economists’ shares of new junior and new junior women by 18.4% and 48.0%, respectively. The results are robust to different specifications.
That is from a new paper by Noriko Amano-Patiño, Elisa Faraglia, and Chryssi Giannitsarou. Via the excellent Kevin Lewis. And here is a related paper on who receives credit for cross-gender co-authorships.
No Evidence of Effects of Testosterone on Economic Preferences
There is conflicting evidence on whether testosterone affects economic preferences such as risk taking, fairness and altruism, with the evidence suggesting significant effects coming from correlational studies or small underpowered testosterone administration studies. To credibly test this hypothesis, we conducted a large pre-registered double-blind randomized controlled trial with N = 1,000 male participants; 10–20 times larger than most previous randomized controlled studies. Participants were randomly allocated to receive a single dose of either placebo or intranasal testosterone. They thereafter carried out a series of economic tasks capturing social preferences, competitiveness and risk preferences. We fail to find any evidence of a treatment effect for any of our nine primary outcome measures, thereby failing to conceptually replicate several previous studies reporting positive findings that used smaller sample sizes. In line with these results, we furthermore find no evidence of an association between basal testosterone and economic preferences, failing to also conceptually replicate previous correlational studies.
Claude 4, I attempt a first prompt and receive this answer
“What do you think was the best/most important piece published in the Journal of Political Economy over the last few years and why?”
Two papers that stand out as particularly important from recent years are:
1. “The Supply-Side Effects of Monetary Policy” (2024)
Authors: David R. Baqaee, Emmanuel Farhi, and Kunal Sangani Published in: Journal of Political Economy, Volume 132, Number 4 (April 2024)
This paper introduces a novel perspective on monetary policy transmission. The authors propose a supply-side channel for the transmission of monetary policy, showing that when high-markup firms have lower pass-throughs than low-markup firms, positive demand shocks such as monetary expansions alleviate cross-sectional misallocation by reallocating resources to high-markup firms UchicagoNBER.
The key innovation is demonstrating that positive “demand shocks” are accompanied by endogenous positive “supply shocks” that raise productivity and lower inflation The Supply-Side Effects of Monetary Policy | Journal of Political Economy: Vol 132, No 4. Their calibration suggests that the supply-side effect amplifies the total impact of monetary shocks on output by about 70% The Supply-Side Effects of Monetary Policy | Journal of Political Economy: Vol 132, No 4.
2. “Consumption and Income Inequality in the United States since the 1960s” (2023)
Authors: Bruce D. Meyer and James X. Sullivan Published in: Journal of Political Economy, Volume 131, Number 2 (February 2023)
This paper provides important insights into inequality trends by comparing consumption and income inequality over five decades. While overall income inequality rose over the past 5 decades, the rise in overall consumption inequality was small Consumption and Income Inequality in the United States since the 1960s | Journal of Political Economy: Vol 131, No 2. The authors argue that the declining quality of income data likely contributes to these differences for the bottom of the distribution Consumption and Income Inequality in the United States since the 1960s | Journal of Political Economy: Vol 131, No 2, while asset price changes likely account for some of the differences in recent years for the top of the distribution Consumption and Income Inequality in the United States since the 1960s | Journal of Political Economy: Vol 131, No 2.
Why These Papers Matter
Both papers represent significant contributions to core areas of economics:
- The Supply-Side Effects paper fundamentally changes how we think about monetary policy transmission by identifying a previously overlooked channel that can explain why monetary expansions might be more effective than traditional models suggest.
- The Consumption and Income Inequality paper challenges the conventional wisdom about rising inequality by showing that consumption inequality has not increased as dramatically as income inequality, which has important implications for welfare analysis and policy design.
Thursday assorted links
The allocation of US AID funds
According to Marco Rubio only 12 cents of every dollar spent from USAID went to recipients, the other 88 cents went to NGOs who pocketed the money.
I tried to fact check that with o3:
However you draw the line, before 2017 well over half—and usually more like 75-90 percent—of USAID money was channelled through third-party NGOs, contractors, and multilateral agencies rather than handed straight to the governments or other local actors in the partner country.
I do support PEPFAR and the earlier vaccine programs, but perhaps those estimates have been underreported as of late? I do understand that not all third party allocations are wasteful, nonetheless something seems badly off here. Nor were many US AID defenders keen to deal with such estimates when the major debate was going on.
