Meet me in Mongolia? (North Korea fact of the day)

As officials scramble to convene the hastily announced and once-unthinkable meeting in the coming weeks, the site itself remains an open question. It is unclear whether Mr. Kim’s fleet of Soviet-era planes can fly him more than a few thousand miles from North Korea.

“We know he has a plane, but it’s an old plane,” said Sue Mi Terry, a former C.I.A. analyst and National Security Council aide who worked on Korea issues. “No one really knows if it works.”

Since taking power in 2011, Mr. Kim is not known to have flown outside his country, and the question of his transportation adds a layer of political complications to a fraught and uncertain summit meeting…

With the expected range of Mr. Kim’s planes, a trip to Hawaii or Guam, the closest United States territory to North Korea, would almost certainly require a refueling stop or a borrowed plane. Korea experts call that an indignity that Mr. Kim would not accept.

That is from Ali Watkins of the NYT.

How do people respond to shared trauma?

Studies of the aftermath of the Oklahoma City bombing of April 19th, 1995, indicate that the traumatic event resulted in people seeking to strengthen their bonds with loved ones: Divorce rates went down, and birth rates went up.

While tragic, the Oklahoma City bombing provided a fortuitous case study. When domestic terrorists Timothy McVeigh and Terry Nichols carried out the truck bombing of the Alfred P. Murrah Federal Building in downtown Oklahoma City, a total of 168 people died and more than 700 were injured. At the time it was the most calamitous terrorist attack in American history. Sixty-two percent of people in the city reported that they were personally affected by the events of that day. Forty percent said they knew someone who was injured or killed. The death of nineteen young children in the bombing was particularly traumatic.

Researchers have since studied the ripple effect the attack had on both divorce rates and birth rates. Family researchers Paul A. Nakonezny, Rebecca Reddick, and Joseph Lee Rodgers note that after the bombing, survivors were statistically less likely than the general population to divorce. Divorce rates, compared to the previous 10 years, declined in the Oklahoma City region in the months after the blast. Researchers thought that the impact would be felt most acutely by those closest to the bomb site, and indeed, the impact was highest among those who lived in counties most directly affected by the bombing, and lessened in Oklahoma counties located further away from downtown Oklahoma City.

In a separate study, Joseph Lee Rodgers, Craig A. St. John, and Ronnie Coleman discovered that Oklahoma City metropolitan area underwent a baby boom nine months after the bombing. In seventy-seven Oklahoma counties, both factors—marriage longevity and increased procreation—declined the further away the counties were from ground zero.

That is from Daily JStor.

What can we plausibly hope for with North Korea?

That is the topic of my latest Bloomberg column, here is one excerpt:

First: The North Korean regime has never been bureaucratized in the modern sense of that term. While we don’t have comprehensive information, it seems that until recently Kim as leader had not been going abroad, nor had he been receiving many visits from other heads of state. His position and perhaps his mood has been one of extreme isolation, and he is not surrounded by anything resembling the U.S. State Department or even the old-style Soviet bureaucracies that managed foreign policy for the USSR. The rest of his regime is probably poorly informed about the extent of American military superiority, should a conflict come to pass.

By meeting with other foreign leaders, the North Korean regime would be forced to build up its basic processes for dealing with the rest of the world. That in turn creates interest groups and flows of information (some of which invariably leak out). The North Korean populace responds by thinking more about the outside world, making it harder to control by propaganda. In turn the North Korean leadership may decide to continue economic liberalization.

One need not count on an “End of History” story culminating in liberalism and democratization. The more modest hope would be for the North Korean leadership to become more decentralized, more bureaucratic, better informed and harder to marshal behind crazy military measures.

The unspoken goal of engagement would be to encourage North Korea to evolve into a more banal and more predictable form. That is the natural flow of most bureaucratic organizations, so in this regard American negotiators actually have time on their side. The North Koreans are going to change a lot more than the U.S. is likely to.

And the concluding sentence:

Think of any diplomatic talks with North Korea as a big act of theater — designed not to fool him, but to teach him that theater itself can be fun.

Do read the whole thing.

A history of randomized assignment in the social sciences

Although the concept of randomized assignment to control for extraneous factors reaches back hundreds of years, the first empirical use appears to have been in an 1835 trial of homeopathic medicine. Throughout the 19th century, there was primarily a growing awareness of the need for careful comparison groups, albeit often without the realization that randomization could be a particularly clean method to achieve that goal. In the second and more crucial phase of this history, four separate but related disciplines introduced randomized control trials within a few years of one another in the 1920s: agricultural science, clinical medicine, educational psychology, and social policy (specifically political science). Randomized control trials brought more rigor to fields that were in the process of expanding their purviews and focusing more on causal relationships. In the third phase, the 1950s through the 1970s saw a surge of interest in more applied randomized experiments in economics and elsewhere, in the lab and especially in the field.

That is from a Julian C. Jamison paper done at the World Bank, via various people in my Twitter feed.

The value of Facebook and other digital services

Women seem to value Facebook more than men do.

Older consumers value Facebook more.

Education and US region do not seem to be significant.

The median compensation for giving up Facebook is in the range of $40 to $50 a month, based mostly on surveys, though some people do actually have to give up Facebook.

I find it hard to believe the survey-based estimate that search engines are worth over 17k a year.

Email is worth 8.4k, and digital maps 3.6k, and video streaming at 1.1k, again all at the median and based on surveys.  Personally, I value digital maps at close to zero, mostly because I do not know how to use them.

That is all from a new NBER paper by Erik Brynjolfsson, Felix Eggers, and Avinash Gannamaneni.

Models as indexing, and the value of Google

There are many arguments for the use of models in economics, including notions of rigor and transparency, or that models can help you to see relationships you otherwise might not have expected.  I don’t wish to gainsay those, but I thought of another argument yesterday.  Models are a way of indexing your thoughts.  A model can tell you which are the core features of your argument and force you to give them names.  You then can use those names to find what others have written about your topic and your mechanisms.  In essence, you are expanding the division of labor in science more effectively by using models.

This mechanism of course requires that models are a more efficient means of indexing thoughts than pure words or propositions alone.  In this view, it is often topic names or book indexes or card catalogs that models are competing with, not verbal economics per se.

The existence of Google therefore may have lowered the relative return to models.  First, Google searches by words best of all.  Second and relatedly, if you have written only words Google will help you find the related work you need, scholar.google.com kicks in too.  In essence, there is a new and very powerful way of finding related ideas, and you need not rely on the communities that get built around particular models (though those communities largely will continue).

It is notable that open access, on-line economics writing doesn’t use models very much and is mostly content to rely on words and propositions.  There are several reasons for this, but this productivity shock to differing methods of indexing may be one factor.

Still, it is not always easy to search by words.  Many phrases — consider say “free will” — do not through search engines discriminate very well on the basis of IQ or rigor.

How big are the buyer and renter gains from SB 827?

This article considers a counterfactual thought experiment: how would California’s housing market be different today if a policy currently under consideration in the California Senate—SB 827, which would allow new residential building along public transit corridors—had been implemented six years ago? I estimate that rent would be 5.8 percent lower in San Francisco, a savings of $266 per month on the median home, and 4.2 percent lower in Los Angeles County, savings of $124 per month.

That is from Salim Furth at Mercatus, here is much more.  You will note those numbers do not include the higher output and innovation from a more efficient allocation of talent.

Here is Salim’s podcast with Matt Yglesias and Emily Hamilton.

Washington, D.C. fact of the day

The National African Art Museum has a problem:

Attendance dropped to 159,000 last year from a high of 403,000 in 2009, when there was a special exhibition. Last year’s number is 43 percent below the 10-year average.

One of the under-reported stories about D.C. is how much the city’s art museums have faded as intellectual and cultural centers for the city.  This seems to be extreme for the African museum, perhaps because of urban gentrification, and perhaps because the African museum has an especially hard time mounting blockbuster exhibits famous to the public eye.  Prince Twins Seven Seven just isn’t as famous as he ought to be.

In the meantime, you all have the internet to keep you busy.

Which is the most ideologically diverse American city?

When I requested requests, Jimmy wrote back:

(1) Conversations with Tyler featuring an actual Straussian.

(2) What is the most ideologically / politically diverse city? Which most moderate in that regard? Where in America am I least likely to be in a bubble and why?

I have several nominations for #2:

1. Houston. It still has plenty of Texas conservatives, but enough non-conservatives to elect a lesbian mayor.  Mexicans fit along a political spectrum of their own.

2. Washington, D.C. and environs. The intellectual class in this city is about half conservative/Republican/libertarian and always will be — just don’t think too hard about who actually lives here!  Most of all, everyone is used to the fact that there are oodles and oodles of forces on the other side of the debate.  No one flips out over this.  Even the media types have a reasonable amount of non-left representation.

3. Chicago. Its presence in the Midwest moderates its left flank, there is a diverse mix of ethnic groups, and the city has lots of Midwestern civic virtue.  Real estate prices have stayed relatively low, so not all blue collar and working class types have been driven out.  “Old Chicago” is still up and running to some extent.

That’s the national capital, plus two of the five largest cities.  And I’ve already argued that, in a Straussian sense, Los Angeles is the most right wing city in the United States.  Orange County is ideologically diverse as well.  In other words, urban American is doing pretty well on intellectual diversity once you get out of (parts of) Manhattan and San Francisco and Seattle.

San Antonio measures as quite moderate, but is neither typical nor extremely diverse.  Here are some basic data, Nashville, Wichita, and Las Vegas also measure in the middle, and of those Las Vegas seems most diverse to me rather than simply dull.

Which place in the country is the least likely to leave you trapped in an intellectual bubble?  Somewhere in Ohio?  Columbus or Cincinnati?  Knoxville, Tennessee?  Louisville?  Kansas City, MO?  In those locales you truly are confronted with the everyday problems of regular American life and you are not obsessing over either crypto or what just passed through the subcommittee.

The proper conclusion may be that intellectual bubbles are a useful means of moving forward.

The impact of the Dodd-Frank Act on small business

There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the DFA disproportionately reduced the incentives for all banks to make very modest loans and reduced the viability of small banks, whose small-business share of C&I loans is generally much higher than that of larger banks. Despite an economic recovery, the small loan share of C&I loans at large banks and banks with $300 or more million in assets has fallen by 9 percentage points since the DFA was passed in 2010, with the magnitude of the decline twice as large at small banks. Controlling for cyclical effects and bank size, we find that these declines in the small loan share of C&I loans are almost all statistically attributed to the change in regulatory regime. Examining Federal Reserve survey data, we find evidence that the DFA prompted a relative tightening of bank credit standards on C&I loans to small versus large firms, consistent with the DFA inducing a decline in small business lending through loan supply effects. We also empirically model the pace of business formation, finding that it had downshifted around the time when the DFA and the Sarbanes-Oxley Act were announced. Timing patterns suggest that business formation has more recently ticked higher, coinciding with efforts to provide regulatory relief to smaller banks via modifying rules implementing the DFA. The upturn contrasts with the impact of the Sarbanes-Oxley Act, which appears to persistently restrain business formation.

That is from Michael D. Bordo and John V. Duca.

Monday assorted links

1. What kind of vacation can the wealthy buy for 150k?

2. Let’s scrape MR.

3. Thomas Friedman on Iran and Syria (NYT).

4. Retail job openings.

5. Subprime mattered less than you thought.

6. “China’s yuan has appreciated vs. US dollar by +3.7% so far this year, and has risen +10.7% since Trump took office. – US dollar has fallen by about -1% so far this year, on a broad trade-weighted basis.” Link here.

The Facebook Trials: It’s Not “Our” Data

Facebook, Google and other tech companies are accused of stealing our data or at least of using it without our permission to become extraordinarily rich. Now is the time, say the critics, to stand up and take back our data. Ours, ours, ours.

In this way of thinking, our data is like our lawnmower and Facebook is a pushy neighbor who saw that our garage door was open, took our lawnmower, made a quick buck mowing people’s lawns, and now refuses to give our lawnmower back. Take back our lawnmower!

The reality is far different.

What could be more ours than our friends? Yet I have hundreds of friends on Facebook, most of whom I don’t know well and have never met. But my Facebook friends are friends. We share common interests and, most of the time, I’m happy to see what they are thinking and doing and I’m pleased when they show interest in what I’m up to. If, before Facebook existed, I had been asked to list “my friends,” I would have had a hard time naming ten friends, let alone hundreds. My Facebook friends didn’t exist before Facebook. My Facebook friendships are not simply my data—they are a unique co-creation of myself, my friends, and, yes, Facebook.

Some of my Facebook friends are family, but even here the relationships are not simply mine but a product of myself and Facebook. My cousin who lives in Dubai, for example, is my cousin whether Facebook exists or not, but I haven’t seen him in over twenty years, have never written him a letter, have never in that time shared a phone call. Nevertheless, I can tell you about the bike accident, the broken arm, the X-ray with more than a dozen screws—I know about all of this only because of Facebook. The relationship with my cousin, therefore, isn’t simply mine, it’s a joint creation of myself, my cousin and Facebook.

Facebook hasn’t taken our data—they have created it.

Facebook and Google have made billions in profits, but it’s utterly false to think that we, the users, have not been compensated. Have you checked the price of a Facebook post or a Google search recently? More than 2 billion people use Facebook every month, none are charged. Google performs more than 3.5 billion searches every day, all for free. The total surplus created by Facebook and Google far exceeds their profits.

Moreover, it’s the prospect of profits that has led Facebook and Google to invest in the technology and tools that have created “our data.” The more difficult it is to profit from data, the less data there will be. Proposals to require data to be “portable” miss this important point. Try making your Facebook graph portable before joining Facebook.

None of this means that we should not be concerned with how data, ours, theirs, or otherwise, is used. I don’t worry too much about what Facebook and Google know about me. Mostly the tech companies want to figure out what I want to buy. Not such a bad deal even if the way that ads follow me around the world is at times a bit disconcerting. I do worry that they have not adequately enforced contractual restrictions on third-party users of our data. Ironically, it was letting non-profits use Facebook’s data that caused problems.

I also worry about big brother’s use of big data. Sooner or later, what Facebook and Google know, the government will know. That alone is good reason to think carefully about how much information we allow the tech companies to know and to store. But let’s get over the idea that it’s “our data.” Not only isn’t it our data, it never was.