Comparative Advantage
The excellent Don Boudreaux on comparative advantage, one of the deepest and most important ideas in economics.
As a new semester begins this is a good reminder that MRU has great videos for learning and teaching economics, all entirely free and open. (Of course, these videos pair delightfully with Modern Principles of Economics).
AI-engaged economics papers are growing rapidly
…share of economics papers that is ABOUT or USES AI increased 10X to 5% in 5 years and growth is basically vertical.
Be there or be square!
Here is the tweet, here is the underlying paper by Eamon Duede, et.al. Other science are considered as well, I do not need to tell you the results, they consider philosophy too.
Profile of Joe Liemandt and Alpha School
The one thing Liemandt will talk about for hours on end is Alpha School: the teacherless, homeworkless, K-12 private school in Austin, Texas, where students have been testing in the top 0.1% nationally by self-directing coursework with AI tutoring apps for two hours a day. Alpha students are incentivized to complete coursework to “mastery-level” (i.e., scoring over 90%) in only two hours via a mix of various material and immaterial rewards, including the right to spend the other four hours of the school day in “workshops,” learning things like how to run an Airbnb or food truck, manage a brokerage account or Broadway production, or build a business or drone.
Since the explosive debut of Generative AI in 2022, Liemandt has taken $1 billion out of Trilogy/ESW in order to fund and incubate proprietary AI software products at Alpha School, where he has also served quietly as “product guy,” dean of parents, and principal. After collecting a three-year data stream in these roles, while also working in a nearby stealth lab, Liemandt believes he now has “the single best product I’ve ever built, in four decades, by far.” The product is called Timeback, and its purpose, in essence, is to scale Alpha School’s concepts and results—learn 2x in 2 hours, test in the 99th percentile, and then give students the rest of their childhood back—to a billion kids.
Here is the full story by Jeremy Stern.
The decline in reading for pleasure
We measure reading for pleasure and reading with children from 2003 to 2023, using a nationally representative sample from the American Time Use Survey (n = 236,270). We found marked declines in the proportion of individuals reading for pleasure daily in the US, with decreases of 3% per year (prevalence ratio = 0.97, 95% confidence interval = 0.97, 0.98, p < 0.001). There were disparities across population groups, with widening gaps for those of Black (vs. White) race, with lower education levels and less annual income.
That is from a new paper by Jessica K. Bone, Feifei Bu, Jill Sonke, and Daisy Fancourt. I have not seen any plausible debunkings of this paper or result (which I believe), but if I do I will pass them along. Note by the way that Denmark is abolishing the VAT on books, in an effort to boost reading. It was formerly twenty-five percent, the highest in the world.
Thursday assorted links
AI and the Detection of Gravity Waves
Researchers at the Laser Interferometer Gravitational-Wave Observatory, the giant two-observatory machine to detect gravitational waves, developed an AI to improve the sensitivity of the design:
Wired: Initially, the AI’s designs seemed outlandish. “The outputs that the thing was giving us were really not comprehensible by people,” Adhikari said. “They were too complicated, and they looked like alien things or AI things. Just nothing that a human being would make, because it had no sense of symmetry, beauty, anything. It was just a mess.”
The researchers figured out how to clean up the AI’s outputs to produce interpretable ideas. Even so, the researchers were befuddled by the AI’s design. “If my students had tried to give me this thing, I would have said, ‘No, no, that’s ridiculous,’” Adhikari said. But the design was clearly effective.
It took months of effort to understand what the AI was doing. It turned out that the machine had used a counterintuitive trick to achieve its goals. It added an additional three-kilometer-long ring between the main interferometer and the detector to circulate the light before it exited the interferometer’s arms. Adhikari’s team realized that the AI was probably using some esoteric theoretical principles that Russian physicists had identified decades ago to reduce quantum mechanical noise. No one had ever pursued those ideas experimentally. “It takes a lot to think this far outside of the accepted solution,” Adhikari said. “We really needed the AI.”
…If the AI’s insights had been available when LIGO was being built, “we would have had something like 10 or 15 percent better LIGO sensitivity all along,” he said. In a world of sub-proton precision, 10 to 15 percent is enormous.
As with AlphaGO and Move 37 the AI developed entirely novel approaches:
“LIGO is this huge thing that thousands of people have been thinking about deeply for 40 years,” said Aephraim Steinberg, an expert on quantum optics at the University of Toronto. “They’ve thought of everything they could have, and anything new [the AI] comes up with is a demonstration that it’s something thousands of people failed to do.”
Data on the effects of censorship in early modern England
We use a panel-data framework to study the effects of print censorship on early-modern England’s cultural production. Doing so requires distilling dispersed qualitative information into quantitative data. Integrating the historical record implicit in a large language model (LLM) with facts from secondary sources, we generate an annual index of print censorship. Applying a machine-learning (ML) algorithm to a major corpus, we construct document-level measures of the innovativeness (quality) and volume (quantity) of cultural production. We use pre-existing topic-model estimates to apportion each document among distinct cultural themes-three affected by censorship and five unaffected. We thereby assemble a yearly theme-level panel for 1525-1700. We use local projections to estimate censorship’s dynamic effects. Paradoxically, censorship raises the level of innovativeness in censorship-affected themes relative to non-affected themes. Censorship has a temporary chilling effect on the quantity of cultural production, with output recovering within a decade. Our findings are robust to the use of an instrumental-variable approach addressing the endogeneity of censorship. Our findings are unchanged when using three alternative LLMs to produce the censorship index. Using LLMs and ML to measure hard-to-quantify phenomena like censorship and cultural production, we provide new insights into the drivers of cultural evolution.
