Results for “model this” 3165 found
Deirdre McCloskey’s Sins
Deirdre McCloskey has made a name for herself by critically examining the logic and rhetoric of economic arguments. She has a nice pamphlet summarizing her claims called “The Secret Sins of Economics.” It’s written for non-economists and nicely makes three points:
1. Some alleged problems of economics are virtues. For example, using math to describe and analyze economic behavior is actually good because math allows you to clearly deduce conclusions from premises.
2. There are some drawbacks to economics that are annoying, but acceptable. For example, economists assume people are always chasing profits. Her response is to say that this narrow focus tends to yield interesting insights. McCloskey identifies other drawbacks of economics and economists, such as professional arrogance, but asks that we forgive those because they really aren’t that bad.
3. McCloskey identifies two horrible, unforgivable economic sins – (a) economists tend to prove qualitative mathematical theorems whose conclusions depend on arbitrary, qualitative premises and (b) statistical analyses routinely confuse statistiscal and substantial significance.
These are pretty weighty charges – that much theoretical economic work is just a useless game and economists (among others) make routine statistical errors no decent statistics undergrad would ever make.
How to respond? I’m not a professional economist – so I can’t speak for the economics profession, but I think the second charge – misunderstanding of significance – is right on target. I’ve told students and colleagues many times that “not significant” does not mean “no effect.” It simply means that you can’t automatically reject the hypothesis that, according to an arbitrary standard, there is no effect, which is different than saying there really is no effect. As McCloskey says, significance is simply a measure of confidence in the effect’s measurement. The whole situation is quite bad. For a summary of anti-significance test views, see the book “What if there were no significance tests?”
This first charge doesn’t bother me too much. All academic endeavors must engage in thought experiments. In fact, bizarre, unrealistic thought experiments can lead to some great insights. But what McCloskey, I think, really focuses on is the lack of empirical discipline. That is to say, when you come up with the premise of your theorem, it should be well justified.
When I studied math, there was a real difference between how mathematicians did it and how physicists did it. Math people are purely concerned with what is logically possible (does B really follow from A?) but physicists employ “physical intuition” – a sense of what assumptions were appropriate, a gut feeling developed from doing lots of experiments and observation. That’s why a lot of physics seems mysterious to mathematicians – the math looks familiar, but why did the physics people choose mathematical model X over Y? McCloskey’s point could be rephrased as saying that economists should move away from the mathematician’s style of modelling (proving what is logically possible) to the physics style of modeling (developing models inspired and constrained by observation and experiment).
The Poincare conjecture
Has the Poincare Conjecture been solved? Possibly. Read this recent news report about a new proof by an obscure Russian loner, Grisha Perelman. The Conjecture is one of the famous Millennium Problems in mathematics.
“This is arguably the most famous unsolved problem in math and has been for some time,” said Bruce Kleiner, a University of Michigan math professor reviewing Perelman’s work.
Here is the clearest statement I can find of what the whole thing means:
To solve it, one would have to prove something that no one seriously doubts: that, just as there is only one way to bend a two-dimensional plane into a shape without holes — the sphere — there is likewise only one way to bend three-dimensional space into a shape that has no holes. Though abstract, the conjecture has powerful practical implications: Solve it and you may be able to describe the shape of the universe.
Or try this:
[the] work has huge implications for our understanding of partial differential equations. PDEs (as they are known in the trade) are the mainstay of physics and engineering. Mazur notes that physicists and engineers use PDEs to model everything from the flow of water to the buildup of heat in aircraft engines. “I would expect this work to have enormous applications in many fields of science,” he says.
There may also be applications for scientists studying DNA…Some kinds of DNA wrap themselves into knot formations that can be insanely difficult to decipher. But Mazur says Thurston’s classification [referring to related work] may provide a way to calculate the exact nature of any knot – so in theory it could be used to work out the structure of knotty DNA molecules.
