Left-wing critique of effective altruism
I very much enjoyed the new LRB piece by Amia Srinivasan. Here is a good “standing on one foot” statement of what effective altruism recommends:
The results of all this number-crunching are sometimes satisfyingly counterintuitive. Deworming has better educational outcomes among Kenyan schoolchildren than increasing the numbers of textbooks or teachers. If you want to improve animal welfare, it’s better to stop eating eggs than beef, since caged layer hens live worse lives than farmed cows, and because eating eggs consumes more animals than eating beef: the average American consumes 0.8 layer hens but only 0.1 beef cows per year. Buying Fairtrade goods can be worse than buying regular goods, since the extra cost goes mostly to middlemen rather than farmers, and when it doesn’t, it benefits farmers in relatively rich countries: because Fairtrade standards are hard to meet, most Fairtrade coffee production comes from Mexico and Costa Rica rather than, say, Ethiopia, where the marginal pound would go much further. The green value of buying locally grown food is overblown, too, since transport accounts for only 10 per cent of the carbon footprint of food, while 80 per cent of it is generated in production; tomatoes grown in the UK can have five times the carbon footprint of tomatoes shipped from Spain because of the energy required to hothouse them. If you’re really committed to minimising your carbon footprint, MacAskill recommends donating to the carbon offsetting charity Cool Earth; he estimates that the average American could offset all his carbon emissions by donating $105 a year. There isn’t much point in unplugging your electricals, either: leaving your mobile phone charger plugged in for a whole year contributes less to your carbon footprint than one hot bath.
And here is part of the critique:
MacAskill is evidently comfortable with ways of talking that are familiar from the exponents of global capitalism: the will to quantify, the essential comparability of all goods and all evils, the obsession with productivity and efficiency, the conviction that there is a happy convergence between self-interest and morality, the seeming confidence that there is no crisis whose solution is beyond the ingenuity of man. He repeatedly talks about philanthropy as a deal too good to pass up: ‘It’s like a 99 per cent off sale, or buy one, get 99 free. It might be the most amazing deal you’ll see in your life.’ There is a seemingly unanswerable logic, at once natural and magical, simple and totalising, to both global capitalism and effective altruism. That he speaks in the proprietary language of the illness – global inequality – whose symptoms he proposes to mop up is an irony on which he doesn’t comment. Perhaps he senses that his potential followers – privileged, ambitious millennials – don’t want to hear about the iniquities of the system that has shaped their worldview. Or perhaps he thinks there’s no irony here at all: capitalism, as always, produces the means of its own correction, and effective altruism is just the latest instance.
Not my view, but well written as a piece and definitely recommended. Here is comment from Scott Alexander.
Italy fact of the day
The Catholic church is estimated to own twenty percent of all real estate in Italy, and a quarter of all real estate in Rome.
That is from Alexander Stille’s new piece on Pope Francis and the Vatican.
Friday assorted links
*By Steppe, Desert, and Ocean: The Birth of Eurasia*
By Barry Cunliffe, due out in November. I’m counting the days…
The culture that is America (Googling for God)
In the United States, there is more interest in heaven than in hell, at least based on searches. There are 1.5 times more searches for “heaven” than “hell,” 2.8 times as many searches asking what heaven looks like than what hell looks like, and 2.75 times as many searches asking whether heaven is real than whether hell is real.
…Relative to the rest of the country, for every search I looked at, retirement communities search more about hell. In retirement communities, there are a similar number of searches asking to see visuals of hell as visuals of heaven.
And:
There are 4.7 million searches every year for Jesus Christ. The pope gets 2.95 million. There are 49 million for Kim Kardashian.
That is from Seth Stephens-Dawidowitz.
Just how guilty is Volkswagen?