Here is the full paper by Peter Murrell and Peter Grajzl. Via the excellent Kevin Lewis.
My Conversation with David Brooks
Held live at the 92nd St. Y, here is the video, audio, and transcript. Here is the episode summary:
David Brooks returns to the show with a stark diagnosis of American culture. Having evolved from a Democratic socialist to a neoconservative to what he now calls “the rightward edge of the leftward tendency,” Brooks argues that America’s core problems aren’t economic but sociological—rooted in the destruction of our “secure base” of family, community, and moral order that once gave people existential security.
Tyler and David cover why young people are simultaneously the most rejected and most productive generation, smartphones and sex, the persuasiveness of AI vs novels, the loss of audacity, what made William F. Buckley and Milton Friedman great mentors, why academics should embrace the epistemology of the interview, the evolving status of neoconservatism, what Trump gets right, whether only war or mass movements can revive the American psyche, what will end the fertility crisis, the subject of his book, listener questions, and much more.
Excerpt:
COWEN: Now, you mentioned the Tanenhaus book. It’s striking because you appear as a character in the book. I know you haven’t gotten to that part yet, but surely you remember the reality that William F. Buckley was considering making you editor of National Review. What would your life have been like if you had received that offer? Would you have even taken it? What does that alternate universe look like?
BROOKS: The American conservative movement is going from strength to strength. Donald Trump is a failed real estate developer somewhere.
COWEN: [laughs]
BROOKS: I was never an orthodox National Review person, that kind of conservative. I was a neoconservative, which was different. Basically, you can tell what kind of conservative a person is by what year they want to go back to.
I’ve learned, especially from this Tanenhaus biography, that a lot of the old right National Review people wanted to go back to the 19th century. They were pre-New Deal. I never had a problem with the New Deal. I had some problems with some of the policies of the 1960s, and I was an urban kid. I was a New Yorker, and I was a Jew, and the magazine was Catholic. I’ve been told that one of the reasons I didn’t get the job was that reason.
COWEN: Tanenhaus says this.
BROOKS: Oh, does he?
COWEN: Yes.
BROOKS: Buckley was my mentor. We can tell that story, how that happened. I worked at National Review, and then I worked at the Wall Street Journal editorial page. I went from being an old right to being a free market, Wall Street Journal sort of person. I never had the opportunity to think for myself until I left those places and went to a place called the Weekly Standard. Suddenly, I could think for myself. It was funny how long — because I was in my 30s — before I really thought, “What do I believe?” Not how do I argue for the Wall Street Journal position on this, or the National Review position.
When I did that, I found I had two heroes. One was Edmund Burke, whose main idea is epistemological modesty. Change is really complicated, and we should be really cautious about what we think we can know about reality. The second was Alexander Hamilton, who’s a Puerto Rican hip-hop star from Washington Heights. Hamilton’s belief was using government in limited but energetic ways to create a dynamic country where poor boys and girls like him could rise and succeed.
That involves a lot more state intervention than National Review would be comfortable with. So, I became sort of a John McCain Republican. Now, another one of my other heroes is this guy named Isaiah Berlin, and toward the end of his life, Berlin said, “I’m very happy to be on the rightward edge of the leftward tendency.” That’s where I found myself today, as a conservative Democrat. I would not have fit in at National Review because I didn’t really hew to the gospel.
And:
COWEN: If you think about Buckley, where you disagree with him, and I don’t mean on particular issues — I feel I know that — but his method of thought, what is there in his method of thought where you would say, “I, David Brooks, diverge from Buckley in a fundamental way”?
BROOKS: His gift and his curse was that he couldn’t slow down his thinking. I would see him write a column in 20 minutes, and if he wrote it for an hour, it would get no better. He just moved at that speed. It takes me two days to write a column. It takes me 14, 20 hours. That’s one thing.
Second, he grew out of such a different background. His dad, as we know from this book, was an old right America Firster. My parents were Lower East Side New York intellectual progressives. I always felt at home in a diverse America, in a regular working-class America that was light years away from the world he inhabited.
COWEN: Your difference with Milton Friedman, again, not on specific issues such as the New Deal, but conceptually, how is it that you think differently from how Milton did?
BROOKS: Friedman — his great gift — and I think this is a libertarian gift — is that once you get inside their logical system, within their assumptive models, there’s no arguing with them. It all fits together. I don’t believe in assumptive models. I’m much less rational. I think human beings are much less rational than needed. I think they obviously respond to incentives in some ways, but often respond to incentives in no rational way. I’m, again, being more neoconservative than conservative, or more whatever you want to call it, a Humean.
