Who is rising and falling in status in the NBA?

Falling:

Damian Lillard
Jordan Poole
Zion Williamson
Klay Thompson
Andrew Wiggins
Austin Reeves

Rising:

Embiid
Maxey
Porzingis
Haliburton
Curry (not Seth)
Dare I say Kyrie Irving?
Lebron, if that is even possible at this point, he is already GOAT
Greg Popovich
Wemby
Bam Adebayo

That is a lot of status reshuffling, but it seems to be happening pretty quickly and I suspect most of it will stick, with Kyrie Irving maybe still up for grabs.  Others?

When I was over Auren Hoffman’s house, I bet (using play chips only) 70% that either Boston or Denver wins the title this year.

Wednesday assorted links

1. Teacher-driven changes in ideas during the Scientific Revolution at Oxford and Cambridge (Julius Koschnick of LSE is on the job market).

2. ChatGPT grey markets in everything.

3. Kiwi family goes to Walmart for the first time (video).

4. Zero-sum thinking and political divides.

5. The course of Brazil’s trade surplus.

6. Why are Canadian remote workers right across the border paid less?

7. Ross on religion (NYT).

The Amazing Vernon Smith

You can find Vernon Smith hard at work at his computer by 7:30 each morning, cranking out 10 solid hours of writing and researching every day.

His job is incredibly demanding — he is currently on the faculty of both the business and law schools at Chapman University. But the hard work pays off: Smith’s research is consistently ranked as the most-cited work produced at the school — a testament to his ongoing academic influence and success. He manages his job and research work while also coauthoring books and traveling around the country to deliver lectures.

It’s a remarkable level of productivity, made all the more remarkable by one simple fact: Vernon Smith is 96 years old.

Smith, who was awarded the Nobel Prize in Economic Sciences at the tender age of 75, says he feels the same passion as he did then, and even as he did when he embarked on his career more than seven decades ago.

That’s from the AARP on SuperAgers. In addition to all that, Vernon “is one of 1,600 participants in the University of California, Irvine’s 90+ Study, a research project examining both successful aging and dementia in people age 90 and older.”

Vernon was always one of our sharpest and most productive colleagues. He remains an inspiration.

Malthus was smarter than you think, vice and prostitution edition

That is a passage from my new book GOAT: Who is the Greatest Economist of all Time and Why Does it Matter?

So one way to read Malthus is this: if a society is going to have any prosperity at all, the people in that society either will be morally quite bad, or they have to be morally very, very good, good enough to exercise that moral restraint. Alternatively, you can read Malthus as seeing two primary goals for people: food and sex. His accomplishment was to show that, taken collectively, those two goals could not easily be obtainable simultaneously in a satisfactory fashion. In late Freudian terms, you could say that eros/sex amounts to the death drive, but again painted on a collective canvas and driven by economic mechanisms.

Malthus also hinted at birth control as an important social and economic force, especially later in 1817, putting him ahead of many other thinkers of his time. Birth control was widely practiced for centuries through a variety of means, and Malthus unfortunately was not very specific. He did call it “unnatural,” and the mainstream theology of his Anglican church condemned it, as did many other churches. But what did he really think? Was this unnatural practice so much worse than the other alternatives of misery and vice that his model was putting forward? Or did Malthus simply fail to see that birth control could be so effective and widespread as it is today? It doesn’t seem we are ever going to know.

From Malthus’s tripartite grouping of vice, moral restraint, and misery, two things should be clear immediately. The first is why Keynes found Malthus so interesting, namely that homosexual passions are one (partial) way out of the Malthusian trap. The second is that there is a Straussian reading of Malthus, namely that he thought moral restraint, while wonderful, was limited in its applicability. So maybe then vice wasn’t so bad after all? Is it not better than war and starvation?

I don’t buy the Straussian reading as a description of what Malthus really meant. But he knew it was there, and he knew he was forcing you to think about just how bad you thought vice really was. Malthus for instance is quite willing to reference prostitution as one possible means to keep down population. He talks about “men,” and “a numerous class of females,” but he worries that those practices “lower in the most marked manner the dignity of human nature.” It degrades the female character and amongst “those unfortunate females with which all great towns abound, more real distress and aggravated misery are perhaps to be found, than in any other department of human life.”

