Results for “Watson” 84 found
Who’s complacent?, stress reduction edition lower the value of signaling
A University of Georgia professor has adopted a “stress reduction policy” that will allow students to select their own grades if they “feel unduly stressed” by the ones they earned.
According to online course syllabi for two of Dr. Richard Watson’s fall business courses, he has introduced the policy because “emotional reactions to stressful situations can have profound consequences for all involved.”
Here is a bit more, but you get the idea. On RateMyProfessor, some considered him tough.
Thursday assorted links
1. Why is there sex segregation for cheese rolling?
2. MIE: Groper insurance, for those accused of such behavior on Japanese trains. Talk about moral hazard…
3. Krugman notes on bilateral imbalances, with respect to Germany (pdf).
4. I am interviewed by the Swiss on-line periodical Watson (in German).
5. Over 1200 “covfefe” products on Amazon — “Did you mean: “coffee””?
6. Relatively masculine and relatively feminine activities, across societies.
Monday assorted links
1. There is no cutlery great stagnation.
4. Kevin O’Rourke on the return of the Irish border.
5. Obituary for Michael Novak (NYT).
6. Watson benched for cancer work?
7. Deviations from covered interest parity seem real and robust, at least these days. And how trade shocks make men less marriageable.
Is the Cost Disease Dead?
Even though William Baumol didn’t win the Nobel prize this year it got me to thinking about the cost disease, as did the death last week of William Bowen, the co-author of Performing Arts – The Economic Dilemma which brought the cost disease to public attention. The cost disease says that if two sectors have unequal levels of productivity growth then the sector with lower growth will increase in relative price. If in 1900, for example, it took 1 day of labor to produce one A good and 1 day of labor to produce one B good then the goods will trade 1:1. Now suppose that by 2000 1 unit of labor can produce 10 units of A but still only one unit of B. Now the goods trade 10:1. In other words, in 1900 the price or opportunity cost of one B was one A but in 2000 to get one B you must give up 10 A. B goods have become much more expensive.
The cost disease says only that the relative price of the low productivity good increases, it doesn’t say that the low productivity good becomes absolutely more expensive. The economy in 2000 is much wealthier than in 1900 so relative to income B has become cheaper. Anyone who could consume x units of B in 1900 can still consume x units of B in 2000, the only difference is that in 2000 they will be giving up more A than in 1900 so the tradeoff has become steeper even though still affordable.
Stated generically the cost disease is indisputable. But it becomes more contentious when we try to identify the A and B good. Baumol and Baumol and Bowen initially pointed to labor intensive goods, the service sector, as the low-productivity B sector. The performing arts were the key example–it took four quartet players 40 minutes to perform a Mozart composition in 1900 (or 1800) and it took four quartet players 40 minutes to perform a Mozart composition in 2000, hence no productivity improvements in Mozart performances, hence a rising cost over time since those four players could produce many more goods in say the manufacturing sector in 2000 than 1900. Health care and education are other stock examples.
Tyler offers one response to the cost disease namely that it’s true if you define the good narrowly (listening to a live performance of a 40 minute Mozart composition) but why should we define the good narrowly? If instead we define the good as “listen to music for 40 minutes” then it’s clear that costs have fallen dramatically. Not only has the cost of listening fallen, variety has increased. Costs have fallen even further since Tyler wrote. In a similar way, Tyler and I have argued that online education greater lowers costs and increases quality.
Here, however, I offer a different and more fundamental response. Baumol pointed to labor and the service sector as the low productivity, low growth, sector. But robots and artificial intelligence mean that there is no longer a pure “labor” sector. Robots are labor made of capital. Whether we are talking about robot vacuum cleaners, AI answering machines or Dr. Watson there is much more capital in the service sector than ever before. K has become L. And when K becomes L, the productivity of L increases with the productivity of K. If manufacturing productivity improves and we are manufacturing robots then any sector that uses robots increases in productivity. If software productivity improves–if AI becomes more intelligent, for example–then any sector that uses AI increases in productivity. Any service that uses information technology inherits all the productivity growth of information technology.