I have a few points:
1. There is decent evidence that many other car companies have done something similar. Read this too. Besides, Volkswagen committed a related crime in 1973. When I was a teenager (maybe still?), it was commonly known that New Jersey service stations would help your car pass the emissions test if you slipped them a small amount of money. So we shouldn’t be shocked by the new story. The incentive of the agencies is to get the regulations out the door and to avoid subsequent bad publicity, not to actually solve the problem. So yes, there is a “regulation ought to be tougher” framing, but there is also a “we’ve been overestimating the benefits of regulation” framing too. Don’t let your moral outrage, which leads you to the former lesson, distract you from absorbing some of the latter lesson too.
2. We are more outraged by deliberate attempts to break the law, compared to stochastic sloppiness leading to mistakes and accidents. But it is far from obvious that the egregious violations should be punished more severely in a Beckerian framework. In fact, if they are harder to pull off, compared to sheer neglect, perhaps they should be punished less severely, at least from a utilitarian point of view. I am not saying we should discard our intuitions about relative outrage, but we ought to look at them more closely rather than just riding them to a quick conclusion. I’ve seen it noted rather frequently that the head of the supervisory committee at Volkswagen is named Olaf Lies.
3. Don’t think this is just market failure, it springs from a rather large government subsidy program. Clive Crook makes a good point:
Remember that “clean diesel” was a government-led initiative, brought to you courtesy of Europe’s taxpayers. And, by the way, the policy had proved a massively expensive failure on its own terms even before the VW scandal broke.
…At best, the clean-diesel strategy lowered carbon emissions much less than hoped, and at ridiculous cost; at worst, as one study concludes, the policy added to global warming.
4. One back of the envelope estimate is that the added pollution killed 5 to 23 Americans each year. Now I don’t myself think we should always or even mostly use economic methods to value human lives. But if you wish to play that cost-benefit game, maybe here we have $25 million to $100 million in economic value a year destroyed. It’s not uncommon to spend $100 million marketing a bad Hollywood movie. So in economic terms (an important caveat), this is a small event. Most of the car pollution problem comes from older vehicles with poor maintenance, not fraud on the newer tests. It also seems (same link) that diesel engines are 95% cleaner since the 1980s.
5. The German automobile sector exported about $225 billion in 2014. That’s almost as big as Greek gdp.
6. Manipulated data will be one of the big, big stories of the next twenty years, or longer.
7. It is worth citing Glazer’s Law, which is designed to classify explanations for microeconomic puzzles: “It’s either taxes or fraud”
This one isn’t taxes.
China fact of the day
The country’s stocks listed in Hong Kong are trading below book value…
The full FT story by James Mackintosh is here.
Generic Drug Regulation and Pharmaceutical Price-Jacking
The drug Daraprim was increased in price from $13.60 to $750 creating social outrage. I’ve been busy but a few points are worth mentioning. The drug is not under patent so this isn’t a case of IP protectionism. The story as I read it is that Martin Shkreli, the controversial CEO of Turing pharmaceuticals, noticed that there was only one producer of Daraprim in the United States and, knowing that it’s costly to obtain even an abbreviated FDA approval to sell a generic drug, saw that he could greatly increase the price.
It’s easy to see that this issue is almost entirely about the difficulty of obtaining generic drug approval in the United States because there are many suppliers in India and prices are incredibly cheap. The prices in this list are in India rupees. 7 rupees is about 10 cents so the list is telling us that a single pill costs about 5 cents in India compared to $750 in the United States!
It is true that there are real issues with the quality of Indian generics. But Pyrimethamine is also widely available in Europe. I’ve long argued for reciprocity, if a drug is approved in Europe it ought to be approved here. In this case, the logic is absurdly strong. The drug is already approved here! All that we would be doing is allowing import of any generic approved as such in Europe to be sold in the United States.
Note that this is not a case of reimportation of a patented pharmaceutical for which there are real questions about the effect on innovation.
Allowing importation of any generic approved for sale in Europe would also solve the issue of so-called closed distribution.
There is no reason why the United States cannot have as vigorous a market in generic pharmaceuticals as does India.