I really do believe that David Hume’s famous sentence that reason is and ought to follow the passions — I believe that’s true, that our passions are wiser than our reasonable mind, and that our emotions, when well trained, are much more supple and much more responsible for the way we think. Again, I may be caricaturing, but the rational school of economics thought, well, you see the world, that simple process of looking, and then weigh costs and benefits about the world, and then you make a decision about the world, I don’t believe that’s the way thinking works.
Self-recommending!
Wednesday assorted links
2. The new Austin Vernon solar start-up.
3. Turn your research paper into a music video.
4. European freedom of speech increasingly in danger. Article from The Atlantic is here.
Bad news, Mises vindicated!
U.S. Commerce Secretary Howard Lutnick is looking into the federal government taking equity stakes in computer chip manufacturers that receive CHIPS Act funding to build factories in the country, two sources said.
Expanding on a plan to receive an equity stake in Intel (INTC.O), in exchange for cash grants, a White House official and a person familiar with the situation said Lutnick is exploring how the U.S. can receive equity stakes in exchange for CHIPS Act funding for companies such as Micron (MU.O), Taiwan Semiconductor Manufacturing Co (2330.TW), and Samsung (005930.KS). Much of the funding has not yet been dispersed.
Here is more from Reuters. It was bad to do this with General Motors, and bad when many of you, way back when, suggested doing this with the bailed out banks. It is still bad, and getting worse.
The Garbage Cafe
Every day, hungry people arrive at this cafe in Ambikapur, a city in the state of Chhattisgarh in central India, in the hope of getting a hot meal. But they don’t pay for their food with money – instead, they hand over bundles of plastic such as old carrier bags, food wrappers and water bottles.
People can trade a kilogram (2.2lb) of plastic waste for a full meal that includes rice, two vegetable curries, dal, roti, salad and pickles, says Vinod Kumar Patel, who runs the cafe on behalf of the Ambikapur Municipal Corporation (AMC), the public body which manages the city’s infrastructure and services. “For half a kilogram of plastic, they get breakfast like samosas or vada pav.”
…”I’ve been doing this work for years,” Mondal says, looking at the small pile of plastic she has gathered. Previously, Mondal used to sell the plastic she collected to local scrap dealers for just 10 Indian rupees (£0.09/$0.12) per kilogram – barely enough to survive on. “But now, I can get food for my family in exchange for the plastic I collect. It makes all the difference in our lives.”
Here is the full story. The Cafe is supported through public funds.
Why is choral music harder to appreciate?
It has struck me that most recommenders and lovers of choral music and themselves singers (or conductors) of choral music. It helps a great deal to be right there. So it occurred to me there are a few reasons why choral music is harder to appreciate than say either symphonies or chamber music:
1. Mixtures of voices do not translate onto recordings as well as do most symphony orchestra instrumental blends. For one thing, the different voices are harder to sort out. They are best understood when you are singing in the midst of the action.
2. A good deal of choral music is sung in a different language, and so most listeners do not understand the words.
3. A good deal of quality choral music has a background religious context. Most listeners have only a modest knowledge of this background context. For instance, how many people know that Elgar’s Dream of Gerontius is about purgatory, and that this was highly controversial in Elgar’s time, as it was viewed as a very Catholic concept?
3b. 6. Choral works may depend on church acoustics, or the surrounding church aura, but we go to church less often these days.
4. A lot of choral music sounds pious, and indeed may be pious. At the very least they tend to be serious. (How many comic choral pieces can you think of from the classical repertoire? Or even comic moments?) That seriousness of mood may appeal less to contemporary listeners.
5. Star vocalists drive a reasonable percentage of classical music sales. But most choral works have a strong collective element, and they may not be set up to showcase soloists. So the celebrity-driven appeal of choral forms can be relatively weak.
6. Many of the best-known choral works are quite long. That may place them at a relative disadvantage.
7. Opera arguably has grown in relative popularity, and that may be serious competition for choral works because it can serve as a substitute.
What else?
Charles Plosser, RIP
Alas, and still an underrated economist.
The AI polity that is Albania?
While the rest of Europe bickers over the safety and scope of artificial intelligence, Albania is tapping it to accelerate its EU accession.
It’s even mulling an AI-run ministry.
Prime Minister Edi Rama mentioned AI last month as a tool to stamp out corruption and increase transparency, saying the technology could soon become the most efficient member of the Albanian government.
“One day, we might even have a ministry run entirely by AI,” Rama said at a July press conference while discussing digitalization. “That way, there would be no nepotism or conflicts of interest,” he argued.
Local developers could even work toward creating an AI model to elect as minister, which could lead the country to “be the first to have an entire government with AI ministers and a prime minister,” Rama added.
While no formal steps have been taken and Rama’s job is not yet officially up for grabs, the prime minister said the idea should be seriously considered…
AI is already being used in the administration to manage the thorny matter of public procurement, an area the EU has asked the government to shore up, as well as to analyze tax and customs transactions in real time, identifying irregularities.
Here is the whole Politico story, via Holger.