Black Magic Technology

by  Alex Tabarrok in

Arthur C. Clarke said that “Any sufficiently advanced technology is indistinguishable from magic.” Here’s an example. You know those ubiquitous little LEDs on devices like speakers, card readers, microphones etc. that simply indicate that the device has power? The authors show that these LEDs can bleed information about power consumption that can be used to deduce when and for how long a computer is computing cryptographic keys and that can be used to deduce the keys. For example, using a “hijacked” security camera the author’s were able to film the power LED on a smart card reader from 16 meters away and from that able to deduce the keys. Paper here. Video below.

Now some people will say, well all you have to do is make sure the LEDs are properly insulated from the main power and adjust the cryptographic algorithms to not take some shortcuts and your systems will be safe. Uh huh.

Eliezer Yudkowsky has a more realistic perspective. Although this is not about AI per se, he notes this is a good example of the kind of thing that a superintelligence could do that would not have been predicted in advance and would seem to require magical powers.

Safari surprises

by  Tyler Cowen

I learned just how accustomed I am to North American wildlife patterns.  In much of North America, you see wildlife only sporadically, as for instance in Yellowstone Park you can easily drive for an hour and not see a bear.

In this part of Masai Mara, it is unusual to drive for more than thirty seconds without seeing something interesting.  And very commonly you can see a tableau of multiple animals, such as buffalo, Thomson’s gazelle, warthogs, and zebras, all together at once.

On those 4-5 hour drives around the plains, usuually I am thinking about “solving for the equilibrium.”  When you see a group of dik-diks, the immediate thought is “how do they escape the cheetahs?”  You wonder what is the optimal number of a buffalo grouping to repel a lion attack, without crowding or overgrazing on a particular patch of land.

How close can your open vehicle come to the lions without arousing excessive interest?  (Closer than you might think.)

When should a pride of lions split into two groups, balancing strength of collective attack against food scarcity?

Why do cheetahs go about it solo?  And how is that fact related to their propensity to win chases on the basis of extreme bursts of speed?

Can you model why the zebras and wildebeest seem to get along so well together?

What is the deadweight loss from the fact that wildebeest use property allocation — over which the males fight — to attract females?

I have noticed that the guides are implicitly Lamarckian in their theorizing.

As dusk arrives, many of the larger cats become more active.  And so the potential prey wake up and move to more open territory, where they can see predators arriving.  They group and spread themselves out (optimally?), to maximize their own collective field of vision and aural acuity, in case a predator should approach.  Those patterns are gone by the late morning.

There is definitely a set of land value gradients here, noting that waterholes are both a) super-valuable, and b) the place where you are most vulnerable to predators.  Few potential prey wish to settle there, though they will visit and make haste to leave.

I enjoy watching the prey trigger equilibrium of “My durability in running speed exceeds yours, so I can hang around and expect you won’t charge me, at least not if I keep a safe enough distance.  Furthermore, if I don’t run away I can keep you in plain view, which is preferable in any case.”

So my biggest surprise is how visible the notion of equilibrium is here.

India bots to the rescue

by  Tyler Cowen in

None of women in the Bangalore trial had heard of ChatGPT and some of them had given up on receiving aid after struggling with language barriers, and government officials and middlemen demanding bribes.

The Bangalore trials were led by Saurabh Karn and his team at the nonprofit OpenNyAI. By feeding a collection of millions of parallel sentences spoken in different Indian languages into machine translation software, and adding thousands of hours of dialogue for speech recognition, the bot, named Jugalbandi, offers text-to-speech multi-language translation on the fly. For instance, a rural farmer can pose a question in Haryanvi, the language spoken just outside Delhi, and the tool translates it into English, searches the database for an appropriate answer, and then translates the answer back to Haryanvi and voices it out in a human voice via Meta Platforms Inc.’s WhatsApp to the farmer…

Vijayalakshmi, who goes by a single name as is common in southern India, voiced a question to a bot in her native Kannada language on education scholarships. Moments later, a human-like voice responded to explain the government aid available to her 15-year-old son.

Here is the full story, via the excellent Samir Varma.

A mild return for Danish phrenology?

by  Tyler Cowen in

A new study in Denmark used machine learning techniques on photographs of faces of Danish politicians to predict whether their political ideology is left- or right-wing. The accuracy of predictions was 61%. Faces of right-wing politicians were more likely to have happy and less likely to have neutral facial expressions. Women with attractive faces were more likely to be right-wing, while women whose faces showed contempt were more likely to be left-wing. The study was published in Scientific Reports.

Of course such results rarely replicate across different countries, including the United States.  Here is the full link, via CB.

Vertical migration externalities, or another reason why California taxes are too high

by  Tyler Cowen in

State income taxes affect federal income tax revenue by shifting the spatial distribution of households between high- and low-productivity states, thereby changing household incomes and tax payments. We derive an expression for these fiscal externalities of state taxes in terms of estimable statistics. An empirical quantification using American Community Survey data reveals that the externalities range from large and negative in some states, to large and positive in others. In California, an increase in the state income tax rate and the resulting change in the distribution of households across states lead to a decrease in federal income tax revenue of 39 cents for every dollar of California tax revenue raised. The externality amounts to a 0.27% decrease in total federal income tax revenue for a 1 pp increase in California’s state tax rate. Our results raise the possibility that state taxes may be set too high in high-productivity states, and set too low in low-productivity states.

That is from new research by Mark Colas and Emmett Saulnier, via the excellent Kevin Lewis.

Saturday assorted links

by  Tyler Cowen

1. The Mechanical Turk is increasingly mechanical in fact.

2. Participating in a climate prediction market increases concern about global warming.

3. “Growth in per pupil education spending in the United States was mostly flat until 1918, after which it increased by almost 100% in a brief six-year period.”

4. Taliban markets in everything, “Cash-strapped Taliban selling tickets to ruins of Buddhas it blew up.”

5. Guess who is being blamed for high rates of Swedish inflation?

6. SpaceX hires fourteen-year-old engineer, he is then denied a LinkedIn account.

7. Ross on C.S. Lewis and the weirdness of our time (NYT).  Good Straussian clincher at the very end.

8. Daniel Ellsberg, RIP (NYT).

Using a Quantum Annealer to Solve a Real Business Cycle Model

by  Alex Tabarrok in

From Jesús Fernández-Villaverde and Isaiah J. Hull a new paper:

NBER 31326: We introduce a novel approach to solving dynamic programming problems, such as those in many economic models, on a quantum annealer, a specialized device that performs combinatorial optimization. Quantum annealers attempt to solve an NP-hard problem by starting in a quantum superposition of all states and generating candidate global solutions in milliseconds, irrespective of problem size. Using existing quantum hardware, we achieve an order-of-magnitude speed-up in solving the real business cycle model over benchmarks in the literature. We also provide a detailed introduction to quantum annealing and discuss its potential use for more challenging economic problems.

Wikipedia offers more on quantum annealing:

Quantum annealing starts from a quantum-mechanical superposition of all possible states (candidate states) with equal weights. Then the system evolves following the time-dependent Schrödinger equation, a natural quantum-mechanical evolution of physical systems. The amplitudes of all candidate states keep changing, realizing a quantum parallelism, according to the time-dependent strength of the transverse field, which causes quantum tunneling between states or essentially tunneling through peaks. If the rate of change of the transverse field is slow enough, the system stays close to the ground state of the instantaneous Hamiltonian (also see adiabatic quantum computation).[6] If the rate of change of the transverse field is accelerated, the system may leave the ground state temporarily but produce a higher likelihood of concluding in the ground state of the final problem Hamiltonian, i.e., diabatic quantum computation.[7][8] The transverse field is finally switched off, and the system is expected to have reached the ground state of the classical Ising model that corresponds to the solution to the original optimization problem.

