Results for “coup”
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Should I keep an eye on Spain? (from my email)

Keep an eye on Spain. What is happening politically is very serious and the tension is increasing.

Fernando Savater: Spain is formally a democracy, sure, but it is ceasing at a forced march from being a rule of law state.

https://theobjective.com/elsubjetivo/opinion/2023-11-05/resignados-sumisos-luchar-sanchez/

Felix de Azúa: The reactionary left will face the coup right with a predictable result: economic ruin and institutional chaos.

https://theobjective.com/elsubjetivo/opinion/2023-11-11/irse-preparando-sanchez/

…Felipe González is very worried, as well.

https://www.youtube.com/watch?v=g5fAXnrMHuI

That is all from Mario Abbagliati.

Child street vendors in India

Street vending is an important source of self-employment for the urban poor. I use primary observation, survey, and experimental data from Delhi to study this market. Partnering with street vendors to randomize both prices and the passersby they solicit to try to make sales, I find that even with identical goods, child vendors are 97% more likely to make a sale and earn more than twice that of adult vendors. Despite no differences in valuation for the goods, couples, and female customers are 90% and 27% more likely to buy than male customers. Females and couples are 50% more likely to be targeted by vendors than males and are charged higher prices on average (1.15-2 times) than males. I show that these findings are consistent with a model that incorporates altruism and a cost of refusal in the buyer’s decision-making. I find that passersby are more altruistic towards children than adults in an incentivized dictator game. Additionally, requesting passersby to buy, increases the purchasing probability twofold for adult vendors and fourfold for child vendors. Survey data confirms that vendors target females or couples, over males, because they consider who would find it harder to refuse. The paper demonstrates that sellers leverage insights into consumer social preferences to inform their selling strategies, which can be effective in markets with personal selling. 

That is from the job market paper of Ronak Jain, job market candidate from Harvard, updated draft to be uploaded by mid-November.

Thursday assorted links

1. Maxims from Larry Gagosian.

2. How might California regulate AI?

3. Why has growth in medical knowledge been so stagnant?  Northwestern job market paper by Megumi Murakami.

4. My AI webinar for Macmillan.  And also from Macmillan here is an Eric Parsons profile video.

5. Are Singaporean couples who are funny more satisfied with each other?

6. Pakistan starts to expel 1.7 million undocumented Afghani migrants.  That is perhaps the largest forced expulsion since the 1950s?

7. Paul’s latest (video).  And the song itself.

Pharmaceutical Externalities

In my view, pharmaceuticals are undervalued and underinvested in because, despite high prices, pharmaceutical innovations earn only a fraction of the value that they create (Nordhaus finds that in general that innovations reap only a small share of the gains that they create). In 2014, for example, we got Harvoni a new treatment that offered a complete cure for hepatitis C (HCV) infection. In 2014, Harvoni cost over $1000 a pill and between $60,000 and $100,000 for a full treatment. In 2015 Medicaid spent more on Harvoni than on any other drug and there were calls for regulation and price controls. Studies showed, however, that even at that high price, Harvoni was value/cost-effective. Today, with more competition, there are equivalent versions of Harvoni available from Amazon for $12,869 (and 64 cents) which is still expensive but cheap for a cure for an often debilitating and sometimes life-threatening disease (and the price is less for a private insurance buyer or Medicare/Medicaid). In 2030, Harvoni will go generic and prices will fall much more.

Writing at their new substack, Random Acts of Medicine (based on their book of the same name which I reviewed at the WSJ), Chris Worsham and Bapu Jena point us to another side-benefit of Harvoni and similar hep-C drugs. By curing hep-C these drugs results in fewer liver transplants but that means more livers are available for transplant to other people on the waiting list.

One simple statistic suggests that indeed, treatment of HCV is freeing up donor livers for patients with other diseases: in 2022, patients with chronic HCV infection represented only 11% of liver transplants (1,029 of 9,528)—down from the 38% in 2013 when the new HCV drugs were approved.

Beyond this simple figure, a new working paper by economists Kevin Callison, Michael Darden, and Keith Teltser has taken a new, rigorous look at data from 2014 to 2019 to understand how these new drugs for HCV have impacted liver transplants after their first 5 years of broad use. There were a number of encouraging findings:

  • Waiting lists for liver transplants were being occupied by fewer HCV-positive patients and more HCV-negative patients; this shift can be explained by an estimated 45% reduction in the addition of new HCV-positive patients to waiting lists
  • Patients on the waiting list were healthier, likely because waiting times for livers have decreased with less demand from HCV-positive patients
  • Compared to what would have been expected without the introduction of new HCV treatments, the researchers estimated a 39% decrease in transplants to HCV-positive patients coupled with a 36% increase in transplants to HCV-negative patients.
  • Over the five year period, researchers estimated 5,682 livers were transplanted to HCV-negative patients as a result of the new HCV drugs, corresponding to an economic value of $7.5 billion.