At any moment there will always be some sectors that are increasing in productivity at a faster rate than other sectors–that is the nature of progress, uneven and episodic–but the time when one could distinguish a manufacturing sector and a service sector and argue that as a general rule the latter increases in productivity at a slower rate than the former is rapidly coming to a close. K has become L.
Addendum: Timothy Lee also has a piece today on the cost-disease.
Not all complaints can be true at the same time
How sticky are real wages anyway? The mainstream view is that real wages are almost completely acyclical. But a new paper by Basu and House challenges this, here is part of their conclusion:
…there are indications that the allocative wage — the wage that governs hours worked and that firms internalize when making production and pricing decisions — may not equal the contemporaneous remitted wage. In particular, firms and workers may well have an implicit understanding that the remitted wage will be a smoothed version of the expected allocative wage. By estimating the expected present value of wage payments, one can construct a “user cost of labor,” which should measure the underlying allocative wage.
You can think of the employer as adjusting the “career ladder” of the worker while the contemporaneous wage remains more or less constant. So in good times that “true” real wage goes up, and in bad times it goes down.
I would say the verdict on this idea remains out, but I found this a stimulating piece to read and it also offers an excellent survey of the literature.
Here’s the catch: on the internet I’ve read dozens — no, hundreds of times — that real wages haven’t gone up more because the Fed chokes off real wage hikes every time the economy nears recovery. You will notice that this claim is simply flat out wrong if the mainstream view of real wage acyclicality is correct. Somehow that never seems to come up. (Yet it seems this ability of the Fed to stifle real wage hikes feels like it is true.)
Now, the Basu and House paper, if it is correct, actually creates an avenue through which you could start (partially) viewing the Fed as a real wage villain. Maybe. If some other auxiliary hypotheses were to kick in, which is not guaranteed.
But then here is the thing: you could no longer believe in traditional doctrines of wage stickiness. And you would have to change many of your views on macroeconomics, and indeed on the efficacy of labor markets more generally.
People, repeat after me: Not all complaints can be true at the same time. I know it is hard to live with that reality, but maybe it is worth a try. And if you don’t like it, you can complain about that too.
Monday assorted links
1. “Watson, who lives with his wife by the sea, says he is still facing charges under a 1935 law that states no one can possess more than 120 packs of cards at one time.” The polity that is Thailand.
2. Productivity growth during the Great Depression.
3. Solar + storage.
4. How Hollywood’s favorite juice bar owner eats every day. For real, not a joke, and parasitic on “Markets in Everything.” Recommended.
5. Can you learn some skills twice as fast?
6. Evidence on candidate electability from prediction markets.
Genetic testing may be coming to your office
A handful of firms are offering employees free or subsidized tests for genetic markers associated with metabolism, weight gain and overeating, while companies such as Visa Inc., Slack Technologies Inc., Instacart Inc. recently began offering workers subsidized tests for genetic mutations linked to breast and ovarian cancer.
The programs provide employees with potentially life-saving information and offer counseling and coaching to prevent health problems down the road, benefits managers say.
Screening for genetic markers linked to obesity is the latest front in companies’ war on workers’ weight woes.
Obesity-related conditions such as Type 2 diabetes comprise a large share of overall health-care costs, estimated to run more than $12,000 a worker this year, according to a recent survey from Towers Watson and the National Business Group on Health.
Employers are hoping to help bend the cost curve—and make their workers healthier—by more aggressively targeting obesity and coaxing workers to lose weight.
Fortunately, none of that information ever will be used against the interests of workers, nor will any worker face pressure, explicit or implicit, to submit to such a test…
The story is here, here is another path in.
Assorted links
1. Nouriel Roubini on the new machine age.
2. Do high heels influence how men behave?
3. Amazon introduces Dutch-style auctions.
4. Steve Albini defends today’s world of music.
5. An app for valet parking service.
6. Jonathan Gruber’s opening statement (pdf).
7. Russia’s richest man bought Watson’s Nobel medal and now will return it to him.
Assorted links
1. What happens when China pledges zero emissions. And financial repression is easing in China.
2. The strange world of computer-generated novels. And are board games back?
3. “Dogs use a very smart (mechanism) to optimize their drinking,…” Cats too.