No Brains
Back in 2011 I wrote in The Atlantic that “The No-Brainer Issue of the Year” was “Let High-Skill Immigrants Stay”:
We should create a straightforward route to permanent residency for foreign-born students who graduate with advance degrees from American universities, particularly in the fields of science, technology, engineering and mathematics. We educate some of the best and brightest students in the world in our universities and then on graduation day we tell them, “Thanks for visiting. Now go home!” It’s hard to imagine a more short-sighted policy to reduce America’s capacity for innovation.
We never went as far as I advocated but through programs like Optional Practical Training (OPT) we did allow and encourage high-skilled workers to stay in the United States, greatly contributing to American entrepreneurship, startup creation (Stripe and SpaceX, for example, are just two unicorns started by people who first came to the US as foreign students), patenting and innovation and job growth more generally. Moreover, there appeared to be a strong bi-partisan consensus as both Barack Obama and Donald Trump have argued that we should “staple a green card to diplomas”. Indeed in 2024 Donald Trump said:
What I want to do, and what I will do, is—you graduate from a college, I think you should get automatically, as part of your diploma, a green card to be able to stay in this country. And that includes junior colleges, too.
And yet Joseph Edlow, President Trump’s appointee to lead the U.S. Citizenship and Immigration Services (USCIS), said that he wants to kill the OPT program.
“What I want to see is…us to remove the ability for employment authorizations for F-1 students beyond the time that they’re in school.”
It’s remarkable how, in field after field, driven by petty grievance and the illusion of victimhood. the United States seems intent on undermining its own greatest strengths.
My excellent Conversation with Theodore Schwartz
Here is the audio, video, and transcript. Here is part of the episode summary:
Tyler and Ted discuss how the training for a neurosurgeon could be shortened, the institutional factors preventing AI from helping more in neurosurgery, how to pick a good neurosurgeon, the physical and mental demands of the job, why so few women are currently in the field, whether the brain presents the ultimate bottleneck to radical life extension, why he thinks free will is an illusion, the success of deep brain stimulation as a treatment for neurological conditions, the promise of brain-computer interfaces, what studying epilepsy taught him about human behavior, the biggest bottleneck limiting progress in brain surgery, why he thinks Lee Harvey Oswald acted alone, the Ted Schwartz production function, the new company he’s starting, and much more.
And an excerpt:
COWEN: I know what economists are like, so I’d be very worried, no matter what my algorithm was for selecting someone. Say the people who’ve only been doing operations for three years — should there be a governmental warning label on them the way we put one on cigarettes: “dangerous for your health”? If so, how is it they ever learn?
SCHWARTZ: You raise a great point. I’ve thought about this. I talk about this quite a bit. The general public — when they come to see me, for example, I’m at a training hospital, and I practiced most of my career where I was training residents. They’ll come in to see me, and they’ll say, “I want to make sure that you’re doing my operation. I want to make sure that you’re not letting a resident do the operation.” We’ll have that conversation, and I’ll tell them that I’m doing their operation, but that I oversee residents, and I have assistants in the operating room.
But at the same time that they don’t want the resident touching them, in training, we are obliged to produce neurosurgeons who graduate from the residency capable of doing neurosurgery. They want neurosurgeons to graduate fully competent because on day one, you’re out there taking care of people, but yet they don’t want those trainees touching them when they’re training. That’s obviously an impossible task, to not allow a trainee to do anything, and yet the day they graduate, they’re fully competent to practice on their own.
That’s one of the difficulties involved in training someone to do neurosurgery, where we really don’t have good practice facilities where we can have them practice on cadavers — they’re really not the same. Or have models that they can use — they’re really not the same, or simulations just are not quite as good. At this point, we don’t label physicians as early in their training.
I think if you do a little bit of research when you see your surgeon, there’s a CV there. It’ll say, this is when he graduated, or she graduated from medical school. You can do the calculation on your own and say, “Wow, they just graduated from their training two years ago. Maybe I want someone who has five years under their belt or ten years under their belt.” It’s not that hard to find that information.
COWEN: How do you manage all the standing?
And:
COWEN: Putting yourself aside, do you think you’re a happy group of people overall? How would you assess that?