How bad are those vices relative to starvation and population triage? Well, the modern world has debated that question and mostly we have opted for vice. You thus can see that the prosperity of the modern world does not refute Malthus. We faced the Malthusian dilemma and opted for one of his options, namely vice. It’s just that a lot of us don’t find those vices as morally abhorrent as Malthus did. You could say we invented another technology that (maybe) does not suffer from diminishing returns, namely improving the dignity and the living conditions those who practice vice. Contemporary college dorms seem pretty comfortable, and they have plenty of birth control, and of course lots of vice in the Malthusian sense. While those undergraduates might experience high rates of depression and also sexual violation, that life of vice still seems far better than life near the subsistence point. I am not sure what Malthus would think of college dorm sexual norms (and living standards!), but his broader failing was that he did not foresee the sanitization and partial moral neutering of what he considered to be vice.

Written by me, recommended, and open source at the above link.

Effects of Maturing Private School Choice Programs on Public School Students

Using a rich dataset that merges student-level school records with birth records, and leveraging a student fixed effects design, we explore how a Florida private school choice program affected public school students’ outcomes as the program matured and scaled up. We observe growing benefits (higher standardized test scores and lower absenteeism and suspension rates) to students attending public schools with more preprogram private school options as the program matured. Effects are particularly pronounced for lower-income students, but results are positive for more affluent students as well. Local and district-wide private school competition are both independently related to student outcomes.

Here is the (AEA gated) paper by David N. Figlio, Cassandra M. D. Hart and Krzysztof Karbownik

Tuesday assorted links

1. The economics team at Instacart.

2. Josh Hart invents a new basketball play?

3. “All else being equal, those highest on cognitive ability experience a 22% (53.2%) increase in the probability of realism (pessimism) and a 34.8% reduction in optimism compared with those lowest on cognitive ability.

4. Digitization has increased the demand for the printed books.

5. Pet psychics are entering the mainstream (WSJ).  “People book sessions with animal communicators to unravel behavioral issues, to learn about preferences for end-of-life care, and when the time comes, to make sure their pets are enjoying the afterlife.”

6. Does vaccine nationalism diminish trust in leaders?

Pharmaceutical Price Controls and the Marshmallow Test

The pharmaceutical market is in turmoil. On the one hand we have what looks like a golden age of medicine with millions of lives saved by COVID vaccines, a leap in mRNA technology, excellent new obesity and blood sugar drugs, breakthroughs in cancer treatments and more. On the other hand, the Inflation Reduction Act includes the most extensive price controls on pharmaceuticals we have ever seen in the United States.

In Washington-speak the “Inflation Reduction Act” requires HHS to “negotiate” drug prices for Medicare Part D and Part B to establish a maximum “fair” price. In reality there is no negotiation–firms who refuse to negotiate are hit with huge taxes. The “negotiation,” if you want to call it that, is “your money or your life” and fairness has little to do with it. The IRA also requires very costly inflation rebates, i.e. a price control/tax. In essence, the IRA is a taking; for drugs with a large Medicare market it is similar to abrogating patents to 9 years for small molecule drugs and 13 years for biologics. For the included drugs there will be a significant reduction in revenues. Moreover, we don’t yet know whether the plan will be extended to more and more drugs. There is significant uncertainty affecting the entire market. What will be situation in 10 years? Will the US be like Europe?

Our government is failing the marshmallow test, big time.

Reduced revenues mean less R&D. The value of extending life is very high and so in my view medical R&D is underprovided. Thus, price controls are taking us in the wrong direction.

The positive effects of price controls are immediate and easy to see: Prices are reduced.

The negative effects of price controls take time and are harder to see. Namely:

  • Fewer drugs for Medicare market.
  • Less research on post-approval indications and confirmatory trials.
  • Reduced incentive for generics to enter quickly.
  • Most importantly: Less R&D spending leading to fewer new drugs, a reduced pharmaceutical armory, lower life expectancy and higher morbidity. By one calculation, ~135 fewer new drugs through to 2039 (see also here and here and here and here).
  • Fewer new drugs means more spending on physicians and hospitals so in the long run price controls may not even save money! (Most prescriptions are for generics. Drugs fall greatly in price when they go generic but physicians and hospitals never go generic!)

Price controls are a classic example of political myopia. Price controls, like rent controls and deficit financing, have modest benefits now and big future costs and thus they are supported by politicians who want to be elected now. Unfortunately, current citizens don’t forecast the future well and future citizens don’t have a vote so it’s easy to create big future costs without engaging an opposition.

The emergence of groundbreaking pharmaceuticals and the increasing implementation of price controls are probably related trends. Everyone wants the great new pharmaceuticals without paying for them. We need to think more long-term–we have much more to gain from a continuing flow of new pharmaceuticals than from lower prices on the last generation. Don’t forget that children who fail the marshmallow test do less well later in life. Well, our government is failing the marshmallow test, big time.

Pharmaceutical price controls driven by myopia and the failure to delay gratification are greatly harming future patients.