The upper reaches of mathematics can often seem absurdly detached from life down here on planet earth, but Mazur points out that you can never know where things might lead. He cites the case of James Clerk Maxwell. In the late 19th century Maxwell worked out the equations of electromagnetism. “At the time it would have been easy to write off Maxwell’s ideas about invisible forces as a mystical abstraction,” Mazur says. But Maxwell’s work laid the foundations for the development of radio, and hence the communications revolution. Every time we turn on the TV or pick up a cellphone or log onto a WiFi system we are reaping the rewards of Maxwell’s equations.
Another bottom line: Perelman will receive a million dollars if his result stands up. Alex says this is another win for bounty hunters!
French revenge on Hollywood?
Henri Crohas’s company, Archos SA, makes a small hand-held device, like a bulky Palm Pilot, that can record and then play back scores of movies, TV shows and digital photos on its color screen or a TV set. The gadget — which in effect does to movies what Apple Computer Inc.’s iPod does to music — already has sold 100,000 units world-wide during the past six months, beating the big consumer electronics makers to the U.S. market.
Archos’s device, which costs about $500 to $900 depending on the model, ignores an anticopying code found on a majority of prerecorded DVDs. That means consumers can plug the Archos device into a DVD player and transfer a movie to it. Users also can transfer recorded TV programs and digital music files to the Archos device.
Yes this item is from a small company in France, here is the full story. Stay tuned for further developments. The bottom line is that the Internet is not the only means of pirating music and movies.
You are a better bargainer than you think
Negotiators tend to think they are more transparent than they truly are. They believe that their negotiating partners can discern their thoughts, and negotiating positions, when in fact the partners are clueless. See the experimental evidence from this recent paper by Leaf van Boven, Thomas Gilovich, and Victoria Medvec. There is good evidence that we send involuntary signals of our own trustworthiness. Still, we do not always have a good sense of how those signals are interpreted by others.
The basic result may stem from a kind of excess sympathy. The negotiator tries to put herself in the position of the “other mind,” but cannot eradicate the knowledge of her own bargaining position. So the model of the other mind contains more self-knowledge than is rationally justifiable. Related results have been found in other areas. Individuals overestimate how much others pick up on the cues from their facial expressions. Similarly, individuals who are laughing think they appear more expressive than they do to others. As for bloggers, well, they probably think that readers pick up more of the nuances of their writing than is the case.
Oxford Encyclopedia of Economic History
Oxford University Press has just published a five-volume Encyclopedia of Economic History, edited by Joel Mokyr of Northwestern University.
Virginia Postrel offers a good review and some interesting details:
Did you know that the oldest records of chemical pest control date back 4,500 years, to Sumerian farmers who used sulfur compounds to kill insects and mites?
Or that a century ago, railroad companies accounted for half the securities listed on the New York Stock Exchange? (Before the railroads, with their huge demand for capital, securities markets traded almost entirely in government debt.)
Or that in 1850, shoemaking employed more workers in the United States than any other manufacturing business?
The past doesn’t look quite like we tend to picture it: many of the people who got rich from the Industrial Revolution were not industrialists, but landowners who held urban real estate or property with access to water power or mines. From 1880 to 1914, unions went on strike at least 50 times to stop American employers from hiring black workers. Above all, Professor Mokyr says, “in the Middle Ages and in classical antiquity, the destitute were the vast majority of the population.”
And what is the bottom line to economic history?
Professor Mokyr says: “There are certain unifying themes that you see everywhere. People have to make a living. People would rather have more than to have less. On the whole, they don’t behave stupidly. They do as well as they can under the circumstances. The variation is in the circumstances, in the richness and diversity of human economic institutions that have emerged over time.”
That is not all:
“Economic history,” Professor Mokyr writes in the preface, “covers nothing less than the entire material existence of the human past.” The encyclopedia gives theoretical economists a way to check their ideas against the realities of the past. “You guys can’t write these big, fancy models without looking at the details,” Professor Mokyr says.
I have not yet seen the volumes but most likely the set will not be surpassed anytime soon.
Is deliberative democracy a good idea?
Richard Posner says no. The deliberative democracy idea is pushed by such scholars as Bruce Ackerman and James Fishkin. They call for the following:
In our soon-to-be-released book, we offer a new way of thinking about democratic reform, proposing a new national holiday–Deliberation Day. It would replace Presidents’ Day, which does no service to the memories of Washington and Lincoln, and would be held two weeks before major national elections. Registered voters would be called together in neighborhood meeting places, in small groups of 15 and larger groups of 500, to discuss the central issues raised by the campaign. Each deliberator would be paid $150 for the day’s work of citizenship. To allow the business of the world to carry on and as many as possible to participate, the holiday would be a two-day affair. If Deliberation Day succeeded, everything else would change: the candidates, the media, the activists, the interest groups, the spin doctors, the advertisers, the pollsters, the fundraisers, the lobbyists, and the political parties. All would have no choice but to adapt to a more attentive and informed public. When the election arrived, the people would speak with a better chance of knowing what they wanted and which candidates were more likely to pursue the popular mandate.
Posner responds with his usual aplomb:
Reform does not well out of deliberation, but reflects passions and interests. Abolitionism, the suffrage movement, the civil rights movement, the opposition to the war in Vietnam, the rise of free-market ideology, welfare reform, and the gay-rights movement were not the product of discussion among voters debating on the model of the academic seminar (the implicit model, naturally, of academic reflection on the political process by the proponents of deliberative democracy, academics all). They were the product of moral and political entrepreneurs tapping into wells of discontent among minorities and eventually getting the attention of the politicians…
I have difficulty suppressing the uncharitable thought that there may be an element of bad faith in the deliberative-democracy movement generally (I do not mean in Ackerman and Fishkin particularly). I think that what motivates many deliberative democrats is not a love of democracy or a faith in the people, but a desire to change specific political outcomes, which they believe they could do through argument, if only anyone could be persuaded to listen, because they are masters of argumentation. I infer this secret agenda from the fact that most proponents of deliberative democracy advocate aggressive judicial review, which removes many issues from democratic control; are coy about indicating what policies they dislike but would accept; and are uncommonly fond of subjecting U.S. citizens to control by international organizations of questionable, and often of no, democratic pedigree. I sense a power grab by the articulate class whose comparative advantage is–deliberation.
My take: I would expect deliberative democracy to lead to greater conformity and a less efficient aggregation of information. Crowds can talk themselves into bad ideas very readily. The main purpose of democracy is to prevent very bad ideas and very bad leaders. We are more likely to resist such dangers in private, and through periodic and gradual evaluations, rather than in open public forums. I award the debate to Posner.
Thanks to www.politicaltheory.info for the link.
Productivity and unemployment
I am growing increasingly annoyed with people who argue that the dark side of productivity growth is unemployment. The Economist, which ought to know better, says we are overproductive. CNN Money discusses the problem of productivity, the President blames productivity growth for unemployment. Even someone as sophisticated as Brad DeLong writes “with productivity surging, it’s hard to be pessimistic about GDP growth, but it’s easy to be pessimistic about unemployment” which seems to suggest that if only productivity growth were lower, employment would be higher.
And yet the “dark side” of productivity is merely another form of the Luddite fallacy – the idea that new technology destroys jobs. If the Luddite fallacy were true we would all be out of work because productivity has been increasing for two centuries. Sure, some say, that may be true in the long run but what about the short run? Even in the short run there is no necessary connection between productivity growth and job loss. In the computer industry, for example, productivity growth has led to falling prices and a bigger not smaller industry. If demand is inelastic then productivity growth can create short-term unemployment, especially at the level of the industry experiencing the growth – less likely but not impossible is that productivity growth leads to short-term economy-wide unemployment.
The more typical case, however, is that productivity growth leads to higher real wages and lower unemployment. Indeed, in the now fairly standard real business cycle models a boom is caused by a positive productivity shock and a recession by a negative shock. Empirical evidence supports the idea that positive productivity shocks lead to lower unemployment.
Why then do we see in very recent data a correlation between productivity growth and unemployment? One reason may be reverse causation. When firms fire workers they tend to fire the least productive first leading to an increase in average productivity. Workers may also work harder when unemployment threatens (an efficiency wage explanation). Thus, an increase in unemployment can cause an increase in productivity per hour. But in such a situation diminished productivity would certainly not lead to higher employment!
Bottom line in my opinion is this: productivity growth and unemployment are mostly unrelated. If productivity growth were currently lower we would have lower real wages and unemployment would be just as high. As a rule – and as a rule to follow – productivity growth is an unalloyed blessing.
More on obsolete professors
A number of people wrote both in support and challenging my comments on obsolete professors. Fabio Rojas wrote:
My reading of university history is that academia has always been a superstar market, except for the three decades or so after WWII…Medieval universities were run by a small group of well paid elites, while much of the grunt work was done by low status lecturers. The German research universities of the 19th century were known for giving comfy chairs to a few stars, while privatdozents slaved away at abysmal wages. The only exception to this trend is post-WWII American higher ed. The simultaneous explosion of student enrollments and Cold War money meant that universities could afford lots of research scholars who could teach. Of course, that model is hard to sustain – already a lot of work is being shifted back to part time workers.
My hunch is that in 50 years, maybe less, the higher ed system will be very different. There will still be a core of elite research universities and liberal arts colleges, where people will pay to study with famous scholars, writers and artists. The rest of the educational system will move toward a University of Phoenix model – an elite core of administrators managing an army of part timers, distance learners, on-line learning, adult ed, etc. The traditional universities can probably maintain their monopoly on occupational certification, but the rest of the system will radically change.
Similarly, Roger Meiners wrote “I think you are correct about professors being nearly obsolete. My guess is that large state universities are the institutions due for the largest restructuring. The private schools, as inefficient as they are, still generally stick to their mission better.”
But my colleagues Robin Hanson and Bryan Caplan as well as Stephen Brown from the Dallas Fed all asked, If teaching by DVD is so great why haven’t we seen it already? After all, VCRs not to mention movie projectors have been around for a long time. Perhaps, they argue, there are efficiency reasons for the structure that exists today. Stephen writes:
Professors working collaboratively, but in decentralized manner may have substantial advantages in providing certifications (degrees) when compared against a system in which students watch pre-recorded lectures by the great teachers and then are tested for mastery by an administrator through exams–particularly if mastery cannot be well demonstrated by machine-graded, multiple-choice exams.
Robin and Bryan pointed to professors as a disciplinary device. The option of self-learning may in fact be self-defeating. (See also Amy Lamboley’s comment at Crescat Sententia). Moreover, if students attend universities to find mates then big lecture classes may not be such a cost after all.
Universities have been around a long time so caution is justified but it has to make a difference in the provision of education that I can today download to my hard drive 10,000 books from Project Gutenberg or search over 100,000 books at Amazon (another 60,000 are available from Google). Innovations often seem impossible or impractical until someone demonstrates the concept and then they take off. Yes, the last is a trendy reference to the Wright brothers – note that just days before they flew, Samuel P. Langley, Director of the Smithsonian Institution and head of a well-funded government project to invent the airplane, proclaimed the goal years if not decades away.
How to conserve flu vaccine
The flu vaccine is now running very scarce, you can wait for weeks and there is no guarantee of getting it at all. Most of the supplies are already in the hands of doctors. Note also the following:
Random immunization is almost useless because, for many viruses, more than 95% of the population must be vaccinated to prevent the disease’s spread.
But things are not as grim as they might sound. First:
An alternative to the flu shot is FluMist, a more expensive inhaled version of the vaccine, which is recommended for healthy people between the ages of 5 and 49. There are about 4 million doses available of FluMist, health officials said.
Although those below 5 and over 49 are the at-risk groups, they are less likely to catch the flu if the rest of us are healthy.
Second, we could administer flu shots more wisely by targeting superspreaders, here is one proposal:
Reuven Cohen of Bar-Ilan University in Israel and his colleagues propose a simple modification of random vaccination that is more effective, according to their computer simulations. The idea is to randomly choose, say, 20% of the individuals and ask them to name one acquaintance; then vaccinate those acquaintances. Potential super-spreaders have such a large number of acquaintances that they are very likely to be named at least once, the researchers found. On the other hand, the super-spreaders are so few in number that the random 20% of individuals is unlikely to include many of them.
Using the team’s vaccination strategy, a disease can be stopped by vaccinating less than 20% of the individuals, in some cases, according to their computer model of a human population. The method can also be tweaked: if a larger sample is asked for names, and those named twice are vaccinated, the total number of vaccinations required can be even lower.
The trick may be getting these people to take the shots, but surely economists can come up with a useful incentives scheme for that, I would prefer a subsidy over a tax.
Queer Eye and the Future of Television
Queer Eye for the Straight Guy, the latest reality-tv show, features five gay men who remake a “style-deficient and culture-deprived straight man from drab to fab.” The show is a huge success and has created much commentary on the changing nature of social mores in America.
Less noticed is that the show is artfully disguised product placement. Each week the fab five carefully name each and every product that they use to remodel the straight guy – like Polo jeans, Ray Ban eyewear, KMS Hair care products, Benjamin Moore paint and Hold Everything furniture, to name a few recently featured items. Love that desk but miss the item number? Got to the website and you can find each product categorized by the show it appeared in.
As usual, a Ralph Nader connected group, Commerical Alert, is complaining that consumers are being ripped off. They want every paid product placement to be overlaid with an on-screen “advertisement” sign. The shift to within-show product placement, however, is a natural response to Tivo and other similar technologies that are making it easier to skip the commercials. I hope that within-show product-placement eliminates commercials altogether – this is the future of television.
Our growing mobility
How much territory do you move through on a typical day? Jesse Ausubel writes:
US per capita mobility has increased 2.7% per year, with walking included. Excluding walking, Americans have increased their mobility 4.6% each year since 1880. The French have increased their mobility about 4% per year since 1800.
Most of all, driving has been replacing movement on foot. Follow this link and scroll down for the illustrative graph and the exact figures. Ausubel believes that in the future people will cover hundreds of kilometers every day, on average, you can think of him as the Julian Simon on transportation economics. In his view people are often willing to travel up to 60 or 70 minutes per day, but they don’t like to go beyond this figure. Yet transportation becomes ever easier and more rapid. He is bullish on magnetic levitation trains, and much of the future improvement may come from airplanes:
During the past 50 years passenger kilometers for planes have increased by a factor of 50. Air has increased total mobility per capita 10% in Europe and 30% in the United States since 1950. A growth of 2.7% per year in passenger km and of the air share of the travel market in accord with the logistic substitution model brings roughly a 20-fold increase for planes (or their equivalents) in the next 50 years for the United States and even steeper elsewhere.
And how is this for optimism?
By the year 2100, per capita incomes in the developed countries could be very high. A 2% growth rate, certainly much less than governments, central banks, industries, and laborers aspire to achieve, would bring an average American’s annual income to $200,000.
And this?
Staying within present laws, a 2.7% per year growth means doubling of mobility in 25 years and 16 times in a century.
This is almost enough to make you forget about the irresponsible fiscal policy of the Bush Administration.
Thanks for Gregg Easterbrook’s The Progress Paradox for the pointer to Ausubel’s work.
Oddly we travel as much as we do, in part, because we love home so much. Did you know that sixty percent of all European flights involve a return flight on the same day? We can go far, but the pull of home is indeed strong.
Progress against AIDS?
Haiti is renowned for its weak or non-existent institutions. Therefore it is both surprising and heartening to see the country making some progress against AIDS. In fact some of Haiti’s problems are being turned to its advantage, namely its large number of underemployed laborers, who are now being used to carry retrovirals to the desperately poor:
No program to treat people in the poorest countries has more intrigued experts than the one started in Haiti by Partners in Health – which has succeeded by enlisting help from hundreds among Haiti’s vast pool of unemployed and underemployed workers.