I would not have expected to see a paper like this for many years to come, even decades. I gather that solving the RBC model more quickly is a test case. I can see applications in knapsack problems and auction allocations.

SHRUG 2 for India is out

by  Tyler Cowen in

Here is the home page.

Agglomeration externalities from restaurants

by  Tyler Cowen in

We estimate agglomeration externalities in Milan’s restaurant sector using the abolition of a unique regulation that restricted where restaurants could locate. In 2005, Milan abolished a minimum distance requirement that had kept the number of establishments artificially constant across neighborhoods. We find that after 2005, the geographical concentration of restaurants increased sharply and at an accelerating rate. Consistent with the existence of strong and self-sustaining agglomeration externalities, restaurants agglomerated in some neighborhoods and deserted others, leading to a growing divergence in local amenities across neighborhoods. Restaurants located in neighborhoods that experienced large increases in agglomeration reacted by increasing product differentiation.

That is from a new AER Insights piece by Marco Leonardi and Enrico Moretti.  Here are some ungated copies.  I am myself repeatedly surprised how much the mere location of a restaurant can predict its quality.

Does Germany need more polarization? (from the comments)

by  Tyler Cowen

My perception is that in Germany most major political decisions are not on the ballot: migration, nuclear energy, international, alliances, emission reduction policies to name but a few examples. Whereas people in the Americas worry about polarization, I would argue that Germany’s problem is the opposite. Compared to the historical average German politics is too tame and not polarized enough. Polarized debates were much more endemic when the country debated the Nato Doppelbeschluss, the Kohl era (re-unification) or the Adenauer era (West alliance, later the failed project of a European army). The counterfactual in many of these cases would have been different had the other party been in power. The same is not true for the Merkel era. The word ‘Alternative’ derives from her suggesting that her Euro-crisis management was without alternative. If I may offer one conjecture as to why this is happening, I would argue that the degree of elite convergence is greater than in the Americas. The opinion spectrum covered by public intellectuals is just so much smaller. And with trade unions and the church in decline so is the opinion spectrum covered by the country’s leading non-governmental institutions. (The treatment of that party’s very different initial leadership in the mid 2010’s illustrates this point.) So, in short, my (and many people’s) argument is that as in the Hotelling model ideological conformity of the elites has created the space for a non-ideologically aligned entrant. Naturally, this entrant is more extreme than a more conservative version of the Christian Democrats (and I tend to think that this is so because Christianity forbids you to go down certain tempting, yet inhumane rabbit holes but that is for another day) and of lesser quality because given the current intellectual climate the new party has trouble recruiting elites. Needless to say, you should not vote for this party. But I understand why it exists.

That is from “C.”

The Road to Socialism and Back: An Economic History of Poland, 1939–2019

by  Alex Tabarrok in

For four decades during the latter half of the 20th century, Poland and its people were the subjects of a grand socio-economic experiment. Under the watchful eye of its Soviet masters, the Polish United Workers’ Party transformed the mixed economy of this nation of 35 million into a centrally planned, socialist state (albeit one with an irrepressible black market). Then, in the closing decade of the 20th century, under the leadership of Polish minister of finance Leszek Balcerowicz, the nation was transformed back into a mixed economy.

In this book, we document the results of this experiment. We show that there was a wide chasm between the lofty goals of socialist ideology and the realities of socialism as the Polish people experienced them. We also show that while the transition back from a socialist to a mixed economy was not without its own pain, it did unleash the extraordinary productive power of the Polish people, allowing their standard of living to rise at more than twice the rate of growth that prevailed during the socialist era. The experiences of the Poles, like those of so many behind the Iron Curtain, demonstrate the value of economic freedom, the immiserating consequences of its denial, and the often painful process of regaining lost freedoms.

That’s the opening to an excellent new book (pdf) from the Fraser Institute written by Boettke, Zhukov, and Mitchell. More than an economic history of Poland, this book is also a very good introduction to the economics of socialism.