These kinds of external benefits from pharmaceuticals are often undercounted and they are one reason why I think the pharmaceutical price controls in the Inflation Reduction Act are a very bad idea.

My excellent Conversation with Lazarus Lake, ultra-marathons

Here is the audio, video, and transcript.  Here is the episode summary:

Lazarus Lake is a renowned ultramarathon runner and designer. His most famous creation (along with his friend Raw Dog) is the Barkley Marathons, an absurdly difficult 100-mile race through the Tennessee wilderness that only 17 people have ever finished in its nearly 30-year existence.

]Tyler and Laz discuss what running 100 miles tells you about yourself that running 26 miles does not, why so many STEM professionals do ultramarathons, which skill holds people back the most, why his entrance fee is no more or less than $1.60, the importance of the Barkley’s opaque application process, how much each race costs to mount, whether he sees a decline in stoicism and inner strength in America, what accounting taught him about running, which books influenced him the most, who’s going to win the NBA title next year, how he’s coping with increasing fame, the competition he’s most focused on now, and more.

And one excerpt:

COWEN: Of all of those skills, which is the most scarce? Which holds people back the most, apart from just the running and the endurance? What are they most likely to screw up?

LAKE: I think these days, navigation is a bigger problem than it used to be because people have become dependent upon GPS. If you don’t use part of your brain, it withers. If you’re not accustomed to knowing, in your head, where you are and just listening for a little voice to tell you when to turn next, it’s something of a problem because they don’t get to take GPS.

COWEN: They literally end up lost in the woods, some people.

LAKE: It happens.

COWEN: What happens to them then? They stay there for the rest of their lives? They wander slowly back to civilization, or . . . What becomes of them? They send out a call for help?

LAKE: If they don’t find their way out in a couple of days, we’ll go look for them. Usually, they will. So far, they’ve always found their way out.

COWEN: That’s the incentive.

LAKE: Sometimes they wander around for an extended period of time lost, but that’s what they signed up for. They’re on their own. All the electronics and all the conveniences of modern life are gone, and they just rely on themselves.

And:

COWEN: How did carrying bodies to the morgue influence your subsequent life?

LAKE: [laughs] How did you know I did that?

As I’ve said before, CWT guests who do not have a college degree are better on average (in equilibrium).

My Conversation with Vishy Anand

In Chennai I recorded with chess great Vishy Anand, here is the transcript, audio, and video, note the chess analysis works best on YouTube, for those of you who follow such things (you don’t have to for most of the dialogue).  Here is the episode summary:

Tyler and Vishy sat down in Chennai to discuss his breakthrough 1991 tournament win in Reggio Emilia, his technique for defeating Kasparov in rapid play, how he approached playing the volatile but brilliant Vassily Ivanchuk at his peak, a detailed breakdown of his brilliant 2013 game against Levon Aronian, dealing with distraction during a match, how he got out of a multi-year slump, Monty Python vs. Fawlty Towers, the most underrated Queen song, how far to take chess opening preparation, which style of chess will dominate in the next ten years, how AlphaZero changes what we know about the game, the key to staying a top ten player at age 53, why he thinks he’s a worse loser than Kasparov, qualities he looks for in talented young Indian chess players, picks for the best places to eat in Chennai, and more.

Here is one excerpt:

COWEN: Do you hate losing as much as Kasparov does?

ANAND: To me, it seems he isn’t even close to me, but I admit I can’t see him from the inside, and he probably can’t see me from the inside. When I lose, I can’t imagine anyone in the world who loses as badly as I do inside.

COWEN: You think you’re the worst at losing?

ANAND: At least that I know of. A couple of years ago, whenever people would say, “But how are you such a good loser?” I’d say, “I’m not a good loser. I’m a good actor.” I know how to stay composed in public. I can even pretend for five minutes, but I can only do it for five minutes because I know that once the press conference is over, once I can finish talking to you, I can go back to my room and hit my head against the wall because that’s what I’m longing to do now.

In fact, it’s gotten even worse because as you get on, you think, “I should have known that. I should have known that. I should have known not to do that. What is the point of doing this a thousand times and not learning anything?” You get angry with yourself much more. I hate losing much more, even than before.

COWEN: There’s an interview with Magnus on YouTube, and they ask him to rate your sanity on a scale of 1 to 10 — I don’t know if you’ve seen this — and he gives you a 10. Is he wrong?

ANAND: No, he’s completely right. He’s completely right. Sanity is being able to show the world that you are sane even when you’re insane. Therefore I’m 11.

