Saturday assorted links
1. Why do women travel more than men?
2. Gates and Altman play Desert Island Discs (short YouTube).
3. Try not to let moose lick your car (Canada).
4. Luring top scientists out of universities (NYT).
5. AI will underwhelm, and a six-month pause? And it’s time to learn something serious about private equity. Adam is right throughout.
6. “30% or Portuguese people between the ages of 15 and 39 have left the country.”
7. Ho hum. I’ve been watching the other post-briefing interviews as well.
World’s First Dominant Assurance Contract Platform
In September I alerted you to a crowdfunding campaign to produce a dominant assurance contract/refund bonus platform. Many of you stepped up and it’s now and up and running! The platform is called EnsureDone. It’s starting up small, with just a few projects, but already the projects are quite interesting. MakeSunsets, for example, had a campaign to raise $1000 to fund a test of seeding the atmosphere with sulfur to increase reflection. That campaign failed which meant the people who had agreed to contribute earned a refund bonus! The UX could also use some work. Still, it’s nice to see this idea being tested in the wild and I have inside info that another such platform will launch soon.
The economics of semaglutide
…while one would certainly like to have these drugs available to these patients, if the price of these drugs doesn’t come down, you can make a good argument their cost will literally break Medicare. Why? Well, roughly 35% of Medicare patients are overweight or obese. Roughly 75% of people over 65 have coronary artery disease. (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6616540/#:~:text=The%20American%20Heart%20Association%20(AHA,age%20of%2080%20%5B3%5D.)
Even if you assume these numbers are independent of each other, which is very unlikely, because overweight people are more likely to have cardiovascular disease, this means at least 26% of the roughly 31 million Medicare recipients (and likely more) might benefit from these drugs. We have an eligible population for these drugs therefore of more than 8 million people. At current list prices we would be spending 8mil*1350*12 or about 130 billion dollars a year. Total Medicare spending is about 725 billion a year. So, Medicare spending would go up by more than 17% overnight and stay at that level for a long time to come.
Here is more from Gary Cornell, mostly about the degree of effectiveness.
Economic ornithology
But a hundred years ago, birds were seen as the best remedy for the weeds and insect pests that threatened the country’s food supply and cost farmers hundreds of millions of dollars every year. And in order to identify the precise impact that birds had on agriculture, a field called economic ornithology was born. According to one of its leading practitioners, economic ornithology was “the study of birds from the standpoint of dollars and cents … in short, it is the practical application of the knowledge of birds to the affairs of everyday life.”1 And from the 1880s to the 1930s, birds were widely seen as economic agents, working alongside farmers in the fight against the insect hordes.
By the 1940s, economic ornithology had become discredited and obsolete. Effective and affordable pesticides had entirely replaced the birds’ bug-killing role, while economic ornithologists could never prove that their methods actually increased the number of helpful birds. But before their role in agriculture was dismissed, there was a time when we believed that we depended on birds for our food, and for our very survival.
And here was the method of economic ornithology:
In 1916, Gilbert Trafton summarized the primary approach used by economic ornithologists: “The practical value of birds to man, whether helpful or harmful, depends chiefly on their food habits,” and by examining what they eat, “the exact economic status of a bird is determined.” Sometimes this was done by observing the behaviors of birds in the field, but it usually meant dissecting birds and seeing what they had in their stomachs.
Here is the full Substack, by Robert Francis. Via Philip Wallach.
Friday assorted links
1. Those new service sector jobs, former chess player edition.
2. John O. McGinnis reviews GOAT.
3. Huge ancient city found in the Amazon.
4. Michael Magoon on progress-related Substacks.
5. Elaine Schwartz has been blogging every day for ten years at Econlife.
6. Things you learn dating Cate Hall. And Cate’s essay on how to be more agentic.
*The Economist* on Tatu City, Kenya
Take the pig’s ear first. Unveiled in 2008 as a $15bn smart city project, Konza Technopolis was supposed to be the heart of Kenya’s “silicon savannah” that, by 2020, would create 100,000 jobs and add 2% to gdp. Three years and many missed deadlines later, there is still far more evidence of savannah than silicon.