Hat tip: Gordon Hanson.
Thursday assorted links
1. Competing to write the smallest chess program (hate).
2. Smart camera stops you from taking ordinary, cliched photographs.
3. Clifford Asness on carried interest.
4. A critique of the sexual assault survey.
5. Animals attacking drones (video).
6. Is the world running out of workers? (speculative, and probably wrong, but worth a read) And how does the welfare state affect the family?
Breaking Bad: Are Meth Labs Justified in Dry Counties?
A new paper from Fernandez, Gohmann and Pinkston shows that counties in Kentucky that forbid alcohol have more meth labs than otherwise similar counties. I like the research but in truth any paper with both Breaking Bad and Justified references is a winner in my book.
Abstract: This paper examines the influence of local alcohol prohibition on the prevalence of methamphetamine labs. Using multiple sources of data for counties in Kentucky, we compare various measures of meth manufacturing in wet, moist, and dry counties. Our preferred estimates address the endogeneity of local alcohol policies by using as instrumental variables data on religious affiliations in the 1930s, when most local-option votes took place. Alcohol prohibition status is influenced by the percentage of the population that is Baptist, consistent with the “bootleggers and Baptists” model. Our results suggest that the number of meth lab seizures in Kentucky would decrease by 24.4 percent if all counties became wet.
The authors suggest that alcohol users who buy alcohol in places where it is banned become acculturated and familiar with illegal networks making it easier for them to buy meth. In a reverse of the usual story, alcohol prohibition becomes the gateway to other illegal activities.
In my interpretation, however, the association of meth labs and alcohol prohibition is due more to supply side factors than demand side factors. In particular, a long history of moonshine production in dry Kentucky counties leads to an accumulation of knowledge about where to hide the labs, how to evade the law and who to bribe. In this version of the theory, lifting alcohol prohibition doesn’t necessarily reduce meth production because the knowledge and the networks remain in place.
A modified version of the theory can combine demand and supply factors. If there are economies of scope between alcohol production and meth production (such as bribes to local police) then a reduction in the demand for moonshine will raise the costs of producing meth.
Understanding which of these theories holds would make an important contribution to the industrial organization of illegal goods and would also have implications for how best to combat illegal good production.
Are pharmaceutical drug prices too high?
Hillary Clinton has proposed a new plan to bring down prescription drug prices, but so far the reception is cool. Here is one comment:
But when I ran it by some health economists and other health policy experts, several strongly disliked the idea because it misunderstands the diversity of companies in the pharmaceutical industry. They say it would create perverse incentives that could raise instead of lower the costs of developing new drugs.
“This is an astonishingly naïve approach,” said Amitabh Chandra, a professor of public policy at Harvard University, in an email. He argues that the plan could encourage wasteful research spending without necessarily doing much about the prices charged for medications.
That is from Margot Sanger-Katz at the NYT, not the Heritage Foundation.
I would stress a different point, and this concerns pharmaceutical prices more generally, not just the Clinton plan. Higher prices induce more innovation, and those innovations benefit patients in many countries. Note that connection is true even if you think most innovations come from universities or the NIH rather than being hatched Big Pharma. There is still a pot at the end of the rainbow for the significant innovators in this process.
OK, so how much does innovation go down if prices go down?
Here is an earlier post by Alex on Frank Lichtenberg’s estimation: “Thus, price controls or other restrictions that reduce prices are almost certainly a bad idea.”
Here is another earlier post by Alex, citing Megan, noting that Apple spends three cents of every dollar on R&D, and other inconvenient facts and that was from 2009.
If the advocate of lower drug prices does not have clear quantitative evidence for a conclusion of “lowering drug prices will not harm innovation very much,” commit the analysis to the flames, for it harbors nothing but sophistry and illusion. And while agnosticism about elasticities might weaken the argument for keeping prices high, that’s not an argument for lowering prices, that is an argument for agnosticism.
