Monday assorted links
1. Brian Chau on how economists see AI.
2. Misha Saul reviews Louise Perry on sex and agency.
3. MIE: “Enter Gensyn, a blockchain-based marketplace protocol connecting developers (anyone who is able to train a machine learning model) with solvers (anyone who wants to train a machine learning model). By tapping into the long tail of idle, machine-learning-capable compute around the world — such as in smaller data centers, personal gaming computers, M1 and M2 Macs, and eventually even smartphones — Gensyn can potentially 10-100x the available compute power for machine learning.” Link here.
4. Fortune 500 CEO colleges, as of 2019.
Lookism on the rampage
Beauty has its privileges. Studies reliably show that the most physically attractive among us tend to get more attention from parents, better grades in school, more money at work and more satisfaction from life. A study published in January in the Journal of Economics and Business found that good-looking banking CEOs take in over $1 million more in total compensation, on average, than their lesser-looking peers. “Good looks pay off,” the authors write.
New research from Shanghai Advanced Institute of Finance similarly finds that comely managers of mutual funds lure more investments and enjoy more promotions than their homelier counterparts, even though their funds don’t perform as well. The researchers suggest this performance gap may be because handsome managers approach risk with hubristic levels of confidence.
Here is more from the WSJ, with further evidence at the link. Via the excellent Daniel Lippman.
Web 3.0 has a future after all
That is the theme of my latest Bloomberg column, here is one excerpt:
I fully expect the ideas behind Web 3.0 to make a major comeback — as the legal and institutional framework for AI bots. It’s worth thinking through how this might work.
Say you run a charity and want to create and distribute an AI bot that will teach mathematics to underprivileged schoolchildren. That’s great, but the bot will encounter some obstacles. In some jurisdictions, it may need to pay licensing and registration fees. It may need to purchase add-ons for recent innovations in teaching. If it operates abroad, it may wish to upgrade its ability to translate. For a variety of reasons, it might need money.
All those transactions would be easy enough if AIs were allowed to have bank accounts. But that’s unlikely anytime soon. How many banks are ready to handle this? And imagine the public outcry if there were a bank failure and the government had to bail out some bot accounts. So bots are likely to remain “unbanked” — which will push them to use crypto as their core medium of exchange.
Critics often point out that dollars are more efficient than crypto as a form of exchange. But if AI bots can’t use dollars, then they will have to use crypto. Yes, some owners might give bots access to their checking accounts, while others might want to OK every bot expenditure through the dollar-based banking system. But most people, I suspect, would rather let the bots operate on their own, without all those risks and hassles — and again, that brings us back to crypto.
There are well-known arguments for why “agentic” bots are often more efficient than “tool” bots, and they are going to need money that is consistent with a reasonable degree of bot autonomy. Furthermore, possibly for liability reasons (do you want to be indicted in some foreign country because of something your bot said or did?), many of these bots won’t be owned at all. That will be another force pushing the bots to operate in the crypto nexus.
There is much more at the link, including a discussion of NFTs as property rights in this regime. You can expect law, adjudication services, and smart contracts as well, all as substitutes for a “proper” legal system.
Mark Zandi on changing odds of recession
What recession? The consensus view that recession was virtually a slam dunk looks increasingly off base. Yes, there will eventually be one, but odds that a downturn is dead ahead are receding. There are a bunch of reasons why the economy is hanging tough. Here are my top three…
First, excess savings. Consumers couldn’t spend as they typically do during the pandemic as they were stuck at home. At the peak, excess savings amounted to 10% of GDP. Consumers have since been using the savings to supplement their purchasing power and calibrate their spending.
Second, labor hoarding. Businesses desperately want to avoid layoffs. Even before the pandemic they had big trouble finding and retaining talent. They also know that the labor shortages will be a perennial problem as the boomers are retiring and immigration is impaired.
Third, low leverage. Households and businesses have borrowed prudently, and their debt service burdens are historically light. They’ve also locked in the previously low rates. Some low income households and PE-acquired businesses have overdone it. But they are the exception.
I remain agnostic on these questions, but I would note that “conditional on inflation coming down from five percent” would be a useful qualifier for some of this discussion…
Sunday assorted links
2. Price controls: too early for a victory lap.
3. David Pogue reviews Apple Vision Pro (WSJ). And Raymond Wong on the same.
4. John Cochrane on discount rates.
5. Ross on whether the government wants you to believe in UFOs (NYT).
6. How does college alter political attitudes?
7. Samuel Hammond: “European AI safety is focused on privacy while American AI safety is focused on paternalism. Neither make us more safe in any substantive sense.”
