Autonomous Vehicles Lower Insurance Costs
The insurance giant Swiss RE did a study comparing human drivers with Waymo autonomous vehicles in the same zip-codes and found that autonomous vehicles generated significantly fewer insurance claims.
This study compares the safety of autonomous- and human drivers. It finds that the Waymo One autonomous service is significantly safer towards other road users than human drivers are, as measured via collision causation. The result is determined by comparing Waymo’s third party liability insurance claims data with mileage- and zip-code-calibrated Swiss Re (human driver) private passenger vehicle baselines. A liability claim is a request for compensation when someone is responsible for damage to property or injury to another person, typically following a collision. Liability claims reporting and their development is designed using insurance industry best practices to assess crash causation contribution and predict future crash contributions. In over 3.8 million miles driven without a human being behind the steering wheel in rider-only (RO) mode, the Waymo Driver incurred zero bodily injury claims in comparison with the human driver baseline of 1.11 claims per million miles (cpmm). The Waymo Driver also significantly reduced property damage claims to 0.78 cpmm in comparison with the human driver baseline of 3.26 cpmm. Similarly, in a more statistically robust dataset of over 35 million miles during autonomous testing operations (TO), the Waymo Driver, together with a human autonomous specialist behind the steering wheel monitoring the automation, also significantly reduced both bodily injury and property damage cpmm compared to the human driver baselines.
The Waymo vehicles are in San Francisco and Phoenix so this doesn’t mean that autonomous vehicles are better everywhere. Also, when we say autonomous vehicles we really mean the entire Waymo system including backup. In addition, there are some differences that are hard to account for such as human drivers use more freeways even in the same zip codes. Nevertheless, it is clear that autonomous vehicles are happening. I predict that some of my grandchildren will never learn to drive and their kids won’t be allowed to drive.
Sentences about Italy
More than half a century ago, an aphorism commonly attributed to the journalist Leo Longanesi captured the problem: “The revolution will never take place in Italy, because we all know each other.” The same is seemingly true for functional government.
Here is more from Mattia Ferraresi (NYT), mostly about Meloni.
Persistence in policy: evidence from close votes
That is the job market paper by economist Zach Freitas-Groff of Stanford University. Here is the abstract:
Policy choices sometimes appear stubbornly persistent, even when they become politically unpopular or economically damaging. This paper offers the first systematic empirical evidence of how persistent policy choices are, defined as whether an electorate’s or legislature’s decisions affect whether a policy is in place decades later. I create a new dataset that tracks the historical record of more than 800 state policies that were the subjects of close referendums in U.S. states since 1900. In a regression discontinuity design, I estimate that passing a referendum increases the chance a policy is operative 20, 40, or even 100 years later by over 40 percentage points. I collect additional data on U.S. Congressional legislation and international referendums and use existing data on state legislation to document similar policy persistence for a range of institutional environments, cultures, and topics. I develop a theoretical model to distinguish between possible causes of persistence and present evidence that persistence arises because policies’ salience declines in the aftermath of referendums. The results indicate that many policies are persistently in place—or not—for reasons unrelated to the electorate’s current preferences.
Impressively original. Zach has several interesting papers (see the first link), some from an EA-adjacent point of view.
Tiny little stories that no one cares about
“At least 45 U.S. service members may have been injured in Iran-linked attacks”
It seems that many of the injuries are traumatic brain injuries. At the moment I don’t see this on the front page of either NYT or WaPo, and yet the announcement came today.
Monday assorted links
1. “Director of new Godzilla film pursuing ‘Japanese spirituality’ of 1954 original.”
3. “Additionally, WFH has the largest detrimental impact on mental health of individuals with lower social abilities relative to WP, and it confers the most substantial benefits on those with higher cognitive abilities compared to NW.” From the job market paper of Jacqueline Nguyen, University of Maryland.
4. 300 Americans have been able to leave Gaza (NYT, it receives some coverage but just an ordinary story not at the top of the page. Not dominating the news anywhere else that I can see).