This same point applies to most commentaries on TPP I might add, and intellectual property analysis. Write it on the bathroom wall: “Without an elasticity, there is no answer.” And scream it from the rooftops while you are at it.
British inequality: not what you think
A new paper by the Institute for Fiscal Studies (IFS) shines a new light on how well the British tax system redistributes incomes over people’s lifetimes, in addition to using the cross-sectional approach. It presents several interesting findings. For a start, it finds that lifetime inequality in Britain has always been much lower than cross-sectional inequality (see first chart). This is because the poorest in any given year are not always poor for their entire lives; the IFS’s simulations suggest that those who, over the whole of their life, are in the lowest 10%, only spend an average of a fifth of their lifetimes at the bottom.
More startlingly, policies that increased or cut welfare expenditure appear to have had very little impact on lifetime inequality. For instance, while the benefit cuts of the late 1980s reduced benefits and increased cross-sectional inequality, it had a much more muted effect on lifetime inequality. And, similarly, although Gordon Brown’s massive expansion of means-tested tax credits in the 2000s reduced cross-sectional inequality, they had very little impact on cutting lifetime inequality.
The paper also finds that the redistribution performed by the British welfare state is, to a great extent, smoothing incomes over people’s lifetimes rather than over their entire lives. Whereas 36% of individuals receive more in benefits than they pay in tax in any given year, only 7% do so over their lifetimes. Over half of all redistribution is simply across peoples’ lifespans; the young pay in while they work, and take out when they retire (see second chart).
The post is from Free Exchange. I do not yet see the paper on the website of the Institute for Fiscal Studies, does anyone know what is up?
A Sephardic Jew from the former Ottoman empire
No, not Dani Rodrik, the guest for tomorrow’s Conversations with Tyler chat, rather Elias Canetti. As prep for Dani at 3:30 tomorrow (live stream), I thought I should read some more Canetti. Here are a few maxims from his The Secret Heart of the Clock:
At the edge of the abyss he clings to pencils
Curiosity diminishing, he could now start thinking
He reads only for appearances now, but what he writes is real
Newspapers, to help you forget the previous day
His disintegrating knowledge holds him together
China question of the day
Visits to medical institutions, hospital visits, and primary medical facilities are growing at 2.98%, 5.40%, and 1.56% respectively.
That is from Christopher Balding, read the whole post. And that is for an aging population and in a setting where the demand for health care is for structural reasons growing rapidly. Furthermore the use of traditional Chinese medicine is declining rapidly, fifteen percent this year from Balding’s citation.
Now let’s say the Chinese economy is about fifty percent services, though the exact number can be debated. And we know that manufacturing PMI is down seven months in a row.
What is your estimate of the overall rate of economic growth in China? The overall rate of growth six months or a year from now?
In the middle of this post you will find Scott Sumner on China’s growth.
Here is Krugman’s excellent post on how large China spillovers will be. I say watch for who is exposed to the sudden weekend ten to fifteen percent devaluation. Lots of other EM currencies have gone down by about that amount, why should China be so different or immune? The Chinese government isn’t going to spend trillions of dollars on fighting a losing battle in the currency wars, they are simply waiting for the right time for this to happen. Don’t be caught off-guard.
Wednesday assorted links
1. Should you be an insider or an outsider? With advice from Larry Summers.
2. Paul Krugman refers to a piece on New Deal bankers wanting higher interest rates.
3. Would leaving the EU make it easier for the UK to control its border? (no, shout from rooftops)
4. Video excerpt, Luigi Zingales on whether Pope Francis is overrated or underrated. And lots of cheating on emissions tests, not just Volkswagen. Speaking of cheating, Angus and I say North Carolina barbecue is in decline.
5. The polity that is New York City:”Custodians took home an average pay of $109,467 in the 2013-14 school year — and 634 of the city’s 799 custodians earned more than $100,000 in salary and overtime during that time, city payroll records show.”
6. What are the current restrictions on American travel to Cuba?