The hypocrisy at the core of America’s elite universities

That is the title of my latest Bloomberg column, the piece is best read as a whole.  Nonetheless here is one excerpt:

As someone who stands to the political right of most of my fellow university faculty and administrators, I have no qualms accepting the argument that colleges and universities need to grow wealthier. That can mean tolerating various inequalities in the short run, because in the longer run academia will produce more innovation that benefits virtually everyone, including the poor.

This is not the kind of argument many on the political left find appealing. In tax policy, for example, such reasoning — the idea that short-run inequality can bring longer-run benefits — is often derided as “trickle-down economics.” And yet virtually any fan of the Ivies has to embrace this idea. The best defense of the admissions policies of America’s most prestigious universities is a right-leaning argument that they are deeply uncomfortable with.

So instead they tie themselves into knots to give the impression that they are open and egalitarian. To boost their image, minimize lawsuits and perhaps assuage their own feelings of institutional guilt, America’s top schools adopt what are known as DEI policies, to promote diversity, equity and inclusion.

The “inclusion” part of that equation is hardest for them to defend. Top-tier universities accept only a small percentage of applicants — below 4% at Stanford last year, for example. How inclusive can such institutions be? Everyone knows that these schools are elitist at heart, and that they (either directly or indirectly) encourage their students and faculty to take pride at belonging to such a selective institution. Most of all, the paying parents are encouraged to be proud as well. Who exactly is being fooled here?

And to close:

I thus have the luxury of opposing the new anti-legacy-admissions bill for two mutually reinforcing reasons. First, it reflects an unjustified expansion of federal powers over higher education. Even if you are anti-legacy, or want to rein in the Ivy League, you may not be happy about how those federal powers will be used the next time around.

Second, I do not mind a world where America’s top schools practice and implicitly endorse trickle-down economics. Someone has to carry the banner forward, and perhaps someday this Trojan horse will prove decisive in intellectual battle. In the meantime, I have my cudgel — hypocrisy among the educational elite — and I, too, can feel better about myself.

Recommended.

Words to live by

I propose a model of a social media platform which manages a two-sided market composed of content producers and consumers. The key trade-off is that consumers dislike low-quality content, but including low-quality content provides attention to producers, which boosts the supply of high-quality content in equilibrium. If the attention labor supply curve is sufficiently concave, then the platform includes some low-quality content, though a social planner would include even more.

That is from the job market paper of Karthik Srinivasan of University of Chicago Booth School of Business.  Via Gavin Leech.

Monday assorted links

1. Noah on Singapore.

2. David Gauthier, RIP.

3. Again, Sweden has done immigration the worst.

4. On the Biden-Xi AI agreement?

5. Why don’t more intellectuals convert to Protestantism?

6. Vultures are underrated (NYT).  I liked this line: ““It makes sense that an animal that depends on scarce resources can really benefit from being intelligent,” said Thijs van Overveld, a vulture researcher at the Donana Biological Station in Seville, Spain.”  One of the best pieces I’ve read in a while.

7. National Gallery of Art receives major Haitian donation.

8. A claim that Hsieh and Moretti does not replicate.  I am happy to link to a response from the authors.

Zoning Deregulation Increases Affordable Housing

Geetika Nagpal and Sahil Gandhi study zoning deregulation in Mumbai, India. As I pointed out in my video, Skyscrapers and Slums: What’s Driving Mumbai’s Housing Crisis?, Mumbai has very restrictive floor area ratio regulations (also called Floor Space Index, FSI, regulations, see the video for an explanation) which means taller buildings require more unused land. In 2018, however, FAR was liberalized for some streets:

Mumbai’s stringent FAR limits, which are much lower than those of comparable megacities, are often criticized for causing housing unaffordability (Bertaud, 2004). Despite the criticism, establishing a causal effect has been challenging because of a lack of changes in FAR regulations. The relaxation in 2018 linked a parcel’s FAR to the width of its bordering road, providing incremental FAR relaxation for parcels on roads wider than 12 meters. Parcels on narrower roads remained ineligible for the relaxation. Our reduced-form specification uses a DID design to compare developments built between 2014 and 2022 on wider roads with FAR relaxation with those on narrower roads that remained ineligible.

…The FAR relaxation results in a significant supply response, driven by less expensive, smaller housing units. Developers fully utilize the FAR relaxation, increasing the average
number of apartments in each treated multifamily development by 28% relative to the control.

…We develop a structural model of housing supply and demand that incorporates the provision of amenity floorspace and shows that average home buyer incomes are 3.18% lower post-relaxation.

GO YIMBY!

Geetika Nagpal is on the market from Brown.