4. MIE: James Watson is selling his Nobel Prize.
5. Daniel Pink’s Crowd Control tries to bring behavioral economics to TV. And Ben Powell’s TV show.
Why does the U.S. economy do better under Democratic Presidents?
Alan S. Blinder and Mark W. Watson have a useful unpacking of this question, here is the abstract summarizing their conclusions:
The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics—when the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.
Machines vs. lawyers
We all know the market for lawyers is shrinking, but not every part of the legal services sector is in retreat. John O. MacGinnis writes:
The job category that the Bureau of Labor Statistics calls “other legal services”—which includes the use of technology to help perform legal tasks—has already been surging, over 7 percent per year from 1999 to 2010.
Much of the rest of the piece details how various legal functions can be taken only, if only slowly, by smart software. Here is a bit more:
Until now, computerized legal search has depended on typing in the right specific keywords. If I searched for “boat,” for instance, I couldn’t bring up cases concerning ships, despite their semantic equivalence. If I searched for “assumption of risk,” I wouldn’t find cases that may have employed the same concept without using the same words. IBM’s Watson suggests that such limitations will eventually disappear. Just as Watson deployed pattern recognition to capture concepts rather than mere words, so machine intelligence will exploit pattern recognition to search for semantic meanings and legal concepts. Computers will also use network analysis to assess the strength of precedent by considering the degree to which other cases and briefs rely on certain decisions. Some search engines, such as Ravel Law, already graphically display how much a particular precedent affected the subsequent course of law. As search progresses, then, machine intelligence not only will identify precedents; it will also guide a lawyer’s judgment about where, when, and how to cite them.
The entire piece is here, interesting throughout, via B.A.
Assorted links
Assorted links
1. MIE: weird Japanese toothpastes. And here is a Swiss nihilist toothpaste.
2. French driverless vehicle available in the USA for 250k.
4. Where have all the Cantonese restaurants gone?
5. The economics of IBM’s Watson. There is further information here about the new business group behind Watson, more here.
6. Polar vortex map (the link uses obscenity, repeatedly).
Why is there superior economic performance under Democratic Presidents?
James Hamilton directs our attention to a useful new paper on this topic by Alan Blinder and Mark Watson (pdf). Blinder and Watson conclude:
Democrats would no doubt like to attribute the large D-R growth gap to better macroeconomic policies, but the data do not support such a claim….It seems we must look instead to several variables that are mostly “good luck.” Specifically, Democratic presidents have experienced, on average, better oil shocks than Republicans, a better legacy of (utilization-adjusted) productivity shocks, and more optimistic consumer expectations (as measured by the Michigan ICE).
Perhaps one could attribute some of the “confidence gap” to policy differences, though the authors point out “…direct measures showing increasing optimism after Democrats are elected are hard to find.” In any case this paper is a useful corrective to some common claims about superior economic performance under Democratic Presidents. Invoking the partisan composition of Congress also does not seem to explain the observed patterns.
Since we are sometimes told that macroeconomic problems dwarf micro in importance (not a division of categories I would support, but you hear this often), well…draw your own conclusions.
Blinder and Watson also debunk a myth you commonly hear from conservatives:
In sum, with the exception of the Greenbook forecasts for the early part of the first Reagan administration, forecasts suggest little reason to believe that Democrats inherited more favorable initial conditions (in terms of likely future growth) from Republicans than Republicans did from Democrats.
This is interesting too:
There is, however, a slight tendency for both the nominal and real Federal funds rate to trend upward during Democratic presidencies and downward during Republican presidencies, suggesting that the Fed normally tightens under Democrats and eases under Republicans. Of course, such an empirical finding does not imply that the Fed is “playing politics” to favor Republicans. Rather, it is just what you would expect if the economy grows faster (with rising inflation) under Democrats and slower (with falling inflation) under Republicans—as it does.
In the UK, economic performance is overall better under the conservatives, although the difference is not statistically significant.
Mt. Kisco, New York dining bleg
That’s Westchester County, right? I will have time for one meal there, before a trip to IBM Watson. Where should I eat?