5. Ian Leslie on the new song (NYT). His book will be excellent.
What the Kia-Hyundai Crime Wave Tells Us About the Long-Term Decline in Crime
Motor vehicle thefts (per capita) are about one third the level they were in the early 1990s, a drop which is consistent with the Great Crime Decline, the large fall in many crimes since the early 1990s. A lot of ink has been spent trying to explain the great crime decline–abortion legalization, lead abatement, increased imprisonment, more policing–these are just some of the leading theories.
In recent years, however, there has been a notable increased in motor vehicle theft–not back to earlier peaks–but a substantial increase. Theft hasn’t increased uniformly across the board, however. Thefts of Kias and Hyundais have seen massive increases–in some places thefts of these cars have increased by a factor of five or ten in just a few years. The reason is simple–most cars today have electronic immobilizers which mean that without the key present these cars can’t easily be hotwired. Some enterprising thieves, however, discovered that Kia and Hyundai neglected to install these devices and they spread the word through Tik-Tok videos about a method to quickly and efficiently jack these cars.
I propose that the micro can shed light on the macro. Consider the four theories for the great crime decline that I mentioned earlier–abortion legalization, lead abatement, increased imprisonment and more policing. The first two, abortion legalization and lead abatement, are theories about why there are fewer criminals–these theories say that people improved and that is why crime declined. But better people shouldn’t steal any car models, including Kias and Hyundais! Moreover, people haven’t suddenly become worse. Thus, offender-based theories cannot explain the sharp rise in motor vehicle thefts. There have been some changes in punishment, imprisonment and policing, in recent years but these have been slow moving and fairly small and in addition they also don’t explain the rise in Kia and Hyundia thefts in particular.
Obviously, what explains the rise in thefts of Kias and Hyundias in particular is the discovery that these vehicles were unguarded, unprotected and unsecured. Notice that being unguarded, unprotected and unsecured swamped any effect coming from abortion legalization, lead abatement, increased imprisonment or more policing.
The failure of the big four to explain the rise in Kia and Hyundai thefts isn’t proof that these theories are wrong. But lets ask the inverse question, can the rise in Kia and Hyundai thefts suggest an explanation for the great crime decline? In other words, can we explain the great crime decline by an increase in security. Begin with the most direct case, motor vehicle theft. Car immobilizes and other security devices began to be installed in the 1990s so the timing fits. Moreover, the timing fits multiple countries. One of the weaknesses of theories of the great crime decline such as increased imprisonment and policing is that these theories work for the United States but the crime decline occurred in many industrialized countries at about the same time. Canadian crime rates, for example, fall in near lockstep with US rates but with very different prison and policing strategies. Immobilizer technology, however, happened at similar times in similar places and where we saw delays or early adoption we also see delayed or early falls in motor vehicle theft. In addition, motor theft declined first for newer cars (secured) rather than for older cars despite the fact that the newer cars are the more desirable for thieves–again this fits the security hypothesis better than an offender or punishment hypothesis.
The security hypothesis fits motor vehicle theft but the connection is less clear with respect to other crimes. Home security devices have increased and become higher quality over time but the change was less rapid and less precisely timed to the early 1990s. The rise of credit cards and decline of cash could have reduced muggings, although again the timing doesn’t appear to be precise. Violent crime would seem even less likely to be security related–although cameras and lights surely matter–but keep in mind that a lot of violent crime is a side-effect of property crime. Vehicle thefts, muggings and drug deals turn into homicides, for example. In addition, there are “life of crime” or “career” effects. If you make motor vehicle theft and burglary less profitable that makes a life of crime less profitable which can reduce crime in general even without specific deterrence.
Overall, the security hypothesis carries some weight, especially in explaining multiple countries. I don’t fully discount any of the major theories, however. Multiple causation is important.
The main less I draw is this: The increase in Kia and Hyundai thefts suggests that the crime wave declined not because the ocean became more gentle but because we built more secure sea walls. The big waves are still out there in the vast ocean and if we lower the walls we shouldn’t be surprised if another big crime wave comes rolling in.
