National Average is Over

by  Tyler Cowen in

This paper considers the implications for developing countries of a new wave of technological change that substitutes pervasively for labor. It makes simple and plausible assumptions: the AI revolution can be modeled as an increase in productivity of a distinct type of capital that substitutes closely with labor; and the only fundamental difference between the advanced and developing country is the level of TFP. This set-up is minimalist, but the resulting conclusions are powerful: improvements in the productivity of “robots” drive divergence, as advanced countries differentially benefit from their initially higher robot intensity, driven by their endogenously higher wages and stock of complementary traditional capital. In addition, capital—if internationally mobile—is pulled “uphill”, resulting in a transitional GDP decline in the developing country. In an extended model where robots substitute only for unskilled labor, the terms of trade, and hence GDP, may decline permanently for the country relatively well-endowed in unskilled labor.

That is from a 2020 IMF working paper by Cristian Alonso, Andrew Berg, Siddharth Kothari, Chris Papageorgiou, and Sidra Rehman.  Via Eric Yu.

Who is locally influential these days?

by  Tyler Cowen in

Um…um…uh-oh:

Who do people think are influential in their own community? This question is important for understanding topics such as social networks, political party networks, civic engagement, and local politics. At the same time as research on these topics has grown, measurement of public perceptions of local influence has dried up. Years ago, researchers took active interest in the question of community influence. They found that most ordinary Americans could identify a person who they thought had influence in their community. Respondents usually named business leaders. Where does the public stand today? In three different ways, we ask respondents who has local influence. The vast majority of respondents today cannot think of anyone. Those who do identify someone as influential rarely choose a businessperson. This article aims to reintroduce the public opinion of community influence and situate findings in related scholarship.

Here is the new article by Joshua Hochberg and Eitan Hersh.  David Brooks, telephone!  Don’t even ask how the “religious leaders” fare in the polling…

AI Is Improving Faster Than Most Humans Realize

by  Tyler Cowen in

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

I have a story for you, about chess and a neural net project called AlphaZero at DeepMind. AlphaZero was set up in late 2017. Almost immediately, it began training by playing hundreds of millions of games of chess against itself. After about four hours, it was the best chess-playing entity that ever had been created. The lesson of this story: Under the right conditions, AI can improve very, very quickly.

LLMs cannot match that pace, as they are dealing with more open and more complex systems, and they also require ongoing corporate investment. Still, the recent advances have been impressive.

I was not wowed by GPT-2, an LLM from 2019. I was intrigued by GPT-3 (2020) and am very impressed by ChatGPT, which is sometimes labeled GPT-3.5 and was released late last year. GPT-4 is on its way, possibly in the first half of this year. In only a few years, these models have gone from being curiosities to being integral to the work routines of many people I know. This semester I’ll be teaching my students how to write a paper using LLMs.

We are now at or close to the point where LLMs can read and accurately evaluate the work of…LLms.  That will accelerate progress considerably.

And to close I wrote this:

I’ve started dividing the people I know into three camps: those who are not yet aware of LLMs; those who complain about their current LLMs; and those who have some inkling of the startling future before us. The intriguing thing about LLMs is that they do not follow smooth, continuous rules of development. Rather they are like a larva due to sprout into a butterfly.

It is only human, if I may use that word, to be anxious about this future. But we should also be ready for it.

Recommended.  Remember my old Wilson Quarterly piece about “invisible competition”?

On censorship of LLM models, from the comments

by  Tyler Cowen in

IMO, censorship is a harder task than you think.

It’s quite hard to restrict the output of general purpose, generative, black box algorithms. With a search engine, the full output is known (the set of all pages that have been crawled), so it’s fairly easy to be confident that you have fully censored a topic.

LLMs have an effectively unbounded output space. They can produce output that is surprising even to their creators.

Censoring via limiting the training data is hard because algorithms could synthesize an “offensive” output by combining multiple outputs that are ok on their own.

Adding an extra filter layer to censor is hard as well Look at all the trouble chatGPT has had with this. Users have repeatedly found ways around the dumb limitations on certain topics.

Also, China censors in an agile fashion. A topic that was fine yesterday will suddenly disappear if there was a controversy about it. That’s going to be hard to achieve given the nature of these algorithms.

That is from dan1111.  To the extent that is true, the West is sitting on a huge propaganda and communications victory over China.  This is not being discussed enough.

Gender and tone in recorded economics presentations

by  Tyler Cowen in

You’re going to see a lot more research papers like this one:

This paper develops a replicable and scalable method for analyzing tone in economics seminars to study the relationship between speaker gender, age, and tone in both static and dynamic settings. We train a deep convolutional neural network on public audio data from the computer science literature to impute labels for gender, age, and multiple tones, like happy, neutral, angry, and fearful. We apply our trained algorithm to a topically representative sample of presentations from the 2022 NBER Summer Institute. Overall, our results highlight systematic differences in presentation dynamics by gender, field, and format. We find that female economists are more likely to speak in a positive tone and are less likely to be spoken to in a positive tone, even by other women. We find that male economists are significantly more likely to sound angry or stern compared to female economists. Despite finding that female and male presenters receive a similar number of interruptions and questions, we find slightly longer interruptions for female presenters. Our trained algorithm can be applied to other economics presentation recordings for continued analysis of seminar dynamics.

Some people might just stop going to recorded conferences, of course.  That paper is by Amy Handlan and Haoyu Sheng, via the excellent Kevin Lewis.

Ethnic Remoteness Reduces the Peace Dividend from Trade Access

by  Tyler Cowen in

This paper shows that ethnically remote locations do not reap the full peace dividend from increased market access. Exploiting the staggered implementation of the US-initiated Africa Growth and Opportunity Act (AGOA) and using high-resolution data on ethnic composition and violent conflict for sub-Saharan Africa, our analysis finds that in the wake of improved trade access conflict declines less in locations that are ethnically remote from the rest of the country. We hypothesize that ethnic remoteness acts as a barrier that hampers participation in the global economy. Consistent with this hypothesis, satellite-based luminosity data show that the income gains from improved trade access are smaller in ethnically remote locations, and survey data indicate that ethnically more distant individuals do not benefit from the same positive income shocks when exposed to increased market access. These results underscore the importance of ethnic barriers when analyzing which locations and groups might be left behind by globalization.

That is from a new NBER working paper by Klaus Desmet and Joseph F. Gomes.

Will Chinese LLMs be much worse?

by  Tyler Cowen in

Presumably these are being built right now.  But which texts will they be trained upon?  Let’s say you can keep out any talk of T. Square.  What about broader Chinese history?  Do you allow English-language sources?  Japanese-language accounts of the war with Japan?  Do you allow economics blogs in English?  JStor?  Discussions of John Stuart Mill on free speech?

Just how good is the Chinese-language, censorship-passed body of training data?  Does China end up with a much worse set of LLMs?  Or do they in essence anglicize most of what they learn and in time know?

Pre-LLM news censorship was an easier problem, because you could let the stock sit in a library somewhere, mostly neglected, while regulating the flow.  But when the new flow is so directly derived from the stock, statistically speaking that is?  What then?

Much hangs in the balance here.  What was it that Paul Samuelson said about writing a nation’s textbooks?

Tyrone cheers up Tim Harford

by  Tyler Cowen in

If you needed someone to cheer you up, would you not want my evil twin brother Tyrone?  Well, Tim Harford is a privileged fellow.  Tyrone read Tim’s recent FT column “Is life in the UK really as bad as the numbers suggest? Yes, it is“, and thought Tim could use a real bucking up.  Tyrone is such a cheery fellow himself, and I so thought I would let him jolly along Tim.  Here is Tyrone’s proposed letter to the FT:

Britain, Britain, Britain — how tears come to my eye each time I swim the Atlantic and stride on shore.  How many times have I returned and with such joy?

The high land rents in Britain are the first and foremost a sign life is really good there.  You get what you pay for!  And in Britain you pay a lot.  You must get a lot too.  For sure, the value of living here can be no lower than the entry fee.  Even much of northern England is not so cheap anymore, and calling it “tea” isn’t going to change that fact.

I hear you all screaming “NIMBY!” while eating your bangers.  Well, NIMBY is one reason why Britain — or some parts of it — are expensive.  But NIMBY doesn’t detract from the quality signal embedded in those high prices.

Let’s say you had a luxury hotel that mismanaged its staff, and so it only opened up three rooms when it should have opened up 300 rooms.  Furthermore, those three rooms are rented out for $3000 a night.  You wouldn’t say the guests paying $3000 a night are miserable in the hotel.  In fact you would conclude they really enjoyed the hotel, to the tune of at least $3000 a night.  They could be enjoying it more at lower prices and higher capacity, but that is like saying the Beatles should have put out more albums.  Both claims are true, but you wouldn’t conclude Britain had a miserable musical life.

If nothing else, the hotel analogy shows Britain has the potential to get oh so much better yet.

GPT tells me that before Brexit, 1.8% of the British population lived in other EU countries, with Spain being a clear first destination.  Was that outflow so high?  The sign of a ruined society?  Or a mark of complacency with a pretty good thing?  A lot of that was (or still is) retirees of course, yet another sign of how splendid British life can be.  What could be better than earning enough in Leeds to spend your declining years in Tavira, yet close enough to fly home and see the grandkids on Boxing Day?

It is not so hard for many British people to migrate to Australia, New Zealand, Canada, or sometimes even the United States.  Northern Ireland beckons too (and the homes there are pretty cheap).  Those acts of migration don’t require a new language, and you might keep the royal family on your money and also on your bestseller lists, wait no they are not the royal family any more.

Chat tells me that in 2019 the net migration from the UK to Australia was about 16,000, hardly a major rebellion against economic servitude.  In that same year, 26,800 Brits decided to leave the barbie and return home — clearly they missed something.  Brit migrants to Australia, unlike those to Provence, are not usually the wealthy.

Tyrone has not only met Tim, but he has observed Tim living and working and succeeding in the United States.  Since Tim left America, presumably he prefers Britain and the superior curries, country homes, and memories of empire.  Not to mention the bookshops.  Amenities!  Tim is hardly the only one moving into southern England.  The UK population more broadly just keeps on rising.  We would gladly have Tim back, but it seems he won’t have us, stars and stripes for never.

Maybe you think some of the high rents in Britain are due to foreigners buying up property.  That is true in some parts of London, but for the country as a whole?  Besides, if London and Oxford give some foreigners the risk protection benefits of their real estate, is that not the cosmopolitan policy my Effective Altruist friends have been urging on me?  It would be easy enough to tax them more for those benefits, any time the Brits need to.

Southern England seems geared to help the world, what with its vaccines, DeepMind, and the data on dexamethasone.  How many regions are grander than that?  No wonder people want to pay so much to live there.  Like yours truly — Tyrone, not to mention Tim — they most of all want to help other humans.

Besides, the UK has a higher birth rate than Switzerland, Norway, or Luxembourg — so where do the real riches lie?  Especially over time.

Put aside some minor problems with the health care system — my friend the very healthy Robin Hanson says it doesn’t matter much.  The evidence keeps mounting that the non-pecuniary benefits of being British hardly could be higher.  And they don’t even tax you on them.  Strawberry Fields Forever.

TC again: Is this the most serious Tyrone has been?  Is he turning over a new leaf?  Have all those weekends in the Lake District rubbed off on him?  But alas, he does not go to the Lake District, he prefers the darker corners of northern New Jersey.  As Herodotus noted, all men consider their own ways to be best, Tyrone not excepted.  And if Tyrone does not live in Britain, how can it possibly be best?

Q.E.D.

Tim Harford, I weep with you, put Tyrone out of your mind.  The fish and chips is better in New Zealand anyway.

Gender, competition, and performance: Evidence from chess players

by  Tyler Cowen in

This paper studies gender differences in performance in a male‐dominated competitive environment chess tournaments. We find that the gender composition of chess games affects the behaviors of both men and women in ways that worsen the outcomes for women. Using a unique measure of within‐game quality of play, we show that women make more mistakes when playing against men. Men, however, play equally well against male and female opponents. We also find that men persist longer before losing to women. Our results shed some light on the behavioral changes that lead to differential outcomes when the gender composition of competitions varies.

Here is the full paper by Peter Backus, Maria Cubel, Matej Guid, Santiago Sánchez‐Pagés, and Enrique López Mañas.  Via someone who is thanked in any case!