It is the rainy season now. So each morning and evening, 700 villagers strike out across dirt roads turned into a morass of mud and dung to deliver medicines to people with AIDS and tuberculosis. They tramp through muck and wade through streams on foot; a lucky few sit atop mules or donkeys.
Here is the full story. One leading participant noted:
“We didn’t do it to be a model program,” said Dr. Farmer, 44, a Harvard medical professor and anthropologist, who is also the subject of a recent book, “Mountains Beyond Mountains,” by Tracy Kidder. “We did it because people were croaking.”
Good news from Haiti is hard to come by, but here is another bit: Haitian artisans will have greater access to the web to sell their wares, visit this site, in addition to the brokers who sell through ebay. Haitian artisans, craftspersons, and artists are remarkably talented and hardworking, this is one of the few areas where Haitians can compete in world markets, this link shows one of my favorite Haitian voodoo flags, click on the hearts to see the larger image.
Corporations and cheeses
Have you ever wondered why they call it Maytag cheese? As in the people who make the dishwashers and washing machines? There is in fact a close connection:
Maytag Blue
Nestled in among the rolling hills of central Iowa is the Maytag appliance factory. Down the road and around the corner is the Maytag Dairy, which produces Maytag Blue cheese, among other, lesser-known cheeses. Yes, the two are related. Fritz Maytag, son of the founder of the Maytag washing machine company, decided he wanted to make his own entrepreneurial mark on the world. Shortly before World War II, he began working with scientists at Iowa State University to begin making a great American blue cheese, modeled after those of Europe. The result was one of the first American farmstead cheeses of superior quality. The dairy is now independent of the appliance company and collects milk from a local dairy cooperative, rather than raising its own cows. Maytag cheese makers, however, are still hand making the same cheese that they created in the 1930’s. Maytag Blue’s popularity has taken off with the growing interest in American farmstead cheeses, and this wonderful, tangy blue cheese is now featured on menus across the country. Its wonderful flavor, moist yet crumbly texture, and lemony finish make Maytag one of the world’s great blue cheeses.
By the way, here is a good recipe for Maytag Blue, or just spread it on apples.
A neat story, no? Sadly, it all ends in subsidy. Here is a libertarian critique of government price support programs for dairy products:
In 1995 alone, wrote Kevin McNew in a Policy Analysis for the Cato Institute (December 1, 1999), taxpayers shelled out $8 billion to dairy farmers through various federal price-support programs…[According to James Bovard] “For the cost of the dairy program, each American family could have bought its own dairy cow.”
Little did I know that some of these subsidies go to the same people who make household appliances, I can’t possibly imagine any good reason for this.
The benefits of free trade
Read Brad DeLong’s excellent post on how we should think about the benefits of free trade, and how large those benefits might be. The basic problem is that when you measure the costs of protection, they don’t seem so enormous in many standard models. So why are economists so solidly behind free trade? Most of all, I’ll opt for his number three, the “missing link” move:
The missing link move: assert that domestic technological and organizational progress is closely and tightly tied to the volume of trade, considered as a proxy for social and technical contact and for the extent to which the government takes down the umbrella protecting inefficient national champions from the rains of competition.
The new replacement for Google?
A news-gathering web site that tailors the stories selected to individual users is being tested by Microsoft. Once MSN Newsbot is fully functional, Microsoft says the site will personalise results within 10 minutes of a user starting to browse.
If successful, the site is likely to be a direct rival to the highly popular Google News, which clusters information from over 4000 news sources according to topics but does not customise results.
For the full story, read here.
How might such a service work? One possible algorithm follows the Amazon.com model, and compares the user to what previous like-minded users have been looking for. But if I could ask for one improvement, it would not be this. My searches are so wide-ranging, so strange, and so eclectic, I am perhaps immodest enough to think I have few useful doppelgaenger [“doubles,” roughly, from the German] in this regard. I would prefer the ability to type in questions, often of a conceptual or abstract nature, and receive a ranking of relevant web sites. In short, a better version of askjeeves.com would be most likely to draw my loyalties away from google.