*Goodbye Eastern Europe*
The author is Jacob Mikanowski and the subtitle is An Intimate History of a Divided Land. Might this be the best overall book on how Eastern Europe ended up so different (but not entirely different) from Western Europe? I’ll be doing a CWT with him later this fall (hold your suggestions for now, and I’ll hold further commentary as well), but though I would flag this book for you in the meantime. I hope it gets some good publicity as the release date is approaching.
*Medieval Horizons: Why the Middle Ages Matter*
Ian Mortimer is the author of this excellent book, here was one of my favorite bits:
It may seem preposterous today to describe a 5 mph increase in the maximum land speed as revolutionary. It sounds like someone pointing to a hillock and calling it a mountain. But it was revolutionary, for a number of reasons. Like a one-degree rise in average global temperature, it represents a huge change. This is because it is not a one-off event but a permanent doubling of the maximum potential speed. By 1600 the fastest riders could cover 150 miles in a day and individual letters carried by teams of riders could travel at speeds of up to 200 miles per day. This significantly reduced the time it took to inform the government about the goings-on in the realm. If the Scots attacked Berwick when the king was at Winchester, and the news came south at 40 miles per day, as it is likely to have done in the eleventh century, it would have taken nine days to arrive. After the king had deliberated what to do, if only for a day, the response would have travelled back at the same speed — so the north of the kingdom would have been without royal instructions for almost three weeks. If, however, the post could carry the news at 200 miles per day, the king and his advisers could decide on a response in less than two days. After a day’s discussion, the king’s instructions would have been back in the Berwick area less than five days after the danger had arisen — two weeks faster than in the eleventh century.
It is hard to exaggerate the political and social implications of such a change. The rapid delivery of information allowed a king far greater control over his realm…The rise in travelling speeds subtle shifted the balance of power away from territorial lords and towards central government.
The speed of information thus created a demand for more information.
That meant, among other things, more spies. And there was this:
Looked at simply as a statistic, an increase in speed of 5 mph is not very impressive. In terms of the cultural horizons explored in this book, however, it is profoundly important. Imagine the rings spreading out from where you are now — the first ring marking the limit of how far you can travel in one day, with a further ring beyond it marketing two days, and then a yet further ring marking three days. Now imagine all those moving further and further outwards, each one twice as far…you haven’t just doubled or trebled the area you could cover in one, two or three days, you’ve increased it exponentially…With the collective horizon also increasing exponentially, you can see how a doubling of the distances people could travel in a day had a huge impact on the nation’s understanding of itself and what was going on within and beyond its borders.
Interesting throughout, this one will make the year’s “best of non-fiction” list. You can buy it here.
Virtue signaling on Twitter
We study whether tweets about racial justice predict the offline behaviors of nearly 20,000 US academics. In an audit study, academics that tweet about racial justice discriminate more in favor of minority students than academics that do not tweet about racial justice. Racial justice tweets are more predictive of race-related political tweets than political contributions, suggesting that visibility increases informativeness. In contrast, the informativeness of tweets is lower during periods of high social pressure to tweet about racial justice. Finally, most graduate students mispredict informativeness, more often underestimating than overestimating, reducing the welfare benefits of social media.
Here is the paper by Deivis Angeli, Matt Lowe, and The Village Team.
Saturday assorted links
Free Formatting For All on First Submission!
Many years ago I was incredulous when my wife told me she had to format a paper to meet a journal’s guidelines before it was accepted! Who could favor such a dumb policy? In economics, the rule is you make your paper look good but you don’t have to fulfill all the journal’s guidelines until after the paper is accepted. Sensible!
A paper just published in BMC Medicine estimates that this obtrusive norm costs researchers in biomedical journals alone some $230 million a year in wasted time. That’s consistent with an earlier study which estimated that over a billion dollars worth of time was wasted reformatting papers in all scientific fields. Quoting from that earlier study:
Our data show that nearly 91% of authors spend greater than four hours and 65% spend over eight hours on reformatting adjustments before publication…Among the time-consuming processes involved are adjusting manuscript structure (e.g. altering abstract formats), changing figure formats, and complying with word counts that vary significantly depending on the journal. Beyond revising the manuscript itself, authors often have to adjust to specific journal and publisher online requirements (such as re-inputting data for all authors’ email, office addresses, and disclosures). Most authors reported spending “a great deal” of time on this reformatting task. Reformatting for these types of requirements reportedly caused three month or more delay in the publication of nearly one fifth of articles and one to three month delays for over a third of articles.