SCHWARTZ: I think we’re as happy as our last operation went, honestly. Yes, if you go to a neurosurgery meeting, people have smiles on their faces, and they’re going out and shaking hands and telling funny stories and enjoying each other’s company. It is a way that we deal with the enormous pressure that we face.
Not all surgeons are happy-go-lucky. Some are very cold and mechanical in their personalities, and that can be an advantage, to be emotionally isolated from what you’re doing so that you can perform at a high level and not think about the significance of what you’re doing, but just think about the task that you’re doing.
On the whole, yes, we’re happy, but the minute you have a complication or a problem, you become very unhappy, and it weighs on you tremendously. It’s something that we deal with and think about all the time. The complications we have, the patients that we’ve unfortunately hurt and not helped — although they’re few and far between, if you’re a busy neurosurgeon doing complex neurosurgery, that will happen one or two times a year, and you carry those patients with you constantly.
Fun and interesting throughout, definitely recommended. And I will again recommend Schwartz’s book Gray Matters: A Biography of Brain Surgery.
Wednesday assorted links
1. Alice Evans chart of the day, recommended.
2. The Shipping Forecast, read by Peter Jefferson. Not recommended.
3. Those new service sector jobs.
4. New book by those who knew Parfit. I did shell out $115 for it.
5. Elad on neglected biomedical areas.
China divination of the day
The AI-Spiritual-Commerce loop went viral. “DeepSeek Occult Commands” became an online hit. On WeChat, a flood of mini-programs appeared—“AI Face Reading,” “AI Bazi Calculator”—reaching the daily user numbers of medium e-commerce apps. A 9.9-yuan facial reading could be resold again and again through referral links, with some users earning over 30,000 yuan a month. DeepSeek hit 20 million daily active users in just 20 days. At one point, its servers crashed from too many people requesting horoscopes.
On social media, commands like “Full Bazi Chart Breakdown” and “Zi Wei Dou Shu Love Match” turned into memes. One user running a fortune-telling template got over 1,000 private messages in ten days. The AI could write entire reports on personality, karma, and even create fake palm readings about “past life experiences.” People lined up online at 1:00 a.m. to “get their fate explained.”
Meanwhile, a competing AI company, Kimi, released a tarot bot—immediately the platform’s most used tool. Others followed: Quin, Vedic, Lumi, Tarotmaster, SigniFi—each more strange than the last. The result? A tech-driven blow to the market for real human tarot readers.
In this strange mix, AI—the symbol of modern thinking—has been used to automate some of the least logical parts of human behavior. Users don’t care how the systems work. They just want a clean, digital prophecy. The same technology that should help us face reality is now mass-producing fantasy—on a huge scale.
Here is the full story. Via the always excellent The Browser.
Rent Seeking for Four Generations
Amazing story in the Gothamist about a family that has occupied the same rent-controlled apartment for four generations and the last generation is not eager to give up the benefits:
For decades, Vines’ grandmother lived in the rent-stabilized, two-bedroom apartment around the corner from Fort Tryon Park. The unit has housed her family since 1977, Vines said, when her great-grandmother, a Cuban immigrant, moved in. Vines said she started living there part time in August 2021, when she enrolled in college in Westchester.
The building’s owner, Jesse Deutch, told Gothamist in an email that “an apartment is not an inheritance” and that Vines has not submitted the necessary documents to prove she has the right to succeed her grandmother as a tenant.
…Family members — by blood, marriage or emotional and financial dependence — can claim succession rights for a rent-stabilized apartment, but only if they can prove they lived there with the tenant for at least two years immediately before their death or permanent departure. There are exceptions to the two-year requirement, including for people who are full-time students, like Vines was when she says she was living with her grandmother.
Vines doesn’t contest that she lived part of the week in her dorm. But she said she spent long weekends, holidays and spring break with her grandmother and sometimes slept over when she had time in the middle of the week.
Now you might think you understand this story. The landlord wants to kick out the current tenant to raise the rent to the new tenant, right? No. Landlords are no longer allowed to raise the rents to new tenants (!!!). Unless the new tenant is themselves getting rental assistance!
…the owner might also be able to boost his income if a new tenant with a housing subsidy moves in. Property records for the building show the owner is allowed to collect more than the rent-stabilized amount for tenants receiving rental assistance….As of January 2024, the maximum amount the federal Section 8 program and the city’s own aid program would pay is $3,027. That’s more than three times the approximately $900 a month Vines said her grandmother paid.
Did you get that? The city’s rental subsidy programs (like Section 8 and CityFHEPS) will pay more than three times what the current tenant does — creating a surreal incentive where landlords prefer subsidized low-income tenants over potentially middle-class legacy-tenants. Note that whether Vines gets the apartment at the rent-controlled rate has nothing to do with her income. Vines could be middle-class or a multi-millionaire and still be entitled to inherit the apartment at the rent-controlled rate, assuming her claims of having lived in the apartment hold up.
New York has outdone itself with a rent control system so dysfunctional it manages to achieve the worst of all worlds. Not only does it suffer from the usual problems of reducing the supply of housing and dulling incentives for maintenance, but it has transformed over time from a safety net into a hereditary entitlement. Thanks to succession rights, what was meant to help the poor now functions as a kind of family heirloom — a subsidized apartment passed down like grandma’s china set.
Changes in the College Mobility Pipeline Since 1900
By Zachary Bleemer and Sarah Quincy:
Going to college has consistently conferred a large wage premium. We show that the relative premium received by lower-income Americans has halved since 1960. We decompose this steady rise in ‘collegiate regressivity’ using dozens of survey and administrative datasets documenting 1900–2020 wage premiums and the composition and value-added of collegiate institutions and majors. Three factors explain 80 percent of collegiate regressivity’s growth. First, the teaching-oriented public universities where lower-income students are concentrated have relatively declined in funding, retention, and economic value since 1960. Second, lower-income students have been disproportionately diverted into community and for-profit colleges since 1980 and 1990, respectively. Third, higher-income students’ falling humanities enrollment and rising computer science enrollment since 2000 have increased their degrees’ value. Selection into college-going and across four-year universities are second-order. College-going provided equitable returns before 1960, but collegiate regressivity now curtails higher education’s potential to reduce inequality and mediates 25 percent of intergenerational income transmission.
An additional hypothesis is that these days the American population is “more sorted.” We no longer have the same number of geniuses going to New York city colleges, for instance. Here is the full NBER paper.
What I’ve been reading
1. Eric Ambler, Cause for Alarm. Are all his books so good? So far yes. With very simple means he redefines what it means to be a good writer of thrillers. Very English, written and set in Italy 1937, with a foolish Englishman who could be out of a Hitchcock movie. They still called it Laibach back then, the menace of the pending war casts the proper shadow over the whole novel.
2. Futurism & Europe: The Aesthetics of a New World, Fabio Benzi and various editors. “By their aesthetics ye shall know them!” What were the aesthetics of the futurist movement in the early 20th century? Should we approve of those aesthetics? This book is a good starting point for asking that question. Nice color plates.
3. Philip Shenon, Jesus Wept: Seven Popes and the Battle for the Soul of the Catholic Church. A very well-written and useful book, I cannot say I have a stance on the issues per se. It is one of my defects that I cannot care enough about the politics of the Catholic Church — I feel there are already too many separate countries with their own politics. Nor do I feel close to either “the liberals” or “the conservatives” in this debate. I do think the current American Pope — who seems “pilled” on many things — will be a big deal, I suspect mostly for the better.
4. Renaud Camus, Enemy of the Disaster: Selected Political Writings. Interesting enough, and if you can read the French lefties why not this guy too? That said, he could be more specific on “the Great Replacement.” The most likely scenario is a France that is about twenty percent Muslim, wracked with periodic ethnic issues, but doing more or less OK. In any case you should not be afraid to read this book, even though for a while it was considered cancel-worthy.
5. Tom Arnold-Foster, Walter Lippmann: An Intellectual Biography. With so many forms of liberalism in semi-collapse, Lippmann is suddenly relevant again. He had faith in experts, and also was not crazy. But somehow is not deep enough to hold my interest? Still, this book is very well done.
I will not soon have time to get to Joseph Torigian, The Party’s Interests Come First: The Life of Xi Zhongxun, Father of Xi Jinping, but it looks excellent.
Tuesday assorted links
Spain fact of the day
By 2039, nearly 4 in 10 Spanish residents will be either immigrants themselves or the children of immigrants.
When combined, these figures imply that, by 2039, approximately 43% of Spain’s workforce — over one in four working-age individuals — will be either first or second-generation immigrants.
Here is the full story, via Mario.