Is fear a bigger problem than hate?
I deploy this protocol as a lab-in-the-field experiment in Jos, Nigeria, to study the region’s ongoing conflict between Christians and Muslims. I find that fear explains 76% (and hate 24%) of the non-cooperative behavior I observe in a coordination game played between Christians and Muslims. Moreover, this fear is mostly unwarranted, as non-cooperators grossly exaggerate the percentage of hateful people in the outgroup. I then estimate a structural model to determine what type of policy intervention would most effectively increase cooperation. My counterfactual analysis suggests that interventions that correct unwarranted fears would be highly effective. In contrast, interventions that reduce hate would not because hateful people also have high levels of fear. Finally, I study an actual policy intervention with an RCT in which I provide participants access to a radio drama that promotes intergroup cooperation. Using my experimental protocol, I find that the radio drama decreases hate but not fear and thus does not translate into increased cooperation, as my model predicts.
That is from Migual Ortiz, an economics job market candidate from UC Berkeley.
Das Adam Smith Problem
The second set of advocates for the book [Theory of Moral Sentiments] I usually find in media outlets, sophisticated media outlets at that, or I hear it over lunch table conversation. These claims suggest that Wealth of Nations covers the commercial, selfish side of human behavior, while Theory of Moral Sentiments is an account of the caring, empathetic side, or something like that. I wish I had a nickel for every time I read or heard that contrast. Maybe it is harmless enough, but – and I don’t completely understand why — it kind of makes me sick. It is simultaneously an attempt to claim a bland centrist middle ground, to snidely distance oneself from capitalism and selfishness, and reduce Smith to a series of empty clichés. It is trying to be pat rather than insightful. It is trying to give everything its place in a manner that we can then safely ignore.
Just for a start, I view Smith’s portrait of human nature in Wealth of Nations as rich and multi-faceted, a piece of behavioral economics, in modern terminology, rather than narrow, commercial, and purely selfish. And in Theory of Moral Sentiments yes people are empathetic, and show sympathy for others, but they are often caring in…pretty narrow and selfish ways. I just don’t think the “each book carves out its own sphere” understanding of the pair works very well.
My biggest takeaway from TMS is that humans beings make evaluations, including sympathetic evaluations but not only, based on local rather than global information. They put a lot of weight on what is right before their eyes and neglect the bigger picture. The very opening passage of TMS expresses how we can understand the emotions of others only through our own. We cannot look around corners to understand other minds directly, so we make inferences from our own experience. Smith demonstrates and then demonstrates that point again throughout the book.
That is a passage from my generative book, written by me, GOAT: Who is the Greatest Economist of all Time, and Why Does It Matter?
Brazilian music bleg
What is new and good in Brazilian music? Say in the last ten years. Any genre. As usual, I thank you in advance for your wise counsel.
Sunday assorted links
1. Rumors about Grōk AI. And the announcement. And new version of Twitter search.
2. Taylor Swift and BTS fans against Milei (NYT, is this the new politics of coordination?).
3. Are people especially impatient for information?
6. “Africa needs to think big.” (David Pilling, FT).
Does mobility make people nicer?
In much of modern life, cooperation takes the form of people engaging in costly behavior that helps another. It is easy to understand how cooperation might be achieved in small communities where members interact repeatedly. However, in our modern world, there is a high degree of relational mobility – where individuals can easily change locations and/or social groups. How does this affect cooperative behavior? I examine this question from both theoretical and empirical perspectives. I first develop a model of repeated prisoner’s dilemma. Individuals are matched but have some ability to leave the relationship. This is sufficient to show that, perhaps surprisingly, greater relational mobility actually leads to more cooperation in equilibrium, and the model predicts a stronger effect when players are more patient. I take these predictions to the data by first conducting a meta-analysis of twelve prisoner’s dilemma experiments that varied the amount of mobility in and out of relationships. I also examine the predictions of the model using data from the World Values Survey and Gallup World Poll. I find that looking across individuals, more relational mobility in the region is associated with greater cooperation and that this relationship is stronger when individuals are more patient. Both the experimental and the observational evidence are consistent with the theoretical mechanism.