It’s all very depressing. If we can’t get rid of unproductive paper reformatting standards–which benefit no one–how can we expect to tackle monumental tasks that require navigating complex tradeoffs such as resolving global climate change or making the tax code more just and efficient?
Yet perhaps there is hope. The BMC Medicine paper was covered in Nature and the authors have started a petition to change the reformatting norm. Do your part. Sign the petition! Free formatting for all on first submission!
Kenya facts of the day
The total fertility rate for 2019 was 3.4 births which marks a drop of about one birth from 4.8 births in 2009.
But here is the more interesting part:
The gap between the highest and lowest TFR continues to increase – which is lowest at 2.5 children in Nairobi and 8 children per woman in Mandera County.
Here is the full story. Here is Wikipedia on Mandera County. Here is another story: “The risk of dying in childbirth in Mandera, Kenya’s forgotten north-eastern region, is higher than anywhere else in the world.”
Why mediocre gdp growth and a strong labor market?
That is the topic of my latest Blooomberg column. This exercise is speculative, but here is my tentative resolution:
Workers have been undergoing a serious crisis of morale since the pandemic — and they really are doing less. So businesses, in turn, have to hire more of them just to keep pace.
Does this hypothesis fit with these economic signals? With inflation still in the range of 5%, slow economic growth cannot be due to insufficient aggregate demand. More likely, it is due to supply-side and productivity considerations. The biggest natural disaster of the last half decade has been Covid, which damages not capital but labor — whether workers’ health or their morale…
Could part of the explanation be the broader adoption of the work-from-home option? I know there are studies that say WFH increases productivity, but even the author of one of the more widely cited papers says that more research is necessary and that a lot depends on how well the arrangement is organized. Meanwhile, America is experiencing a mental health crisis, arguably made worse by both Covid stress and the accompanying lockdowns.
The productivity question is even more puzzling. If worker productivity is low, why keep on hiring? The key may be to look not at total productivity, but at productivity per hour — and not per reported hour, but per hour actually worked.
I concede that there exists no measure of productivity per hour actually worked. (The official number, which is not doing great either, measures productivity per reported hour.) But if the average office worker only puts in say two to three hours a day — and it is not implausible — then there is a lot of slack in the worker’s day, especially if they are WFH.
So consider this thought experiment as a possible explanation: You are a manager and have noticed that new hires tend to be more enthusiastic and hard-working than current employees. Under this theory — and that’s all it is — you decide to hire more contract workers for well-defined, short-run tasks. Meanwhile, you redouble your efforts to bring workers back into the office.
Viewed through an economic lens, it is puzzling why there aren’t more gains from trade. That is, workers agree to put in more effort, and employers agree to pay them more. That is a trend which should be expected — but WFH makes monitoring difficult.
Note this same pattern of mediocre output growth and labor scarcity is evident in many other economies, including Germany and Czechia, as discussed in the column.
The nuclear polity that is Georgia
The first new nuclear reactor built in the United States in more than 40 years is now up and running in Waynesboro, Georgia. After more than a decade of construction and spiraling costs, Plant Vogtle Unit Three, the first of two new reactors at the site, started producing power at its full capacity in May. It’s expected to come online this month after a final round of tests.
The completion of the new reactors is a major milestone not just for the long-delayed project but for nuclear energy in the United States. The new units at Plant Vogtle were the first nuclear construction approved in decades and are the country’s only new reactors in progress.
Here is the full story. Better than nothing, but not entirely encouraging either. Elsewhere, transmission builds (non-nuclear) are declining…
Friday assorted links
1. Davis Kedrosky defends Jared Diamond, a good piece.
2. Is “war-related” a “factor” in financial market returns?
3. Global inequality in well-being has decreased along many dimensions.
4. Overview of the new ARPA-H.
5. “WWSS?” Or, “What would Singapore say?” You don’t have to agree, but the question is usually worth asking. Here is Singapore on LLMs. And if you don’t already know it — I covered it years ago — here is one of my favorite videos, namely Singapore Complaints Choir.
Economics, Hayek, and Large Language Models
Here is my Hayek lecture at LSE, from earlier in this week: