Thursday assorted links

1. Ideological trends in academic scholarship.

2. Prediction market for the John Bates Clark award.

3. Show Me The Model“Give it a URL or paste some plain text, and the tool flags hidden assumptions, internal inconsistencies, and other problem areas, and tells you how a real economist would think through the issue.”

4. “I built Frontier Graph: an open-source tool to explore open questions in economics, drawing on 240K papers across 300 journals.”  And here.

5. The Peruvian death toll.

6. India tests whether AI can stop trains from hitting elephants.

7. The Amish are OK with washing machines.

University of Chicago fact of the day

A team largely composed of economics majors who know their way around Milton Friedman and Gary Becker, Chicago (23-4) is a DIII powerhouse currently in the DIII Sweet 16 and chasing its first-ever NCAA national title.

“Nobody’s ever going to confuse this with Alabama football,” says head coach Mike McGrath, “but if you think about the student-athlete model, I think we show you can do both of those things very, very well.”

…“Obviously, the kids are really smart,” he says. “You can’t B.S. them. They’re going to challenge everything that you tell them, you have to be prepared for that…there’s a need to understand the why behind things.”

…a friend of the program, Chicago professor John List, is working with students on an analysis of player positioning.

Here is more from the WSJ, via Rama Rao.

My excellent Conversation with Harvey Mansfield

Here is the audio, video, and transcript.  Here is part of the episode summary:

Tyler and Harvey discuss how Machiavelli’s concept of fact was brand new, why his longest chapter is a how-to guide for conspiracy, whether America’s 20th-century wars refute the conspiratorial worldview, Trump as a Shakespearean vulgarian who is in some ways more democratic than the rest of us, why Bronze Age Pervert should not be taken as a model for Straussianism, the time he tried to introduce Nietzsche to Quine, why Rawls needed more Locke, what it was like to hear Churchill speak at Margate in 1953, whether great books are still being written, how his students have and haven’t changed over 61 years of teaching, the eclipse rather than decline of manliness, and what Aristotle got right about old age and much more.

Excerpt:

COWEN: From a Straussian perspective, where’s the role for the skills of a good analytic philosopher? How does that fit into Straussianism? I’ve never quite understood that. They seem to be very separate approaches, at least sociologically.

MANSFIELD: Analytic philosophers look for arguments and isolate them. Strauss looks for arguments and puts them in the context of a dialogue or the implicit dialogue. Instead of counting up one, two, three, four meanings of a word, as analytic philosophers do, he says, why is this argument appropriate for this audience and in this text? Why is it put where it was and not earlier or later?

Strauss treats an argument as if it were in a play, which has a plot and a background and a context, whereas analytic philosophy tries to withdraw the argument from where it was in Plato to see what would we think of it today and what other arguments can be said against it without really wanting to choose which is the truth.

COWEN: Are they complements or substitutes, the analytic approach and the Straussian approach?

MANSFIELD: I wouldn’t say complements, no. Strauss’s approach is to look at the context of an argument rather than to take it out of its context. To take it out of its context means to deprive it of the story that it represents. Analytic philosophy takes arguments out of their context and arranges them in an array. It then tries to compare those abstracted arguments.

Strauss doesn’t try to abstract, but he looks to the context. The context is always something doubtful. Every Platonic dialogue leaves something out. The Republic, for example, doesn’t tell you about what people love instead of how people defend things. Since that’s the case, every argument in such a dialogue is intentionally a bad argument. It’s meant for a particular person, and it’s set to him.

The analytic philosopher doesn’t understand that arguments, especially in a Platonic dialogue, can deliberately be inferior. It easily or too easily refutes the argument which you are supposed to take out of a Platonic dialogue and understand for yourself. Socrates always speaks down to people. He is better than his interlocutors. What you, as an observer or reader, are supposed to do is to take the argument that’s going down, that’s intended for somebody who doesn’t understand very well, and raise it to the level of the argument that Socrates would want to accept.

So to the extent that all great books have the character of this downward shift, all great books have the character of speaking down to someone and presenting truth in an inferior but still attractive way. The reader has to take that shift in view and raise it to the level that the author had. What I’m describing is irony. What distinguishes analytic philosophy from Strauss is the lack of irony in analytic philosophy. Philosophy must always take account of nonphilosophy or budding philosophers and not simply speak straight out and give a flat statement of what you think is true.

To go back to Rawls, Rawls based his philosophy on what he called public reason, which meant that the reason that convinces Rawls is no different from the reason that he gives out to the public. Whereas Strauss said reason is never public or universal in this way because it has to take account of the character of the audience, which is usually less reasonable than the author.

And yes he does tell us what Straussianism means and how to learn to be a Straussian.  From his discussion you will see rather obviously that I am not one.  Overall, I found this dialogue to be the most useful source I have found for figuring out how Straussianism fits into other things, such as analytics philosophy, historical reading of texts, and empirical social science.

Perhaps the exchange is a little slow to start, but otherwise fascinating throughout.  I am also happy to recommend Harvey’s recent book The Rise and Fall of Rational Control: The History of Modern Political Philosophy.

*Recession*, by Tyler Goodspeed

The subtitle is The Real Reasons Economies Shrink and What To Do About It.  Here is from the book’s summary:

Contrary to popular perception, recessions are not the inevitable bust that follows an unsustainable boom, and they do not operate like wildfires that clear out economic deadwood. Recessions are caused by adverse shocks like war and energy price spikes; and far from unleashing gales of creative destruction, post-recession economic growth typically resumes the same trend as before—all pain, no gain.

The book covers American history and focuses on verbal exposition of the theory, not mathematics.  Overall, Goodspeed provides an underrated perspective in an era where 2008-2009 led people to become overly obsessed with issues of aggregate demand.  Our current presidency may be curing this however!

Wednesday assorted links

1. Congestion pricing for WDC? It is good to see a move away from the selective invocation of economic reasoning, and recognition that some degree of congestion does not justify every tariff.

2. Zimbabwean Uber drivers in Cape Town.

3. Northern Mariana Islands fact of the day.

4. Advances in asteroid protection? (NYT)  And Jason Furman on today’s economy (NYT).

5. Benefits of a malaria vaccine.

6. New podcast on longevity biotech.

7. Anthropic recruiting for economic research positions.

8. W.H. Hutt on apartheid.

International Comparison of Physician Incomes

We compare physician incomes using tax data from the United States, Canada, Sweden, and the Netherlands. Physicians are concentrated in the top percentiles of the income distribution in all four countries, especially in the United States and certain specialties. Physician incomes are highest in the United States, and a decomposition shows that this mainly reflects differences in overall income distributions, rather than physicians’ locations in those distributions. This suggests that broader labor market differences, and thus physicians’ outside options, drive absolute incomes. Shifting US physicians’ incomes to match relative positions in other countries’ distributions would only marginally reduce healthcare spending.

By Aidan Buehler, et.al., from a new NBER working paper.

Some simple economics of AI?

AI lowers the cost of building businesses. But it raises the bar for sustaining advantage. More companies can start. Fewer can dominate.

That implies greater dispersion. More volatility. Less structural concentration. A market that rewards adaptability rather than mere size.

And it raises the question that follows logically from duration compression: if software moats erode faster, where does durable advantage reconcentrate? The answer may be in the places that resist compression, physical infrastructure, energy constraints, material bottlenecks, regulatory barriers. The assets that cannot be replicated with model access and API credits. The things that still require time.

Equity does not disappear in this world.

It transforms.

From ownership of stability to exposure to speed.

From franchises to call options.

And that is the structural shift beneath the surface panic, the real story unfolding in the Age of Agents.

Here is more from Jordi Visser.

One reason why South Africa is difficult to govern (South Africa fact of the day)

South Africa holds the grim distinction of being the most unequal country on Earth. South Africa leads the global ranking with a Gini index of 0.63. Statista The richest 10% of South Africans hold 71% of the wealth, while the poorest 60% hold just 7%. World Population Review This extreme inequality is largely rooted in history — economists attribute it to historical land ownership laws, the lingering socio-economic impacts of apartheid, and an economy heavily reliant on undiversified natural resource extraction. Data Pandas

The World (Global Gini) is trickier to pin down, because it measures inequality across all of humanity rather than within a single country. Different scholars estimate the global Gini index to range between 0.61 and 0.68. Wikipedia Interestingly, when measured this way — treating every person on Earth as part of one big “country” — global inequality ends up being comparable to South Africa’s, because the gap between the world’s richest and poorest nations is enormous.

That is from Claude.

Who profits from prediction markets?

It seems execution beats foresight:

Retail traders correctly forecast asset price direction yet lose money. Using 222 million prediction market trades with observable terminal payoffs, we decompose returns into a directional component (did the trader pick the right side?) and an execution component (did the trader get a favorable price?). Traders with above-random accuracy earn negative returns because they arrive late and pay unfavorable prices; traders with near-random accuracy profit through superior execution. These two dimensions of skill are nearly orthogonal (ρ ≈ 0.13), and split-sample tests confirm both are persistent. What separates profitable from unprofitable traders is not forecasting ability but execution: automated traders pay 2.52 cents less per contract than casual traders, and this gap alone accounts for the sign of returns across trader types. Being right and making money are not the same thing.