That is from the job market paper of Ziqi Lu of Harvard economics. His entire portfolio looks interesting…
Child street vendors in India
Street vending is an important source of self-employment for the urban poor. I use primary observation, survey, and experimental data from Delhi to study this market. Partnering with street vendors to randomize both prices and the passersby they solicit to try to make sales, I find that even with identical goods, child vendors are 97% more likely to make a sale and earn more than twice that of adult vendors. Despite no differences in valuation for the goods, couples, and female customers are 90% and 27% more likely to buy than male customers. Females and couples are 50% more likely to be targeted by vendors than males and are charged higher prices on average (1.15-2 times) than males. I show that these findings are consistent with a model that incorporates altruism and a cost of refusal in the buyer’s decision-making. I find that passersby are more altruistic towards children than adults in an incentivized dictator game. Additionally, requesting passersby to buy, increases the purchasing probability twofold for adult vendors and fourfold for child vendors. Survey data confirms that vendors target females or couples, over males, because they consider who would find it harder to refuse. The paper demonstrates that sellers leverage insights into consumer social preferences to inform their selling strategies, which can be effective in markets with personal selling.
That is from the job market paper of Ronak Jain, job market candidate from Harvard, updated draft to be uploaded by mid-November.
Occupational dynasties
Children often follow their parents in the same occupation. The literature has previously documented occupational persistence, but whether it has economic implications remains an open question. Using administrative data from the Netherlands and a unique policy experiment, this paper documents the prevalence of occupational transmission and estimates its effects and selection for medical doctors. I find that children are twice as likely to enter a parent’s field, with this rate substantially increasing for those above the top quartile of the parental income distribution. In addition, OLS estimated returns to occupational persistence are 2.5%. I focus on the medical profession to decompose these “naive” returns into a treatment and a selection effect of occupational transmission. I find that ’dynastic’ doctors experience a 24% income boost relative to their ’non-dynastic’ counterparts, corresponding to 58% higher returns from the medical profession. Furthermore, I identify a substantial negative selection bias in the OLS estimates, explaining why naive returns considerably underestimate the effects of occupational persistence. The large treatment effect together with the unequal incidence along the income distribution highlights the critical role of occupational transmission in exacerbating inequalities.
That is from Maria Ventura, a job market candidate from LSE.
Saturday assorted links
1. A sympathetic psychological perspective on Thomas Sowell.
2. “To “help gamers keep the crunch to themselves,” Doritos is debuting what it calls “Doritos Silent.” Gamers download Doritos Crunch Cancellation software and when the technology is turned on, the software detects the crunching sounds and silences it while keeping the gamer’s voice intact.” Link here.
3. Critique of Greg Clark on persistent status.
4. Do early morning classes change academic trajectories?
5. Top economists are not SES diverse, including compared to other academic fields.
6. “Projects developed in partnership with policymakers are 15 to 20 percentage points more likely to result in observed policy change.” (Alix Bonargent job market paper from LSE).
Income security for American workers has been rising
American workers are doing relatively well, but there is still a lot of anxiety about their plight. To many commentators, the US worker is suffering: Whether the culprit is outsourcing, trade with China, or the sheer daily turbulence of capitalism, that worker faces increasingly volatile income prospects. One political scientist even wrote a whole book about this worry.
Fortunately, the reality is much brighter. One study of this question, performed by a group of economists from Wharton, Stanford, the University of Minnesota and Brookings, suggests that income volatility has mostly been declining for the last seven decades — and especially for the last four. Whatever volatility risks remain, they used to be much worse.
One striking feature of these results, posted last week and based on data from the US Census Bureau and the Social Security Administration, is how widespread are the gains in job security. They are not going to just a scant few workers. They are long-running for both women (dating to the 1950s) and men (dating to the 1980s). They hold across most demographic groups and by gender, age, earnings level and cohort.
Here is the rest of my latest Bloomberg column.