Wednesday assorted links
2. Richard Ngo on educational signaling theories.
3. “There is no secular alternative. There has never been one.”
5. Dominicans vs. Franciscans.
7. Is Europe’s problem labor law?
8. Arbitrage in Singaporean aunties? The country is getting more interesting again.
The Cassidy Report on the FDA
Senator Bill Cassidy (R-La.) released a new report on how to modernize the FDA. It has some good material.
… FDA’s process for reviewing new products can be an unpredictable “black box.” FDA teams can differ greatly in the extent to which they require testing or impose standards that are not calibrated to the relevant risks. The perceived disconnect between the forward leaning rhetoric and thought leadership of senior FDA officials and cautious reviewer practice creates further unpredictability. This uncertainty dampens investment and increases the time it takes for patients to receive new therapies.
Companies report that they face a “reviewer lottery,” where critical questions hinge on the approach of a small number of individuals at FDA. Some FDA review teams are creative and forward-leaning, helping developers design programs and overcome obstacles to get needed products to patients, without cutting corners. FDA’s Oncology Center of Excellence (OCE), for example, is repeatedly identified as a model for providing predictable yet flexible options for bringing new drugs to cancer patients. OCE is now a dialogue-based regulatory paradigm that has facilitated efforts by academia, industry, the National Institutes of Health (NIH), and others to develop new cancer therapies and launch innovative programs and pilots like Project Orbis, RealTime Oncology Review.
That’s quite right. In my report with DiMasi and Milne, we show that review times vary markedly within the FDA, across divisions, without clear cause. Put aside the big questions of FDA or no FDA–scaling the practices of the better-performing divisions would likely yield large gains.
Mike Doherty further asks the AI what Alex Tabarrok would think of the Cassidy report. It replies:
Strongest features: It correctly diagnoses FDA as a bottleneck to innovation, emphasizes “least burdensome” evidence, calls for streamlined pathways (505(b)(2)-style for biologics, biosimilar simplification), and worries about U.S. losing early-phase trials to other countries. This is very much in Tabarrok’s wheelhouse: regulation as a hidden tax on innovation and growth.
Weakest features: It rarely quantifies tradeoffs, almost never confronts the “invisible graveyard” of patients who never see therapies because of delay, and treats reforms as marginal tweaks rather than testing fundamentally different regulatory models (e.g., insurance-based approval, private certification, or sunset/experimentation with parallel regimes).
If you imagine this as a draft memo handed to Tabarrok, he’d likely say: “Good directionally; now add 50% more economics, 50% more quantification, and 100% more willingness to experiment with institutional competition.”
Yeah, pretty good.
Addendum: In other FDA news see also Adam Kroetsch on Will Bayesian Statistics Transform Trials?
Addendum 2: FDA has now agreed to review Moderna’s flu vaccine which is good although the course reversal obviously speaks to the unpredictability of the FDA.
A simple test of how immigration really is going
I suggest looking at whether real estate prices in a particular locale have been rising or falling. If immigration is “ruining” a particular city, we would expect homes and other property values in that place to become much cheaper.
Home values have historically served as a strong indicator of the health of a city. Consider Detroit. It was one of the premier American cities in the mid-20th century, but the region lost a lot of its automobile industry to foreign competition, and crime rose precipitously. The city also was poorly managed. The result in real estate markets was a collapse in prices. If anyone asked you to point to quantifiable evidence for the decline in Detroit, it was easy to do so.
Detroit has undergone a renaissance since its nadir. New businesses have opened, crime rates have fallen, and the city feels more lively again. And since that turn of fortune, often dated around the 1990s, Detroit real estate has made a major comeback, putting aside the price collapse of the Great Recession in 2008. Home prices are not a perfect measure of how the city is doing, but they do pick up major and radical trends, both on the downside and on the upside.
The nice thing about market prices is that they show how buyers weigh the benefits of immigration against costs. Say some new immigrants have moved into your community and the quality of the schools has declined somewhat and traffic is modestly worse. At the same time, there are new businesses, the streets feel more lively, and it is easier to get a good local plumber. In the abstract, it is hard to tell which effects might be most important. But individuals, when bidding for homes or deciding to sell, make their own judgments. What happens to the home prices is a reflection of the collective judgments of people with major decisions about their lives on the line.
Of course in most of the Western world, including Malmo, real estate prices are healthy and very often rising. Here is the full Free Press link, by yours truly. The piece of course does cover the usual caveats, such as bubbles and busts, but note NIMBY factors will not alone reverse the basic conclusions.
Liberal AI
Can AI be liberal? In what sense? One answer points to the liberal insistence on freedom of choice, understood as a product of the commitment to personal autonomy and individual dignity. Mill and Hayek are of course defining figures here, emphasizing the epistemic foundations for freedom of choice. “Choice Engines,” powered by AI and authorized or required by law, might promote liberal goals (and in the process, produce significant increases in human welfare). A key reason is that they can simultaneously (1) preserve autonomy, (2) respect dignity, and (3) help people to overcome inadequate information and behavioral biases, which can produce internalities, understood as costs that people impose on their future selves, and also externalities, understood as costs that people impose on others. Different consumers care about different things, of course, which is a reason to insist on a high degree of freedom of choice, even in the presence of internalities and externalities. AI-powered Choice Engines can respect that freedom, not least through personalization. Nonetheless, AI-powered Choice Engines might be enlisted by insufficiently informed or self-interested actors, who might exploit inadequate information or behavioral biases, and thus co5mpromise liberal goals. AI-powered Choice Engines might also be deceptive or manipulative, again compromising liberal goals, and legal safeguards are necessary to reduce the relevant risks. Illiberal or antiliberal AI is not merely imaginable; it is in place. Still, liberal AI is not an oxymoron. It could make life less nasty, less brutish, less short, and less hard – and more free.
The fertility asymptote?
From a recent paper by Sebastian Galiani and Raul A. Sosa:
Fertility rates have fallen below replacement in most countries, fueling predictions of demographic collapse. We show these forecasts overlook a crucial fact: societies are not homogeneous. Using the Bisin–Verdier model of cultural transmission with endogenous fertility and direct socialization, calibrated to U.S. and global data, we find that high-fertility, high-retention groups persist, gain share, and lead the total population to grow. Even if fertility remains below replacement in every country, extinction is unlikely. Simulations imply continued growth with pronounced compositional change, driven especially by religious communities with high fertility. In our ten-generation world calibration, Muslims become the largest tradition.
I am pleased to hear that extinction is unlikely.
Tuesday assorted links
1. The separating equilibrium.
2. Can speed revitalize American manufacturing?
3, Malmo real estate prices are doing fine.
4. AI and economics summer institute at University of Chicago.
5. Why total legal services costs may not fall with AI. Correct working link here.
6. Sylvia Plath in her journals.
7. Stephen Kinsella Substack on the economy of Ireland.
p.s. hbsk!
The Journal for AI Generated Papers
Science should be machine-readable
One of the leading tasks of our time:
We develop a machine-automated approach for extracting results from papers, which we assess via a comprehensive review of the entire eLife corpus. Our method facilitates a direct comparison of machine and peer review, and sheds light on key challenges that must be overcome in order to facilitate AI-assisted science. In particular, the results point the way towards a machine-readable framework for disseminating scientific information. We therefore argue that publication systems should optimize separately for the dissemination of data and results versus the conveying of novel ideas, and the former should be machine-readable.
Here is the paper by A. Sina Booeshagh, Laura Luebbert, and Lior Pachter. Via John Tierney.
Rebuilding our world, with reference to strong AI
When 2012 passed into 2013, we did not have to rebuild our world, not in most countries at least. It sufficed to make adjustments at the margin.
After the Roman Empire fell, parts of Europe had to rebuild their worlds. It took a long time, but they ended up doing pretty well.
After the American Revolution, the newly independent colonies had to rebuild their own world. They did so brutally, but with considerable success.
After WWII, Western Europe had the chance to rebuild its own world, and did a great job.
We moderns are not used to having to rebuild our world.
It is now the case that strong AI is here/coming, and we will have to rebuild our own world. Many of us are terrified at this prospect, others are just extremely pessimistic. It seems so impossible. How are all the new pieces supposed to fit together? Who amongst us can explain that process in a reassuring way?
Yet we have done it many times before. Not always with success, however. After WWI ended, Europe was supposed to rebuild its own world, but they came up with something far worse than what they had before. Nonetheless, in the broader sweep of history world rebuilding projects have had positive expected value.
And so we will rebuilding our world yet again. Or maybe you think we are simply incapable of that.
As this happens, it can be useful to distinguish “criticisms of AI” from “people who cannot imagine that world rebuilding will go well.” A lot of what parades as the former is actually the latter.
In any case, it all will be quite something to witness.
“You see tech and AI everywhere but in the productivity statistics”
How many times have I heard versions of that claim? Erik Brynjolfsson picks up the telephone in the FT:
While initial reports suggested a year of steady labour expansion in the US, the new figures reveal that total payroll growth was revised downward by approximately 403,000 jobs. Crucially, this downward revision occurred while real GDP remained robust, including a 3.7 per cent growth rate in the fourth quarter. This decoupling — maintaining high output with significantly lower labour input — is the hallmark of productivity growth.
My own updated analysis suggests a US productivity increase of roughly 2.7 per cent for 2025. This is a near doubling from the sluggish 1.4 per cent annual average that characterised the past decade.
It is fine to suggest caution in interpreting such statistics, but they hardly push the other way.
Monday assorted links
1. Andrew Hall on improving the operation of prediction markets.
2. A new aesthetic for San Francisco.
3. Intelligent AI delegation. And Seb Krier. And Abigail Shrier. All of this can change your life.
4. Krugman on tariff incidence.
5. The century of the maxxer (“How many apricots can fit in your mouth?”). Excellent piece.
6. Andy Goldsworthy (New Yorker). Ditto.
7. Claims.
Minimum Wages for Gig Workers Can’t Work
In 2017, I analyzed the Uber Tipping Equilibrium:
What is the effect of tipping on the take-home pay of Uber drivers? Economic theory offers a clear answer. Tipping has no effect on take home pay. The supply of Uber driver-hours is very elastic. Drivers can easily work more hours when the payment per ride increases and since every person with a decent car is a potential Uber driver it’s also easy for the number of drivers to expand when payments increase. As a good approximation, we can think of the supply of driver-hours as being perfectly elastic at a fixed market wage. What this means is that take home pay must stay constant even when tipping increases.
…If Uber holds fares constant, the higher net wage (tips plus fares) will attract more drivers but as the number of drivers increases their probability of finding a rider will fall. The drivers will earn more when driving but spend less time driving and more time idling. In other words, tipping will increase the “driving wage,” but reduce paid driving-time until the net hourly wage is pushed back down to the market wage.
A paper by Hall, Horton and Knoepfle showed that’s exactly what happened.
More recently, in 2024, Seattle implemented “PayUp”, a pay package for gig workers like DoorDash workers that required a minimum wage based on the time worked and miles travelled for each offer. Note that this is not a minimum wage for all workers but for one type of worker in a large market. For this reason, we can use the same analysis as with Uber tipping. The supply of workers is very elastic and essentially fixed at the market wage for workers of similar skill. Thus, we would expect a zero effect on net pay.
Here is a recent NBER paper by An, Garin and Kovak looking at the effects of the Seattle law:
We find that the minimum pay law raised delivery pay per task….At the same time, the policy led to a reduction in the number of tasks completed by highly attached incumbent drivers (but not an increase in exit from delivery work), completely offsetting increased pay per task and leading to zero effect on monthly earnings. We find evidence that drivers experienced more unpaid idle time and longer distances driven between tasks…Using a simple model of the labor market for platform delivery drivers, we show that our evidence is consistent with free entry of drivers into the delivery market driving down the task-finding rate until expected earnings return to their pre-reform level.
All of this is a general result of the Happy Meal Fallacy.
Malthus had real influence
From a recent paper by Eric Robertson:
Public officials often fail to implement government policy as directed, yet the role of economic ideas in shaping these implementation choices is poorly understood. This paper provides causal evidence that exposure to economic ideas can durably influence bureaucrat behavior. I study British colonial bureaucrats in India, exploiting a natural experiment created by the abrupt death of Thomas Malthus in 1834, replacing his economics instruction at a bureaucrat training college for that of a contemporary critic, Richard Jones. Whereas Malthus regarded economic distress as a natural mechanism for restoring equilibrium by reducing population growth, Jones disagreed with this view. Linking rainfall shocks to district-level fiscal responses, I show that officials trained by Malthus delivered less relief during droughts, providing 0.10-0.25 SD less aid across all major measures compared with officials taught by Jones. The results reveal that exposure to abstract economic ideas can shape real-world policy implementation for decades.
This may be a case where using rainfall shocks in a paper actually makes sense. Via Krzysztof Tyszka-Drozdowski.
India’s AI wedding buffet
Shruti Rajagopalan surveys much of the AI policy debate in India. Excerpt:
If there is a single domain where India’s AI ambitions will succeed or fail, it is energy. And energy in India is not a technology problem. It is a political economy problem, arguably the most intractable one the country faces.
India’s peak electricity demand hit 250 GW in May 2024, up from 143 GW a decade earlier. The IEA forecasts 6.3 percent annual growth through 2027, faster than any major economy. Cooling demand alone could reach 140 GW of peak load by 2030. One number captures the trajectory. For each incremental degree in daily average temperature, peak demand now rises by more than 7 GW. In 2019 the figure was half that. India is getting hotter, richer, and more electricity-hungry simultaneously.
State-controlled distribution companies have accumulated $83.7 billion in debt because energy prices have been politically distorted for decades. Over 50 GW of renewable capacity sits underutilized. About 60 GW is stranded behind inadequate transmission. The shortage is financial and infrastructural, not resource-based. Without reforming distribution pricing, governance, and grid investment ($50 billion estimated by 2035), new renewable capacity will not become reliable electricity. It will become another line item on a DISCOM balance sheet no one wants to read.
India’s electricity reaches consumers through 72 distribution companies, 44 of them state-owned, collectively the most financially distressed utilities in the world. Accumulated losses stood at ₹6.92 trillion ($76.89 billion) as of March 2024, rising every year despite five government bailouts since 2002.
Substantive throughout.
At the Grand Egyptian Museum
Neal Spencer has a good review at the LRB, excerpt:
Over the past few decades, however, Egyptian museums have pivoted away from Europe and America. The National Museum of Egyptian Civilisation, which opened in 2021, rejected the traditional division of artefacts into pharaonic, Coptic, Greco-Roman and Islamic eras (a framework associated with European academic disciplines). The Grand Egyptian Museum, announced at the height of Hosni Mubarak’s rule and styled ‘the largest museum in the world dedicated to the people, history and culture of Ancient Egypt’, opened in November last year with a lavish ceremony broadcast round the world. It is estimated to have cost more than $1 billion ($300 million of which was a loan from Japan) and sprawls over an area the size of seventy football pitches. The financial crash of 2008, the Arab Spring and Covid meant that its construction took almost twenty years. Much has changed in that time. The last decade of construction took place under the military regime of Abdel Fattah el-Sisi, who installed one of his generals as its head – the first non-Egyptologist to direct a major Egyptian museum.
I saw the museum shortly after the opening and found it pretty spectacular, both the building/setting and the collection. It is worth making a trip to Cairo just to see this, and it now can be considered one of the world’s great museums and history sites (yes I had seen the earlier incarnation of the museum, years ago). The very wise Rasheed Griffith also gave the museum an A+.