By contrast, Tatu City, on the northern outskirts of Kenya’s capital, Nairobi, is flourishing. Some 23,750 people already live, study or work there and 78 businesses have made it home. Moderna, an American drugmaker, is opening a $500m vaccine manufacturing facility, its first in Africa. Zhende Medical, a Chinese medical-supplies manufacturer, is also setting up shop.
Tatu and Konza were conceived at the same time. Each, at roughly 5,000 acres, is of a similar size. Both aspire to house populations of more than 200,000 people. And both have been designated Special Economic Zones (sezs), meaning that the businesses they house are eligible for tax benefits and other incentives. Why is one more likely to succeed than other? The answer lies not in their similarities, but in their differences, and these provide lessons for other developments in Africa.
The first is ownership. Konza’s proprietor is the state. Tatu City’s is Rendeavour, a big private urban land developer.
Here is the rest of the article. Here are my three CWT podcasts about Tatu City. I am pleased at how well it is all going!
For the pointer I thank Kurtis Lockhart of Charter Cities Institute.
My Conversation with the excellent Patrick McKenzie
Here is the audio, video, and transcript. Here is part of the episode summary:
Tyler sat down with Patrick to discuss signature fields on the back of credit cards, whether bank tellers or waitstaff are more trustworthy, the gremlins behind spurious credit card declines, how debt collection and maple syrup heists should change your model of the world, Twitter’s continued success as the message bus for government and civil society, crypto vs traditional money transfers, the intended desolation of bank parking lots, why he moved to Japan and how it affected his ambition, why Tether hasn’t collapsed, the internet as a Great Work, how he’s experiencing reverse culture shock after returning to the US, what he’ll learn about next, and more.
Excerpt:
COWEN: How did the maple syrup heists change your overall view of the world and of humanity? What’s the model update?
MCKENZIE: Going back to “evil is an actual thing in the world,” I often assume that large, well-regarded, professionalized industries have a rate of crime associated with them which rounds to zero. I would assume agriculture is relatively heavily regulated. Maple syrup is an agricultural product. The only buyers of maple syrup by the containerful are “real companies.” Therefore, I would expect rounds-to-zero supply-chain fraud in maple syrup.
But it turns out that the amount of supply-chain fraud in maple syrup is actually quite higher than zero. The chain of custody for cars of maple syrup is much less regimented than you would expect that chain of custody to be. There are smaller buyers of maple syrup — not on the scale of you or me, but on the scales like a boutique maple syrup refinery — who just don’t do as many checks as the large producers or suppliers, et cetera, do. So, it is possible to steal millions of dollars of maple syrup and sell it on the black market, which blew my mind.
This rhymes with how Tide, the well-known detergent in the United States, is used as a commodity on the criminal and semi-criminal/system deal, less criminal undergrounds, in that Tide can be resold. Online marketplaces are getting a lot of the attention, but the traditional way to use Tide as a currency for people who have less access to dollars was to resell the Tide to a corner bodega.
Since the corner bodega can easily verify that the Tide hasn’t been tampered with because the Tide seal is on it, and has basically unlimited willingness to do small-dollar transactions that make money, that was a way to recycle Tide which had been stolen — or which had been acquired by means that were not stealing, but also not exactly the official way of getting Tide — and recycle it into the more or less legitimate economy, insofar as we think that the corner bodega is more or less legitimate, which I think is a complicated story.
And:
COWEN: Why are bank parking lots usually so empty?
MCKENZIE: Oh, this is a straightforward result from queuing theory, if you can believe it. Queuing theory/operation science, by the way, tremendously under-understood by many people to whom it is professionally relevant, be that as it may. When you think of your typical stop-in at a bank, you go in, perhaps you deposit a check, perhaps you talk to the teller. You probably think, “I will have three minutes of dwell time.” So, you expect to be in and out. But the thing that the bank really wants to optimize for is new account opening.
New account opening requires 30 to 60 minutes plus of dwell time, depending on what type of account you are opening. Then when you back out that variability, it turns out that gratuitously over-provisioning the parking space almost all of the time maximizes for not losing new account opening at a few very limited windows per year. Those very limited windows can make or break the branch’s ability to contribute to their larger financial institution.
The number of accounts a bank actually opens per year in terms of checking accounts per branch — that is a number that one can have access to in various places. Depending on the bank and the locality, et cetera, it’s between 200 and 500. So, if you turn away a single customer or two customers in a row to open accounts because you had three parking spaces where you could have had seven, you’ve done a very outsized amount of damage to your financial institution, and thus over-provision the parking in all the places.