That is from Joshua Della Vedova.  Via John de Palma.

Rich Elliott on Cape Town (from my email)

Live in Cape Town long enough and you lose interest in the outside world. Visitors from more exciting cities start yawning at your dinner table, but I no longer care. They have no possible conception of the unbearable bliss of fine summer days when the sea is warm and the figs are ripe and you start the morning with a dive into a cool green rock pool, followed perhaps by coffee in one of those impossibly quaint cafes and a spot of light typing, if I can manage to ignore the drama outside my window – tides rising, whales blowing, birds diving, the boats coming back to Kalk Bay. The Contessa and I often walk down to meet them, come home with a fat Cape salmon or snoek. Come sundown, we set the fish to grill on an open fire, uncork a bottle of wine, and, yes, congratulate ourselves for living in the last corner of Africa that is immune to chaos and madness.

Tuesday assorted links

1. “Absolutely astounding figures from the NY state comptroller: spending on services for the NYC street homeless population ran to $81,705 per person last year, up from $28,428 pp 6yrs ago. Figures do not include all kinds of other spending, supportive housing, policing costs etc.” Link here.

2. Backlash against The Giving Pledge (NYT).

3. Poor weather when touring a college campus reduces a student’s chance of applying.

4. Where do AI agents settle their payments?

5. Even Nevada never had that much of a real estate bubble?

6. Prediction markets turn many people into unwilling referees.  Good and interesting piece.

7. GPT Pro on the value of introspection.  “The literature does not really say “successful people are introspective.” It says: successful people are better at turning reflection into accurate self-insight, external calibration, and better next actions.”

8. Chicago meet-up for CWT.

NB: The passing of Coetzee is now not confirmed.

The AI arms race

That is the topic of my latest column for The Free Press, here is the closing tag:

The biggest risk is not from the AI companies, but rather that the government with the most powerful AI systems becomes the bad guy itself. The U.S., on the world stage, is not always a force for good, and we might become worse to the extent we can act without constraint. The Vietnam War is perhaps the least politically controversial way of demonstrating that point.

So today we need an odd and complex mix of not entirely consistent ideologies for the current arms race to go well. How about some tech accelerationism mixed with capitalism, and then a prudent technocratic approach to military procurement, to make sure those advances serve national security ends? On the precautionary side, we need a dash of the 1960s and ’70s New Left and libertarian anti-war ideologies, skeptical of Uncle Sam himself. We do not want to become the bad guys.

Do you think we can pull that off? The new American challenge is underway.

Worth a ponder.

Claims about grade inflation

Average grades continue to rise in the United States, raising the question of how grade inflation impacts students. We provide comprehensive evidence on how teacher grading practices affect students’ long-run success. Using administrative high school data from Los Angeles and from Maryland that is linked to postsecondary and earnings records, we develop and validate two teacher-level measures of grade inflation: one measuring average grade inflation and another measuring a teacher’s propensity to give a passing grade. These measures of grade inflation are distinct from teacher value-added, with grade inflating teachers having moderately lower cognitive value-added and slightly higher noncognitive value-added. These twomeasuresalso differentially impact students’ long-term outcomes. Being assigned a higher average grade inflating teacher reduces a student’s future test scores, the likelihood of graduating from high school, college enrollment, and ultimately earnings. In contrast, passing grade inflation reduces the likelihood of being held back and increases high school graduation, with limited long-run effects. The cumulative impact is economically significant: a teacher with one standard deviation higher average grade inflation reduces the present discounted value of lifetime earnings of their students by $213,872 per year.

That is from a recent paper by Jeffrey T. Denning, Rachel Nesbit, Nolan Pope, and Merrill Warnick.  Via Séb Krier.

The hyper-NIMBY of earlier Cape Town and South Africa

The most controversial of the forced removals occurred in the second half of the 1960s, with the expulsion of 65,000 coloureds from District Six, a vibrant inner-city ward of Cape Town, where whites, many of the slumlords, owned 56% of the property.  Against their will, District Six residents were moved out to the sandy townships of the Cape Flats.  In Johannesburg, the inner-city suburb of Sophiatown, where blacks could own freehold property, was another notorious site of forced removals.  Often long-established community institutions such as churches and schools had to be abandoned.

That is from the very good book by Hermann Giliomee The Afrikaners: A Concise History.