Definitely recommended, interesting throughout.
The efficiency of counterfeiting in 19th century Peru
“The counterfeiter probably didn’t realize that that coin didn’t exist,” Dr. Ortega said.
He said that an influx of low-value coinage would have been welcomed in Peru at the dawn of the 20th century. The country’s economy was reeling from the recent War of the Pacific, and the government was focusing on printing larger-denomination paper bank notes to pay off international loans; in 1899, the Lima Mint produced roughly one-tenth the number of silver coins it produced just five years earlier.
As a result, people in Peru were using coins from neighboring nations or even cutting their own country’s coins in half to conduct small transactions. “Counterfeiters found a field of opportunity,” Dr. Ortega said.
Here is more from Katherine Kornei at the NYT, mostly about finding an old coin that should not exist and cannot be traced.
Thursday assorted links
1. Claims about the Russian defense sector.
2. South Korea to ban dog meat.
3. Microsoft debates what to do with AI lab in China, perhaps EAers should discuss this more? (NYT) EA is right about many issues, but for far too long foreign policy has been a weak suit of the philosophy. And here is U.S. companies talking to China about AI safety (FT).
4. Johor Bahru metro concept map. And “Malaysia and Singapore agreed to jointly develop a special economic zone and explore a range of measures including passport-free travel to boost trade between the neighbors that each count the other as the No. 2 trading partner.” (Bloomberg, this has been a longstanding prediction of mine).
Hester Peirce on the SEC
As she did on the LBRY case (n.b. I was a LBRY advisor), SEC Commissioner Hester Peirce released a statement about the failings of the SEC with regards to the recently approved Bitcoin spot ETPs. It’s rare to read something this brutal coming from the inside.
We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff.
…Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin products.
First, our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively. This saga will taint future interactions between the industry and our staff and will dampen the rich, informative dialogue that best protects investors.
Second, our disproportionate attention on these filings has diverted limited staff resources away from other mission critical work. Over ten years, likely millions of dollars of staff time has gone toward blocking these applications.
Third, our actions here have muddied people’s understanding of what the SEC’s role is. Congress did not authorize us to tell people whether a particular investment is right for them, but we have abused administrative procedures to withhold investments that we do not like from the public.
Fourth, by failing to follow our normal standards and processes in considering spot bitcoin ETPs, we have created an artificial frenzy around them. Had these products come to market in the way other comparable products typically have, we would have avoided the circus atmosphere in which we now find ourselves.
Fifth, we have alienated a generation of product innovators within our space. Our unreasonable approach to these applications has signaled that regulatory prejudice against new products and services can lead us to sidestep the law and unreasonably delay product launches. The industry has logged hundreds of meetings, has filed submissions, withdrawals and amendments, and ultimately had to resort to a costly legal battle to get us to today.
Although this is a time for reflection, it is also a time for celebration. I am not celebrating bitcoin or bitcoin-related products; what one regulator thinks about bitcoin is irrelevant. I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs.[10] And I am celebrating the perseverance of market participants in trying to bring to market a product they think investors want. I commend applicants’ decade-long persistence in the face of the Commission’s obstruction.
*Sound of Freedom*
I enjoyed watching this somewhat controversial production. In terms of quality, think of it as comparable to a very good made-for-TV movie. The political message, that we don’t worry enough about sex trafficking of minors is I think mostly correct, though I would not buy most of the baggage that in today’s world so often comes with that view. The cinematography of Latin America is very good, and interestingly this movie has an easier time feeling “genuinely international” than do most Hollywood productions. The opening scene is set in Tegulcigalpa, Honduras. Here is some useful background on the movie. I am happy to see a film showcasing freedom and presenting slavery as a complete negative.
Department of Uh-Oh, economic research edition
We assess statistical power and excess statistical significance among 31 leading economics general interest and field journals using 22,281 parameter estimates from 368 distinct areas of economics research. Median statistical power in leading economics journals is very low (only 7%), and excess statistical significance is quite high (19%). Power this low and excess significance this high raise serious doubts about the credibility of economics research. We find that 26% of all reported results have undergone some process of selection for statistical significance and 56% of statistically significant results were selected to be statistically significant. Selection bias is greater at the top five journals, where 66% of statistically significant results were selected to be statistically significant. A large majority of empirical evidence reported in leading economics journals is potentially misleading. Results reported to be statistically significant are about as likely to be misleading as not (falsely positive) and statistically nonsignificant results are much more likely to be misleading (falsely negative). We also compare observational to experimental research and find that the quality of experimental economic evidence is notably higher.
That is from a new paper by Zohid Askarov, Anthony Doucouliagos, Hristos Doucouliagos, and T. D. Stanley.
Via my colleague Jonathan Schulz.
Are chatbots better than we are?
Maybe so:
We administer a Turing Test to AI Chatbots. We examine how Chatbots behave in a suite of classic behavioral games that are designed to elicit characteristics such as trust, fairness, risk-aversion, cooperation, \textit{etc.}, as well as how they respond to a traditional Big-5 psychological survey that measures personality traits. ChatGPT-4 exhibits behavioral and personality traits that are statistically indistinguishable from a random human from tens of thousands of human subjects from more than 50 countries. Chatbots also modify their behavior based on previous experience and contexts “as if” they were learning from the interactions, and change their behavior in response to different framings of the same strategic situation. Their behaviors are often distinct from average and modal human behaviors, in which case they tend to behave on the more altruistic and cooperative end of the distribution. We estimate that they act as if they are maximizing an average of their own and partner’s payoffs.
That is from a recent paper by Qiaozhu Mei, Yutong Xie, Walter Yuan, and Matthew O. Jackson. Via the excellent Kevin Lewis.
Wednesday assorted links
1. Donation suggestions for economic growth.
3. Tiny homes in Austin (NYT).
4. Casey Handmer on alleviating water scarcity in the US Southwest.
5. Using an LLM as your operating system? And the video is here, I have been predicting this.
6. Hillsdale College update (NYT).
Back to the Future: Power Dishwashers!
Why do today’s dishwashers typically take more than 2 hours to run through a normal cycle when less than a hour was common in the past? The reason is absurd energy and water “conservation” rules. These rules, imposed on dish and clothes washers, have made these products perform worse than in the past, cleaning less well or much more slowly. One of the best things that the Trump administration did (other than Operation Warp Speed, of course) was creating a product class–superwashers!–that cleaned in under an hour and were not subject to energy and water conservation standards. The Biden administration reversed these rules but the 5th circuit just ruled that the reversal was “arbitrary and capricious.”
The ruling notes
…the record contains historical evidence that dishwasher cycle time has increased from around one hour at the advent of DOE’s conservation program to around two and a half hours in 2020. See CEI Petition, 83 Fed. Reg. at 17773–74. DOE does not appear to contest this data; in fact, DOE in 2020 appeared to agree that the frustratingly slow pace of modern dishwashers caused consumer substitution away from dishwashers and toward handwashing. See 2020 Dishwasher Rule, 85 Fed. Reg. at 68729; see also Record App’x 3 (noting consumers supported efficacious dishwashers by a margin of 2,200 to 16). And nothing wastes water and energy like handwashing: DOE itself estimated in 2011 that handwashing consumes 350% more water and 140% more energy than machine washing. See Record App’x 5 (citing U.S. Dep’t of Energy, Technical Support Document Docket EE-2006-STD-0127: National Impact Analysis 16 (2011), https://perma.cc/849K-NCX8).
…What did DOE say in response? Basically nothing: It acknowledged the concern and moved on. But bare acknowledgment is no substitute for reasoned consideration.
…the Repeal Rule is arbitrary and capricious for two principal reasons. (1) It failed to adequately consider appliance performance, substitution effects, and the ample record evidence that DOE’s conservation standards are causing Americans to use more energy and water rather than less. (2) It rested instead on DOE’s view that the 2020 Rules were legally “invalid”—but even if true, that does not excuse DOE from considering other remedies short of repealing the 2020 Rules in toto.
More generally AnechoicMedia on twitter wrote:
Water usage restrictions on home dishwashers are a complete non-issue from an environmental standpoint and our inability to overthrow this petty regime is why this country sucks. You cannot provide abundance and prosperity while retaining this wartime rationing mindset.
A position with which I wholeheartedly agree.