COWEN: [laughs] Overall, how happy a lot do you think top chess players are? Say, top 20 players?

ANAND: I think they’re very happy.

Most of all, I was struck by how good a psychologist Vishy is.  Highly recommended, and you also can see whether or not I can keep up with Vishy in his chess analysis.  Note I picked a game of his from ten years ago (against Aronian), and didn’t tell him in advance which game it would be.

The Relentless Rise of Stablecoins

1. In 2022, stablecoins settled over $11tn onchain, dwarfing the volumes processed by PayPal ($1.4tn), almost surpassing the payment volume of Visa ($11.6tn), and reaching 14% of the volume settled by ACH and over 1% the volume settled by Fedwire. It is remarkable that in just a few years, a new global money movement rail can be compared with some of the world’s largest and most important payment systems.

2. Over 25mm blockchain addresses hold over $1 in stablecoins. Of these, ~80%, or close to 20mm addresses, hold between $1 and $100. For a sense of scale, a US bank with 25mm accounts would rank as the 5th largest bank in the US by number of accounts. The massive number of small-dollar stablecoin holdings indicates the potential for stablecoins to provide global financial services to customers underserved by traditional financial institutions.

3. Approximately 5mm blockchain addresses send stablecoins each week. This number provides a very rough proxy for global users regularly interacting with stablecoins. These ~5mm weekly active addresses send ~38mm stablecoin transactions each week, representing an average of over 7 weekly transactions per active address.

4. Stablecoin usage has decoupled from crypto exchange volumes, indicating that significant stablecoin transaction volumes may be driven by non-trading/speculative activity. Since December 2021, centralized exchange volumes are down 64%, and decentralized exchange volumes are down 60%. During this period, stablecoin volumes are down only 11%, and weekly active stablecoin addresses and weekly stablecoin transactions are up over 25%.

5. Of the ~5mm weekly active stablecoin addresses, ~75% transact less than $1k per week, indicating that small/retail users likely represent the majority of stablecoin users.

6. The outstanding supply of stablecoins has grown from less than $3bn five years ago to over $125bn today (after peaking at over $160bn) and has shown resilience to the market downturn with the market cap of stablecoins currently down ~24% from its peak, compared with a ~57% decline for the overall crypto market cap.

7. Less than 1/3rd of stablecoins are held on exchanges. Most are held in externally owned accounts (not exchanges or smart contracts).

8. The majority of stablecoin activity uses Tether (USDT). Tether represents 69% of stablecoin supply, and YTD has accounted for 80% of weekly active addresses, 75% of transactions, and 55% of volumes.

9. Most stablecoin activity occurs on the Tron and BSC blockchains. Year-to-date, the Tron and BSC blockchains collectively account for 77% of weekly active addresses, 75% of transactions, and 41% of volumes.

10. The Ethereum blockchain is used for higher value transactions (on average). Despite accounting for just 6% of active wallets and 3% of transactions, the Ethereum blockchain is home to 55% of stablecoin supply and settles close to 50% of weekly stablecoin $ volume.

These are all from a Bevan Howard report, The Relentless Rise of Stablecoins (requires email).

Diogo Costa on Brazil

From my email, via Gonzalo Schwartz:

The country ranks third globally in consuming information via digital platforms, a landscape that cultivates distrust in public institutions and ignites social unrest. This has fostered a rise in right-wing populism, including the election of former president Jair Bolsonaro, intensifying what Martin Gurri describes as a ‘crisis of authority.’  Efforts to counter this crisis, however, further destabilize Brazil’s democracy. 

Supreme Court Justice Alexandre de Moraes exemplifies this turmoil with his controversial measures, including arbitrary digital content removalousting elected officials, and implementing unprecedented surveillance. Moraes and his peers have been criticized for investigating entrepreneurs and freezing assets over alleged anti-democratic private messagesprobing executives from Google and Telegram for supposed disinformation campaignsrevoking passports of foreign-based journalists, and censoring a film about then-president Jair Bolsonaro. 

The government’s endorsement of these measures amplifies the crisis. It has established a “National Attorney’s Office for the Defense of Democracy” to combat disinformation, while introducing a contested “fact-checking” platform. The Federal Prosecutor’s Office recently requested user data from followers of former President Jair Bolsonaro across major social media platforms to aid their investigation into anti-democratic activities. 

Two key anti-corruption figures, Senator Sergio Moro, an ex-judge, and Representative Deltan Dallagnol, a former prosecutor, are under increased political assault. Accused of colluding in past investigations, they now face political retribution. Dallagnol has already been ousted from Congress by Brazil’s electoral court, and many speculate that Moro will follow suit. Their plight was summed up by President Lula’s statement, “I will only feel well when I f*ck with Moro”. 

These high-profile cases are emblematic of a broader collapse of Brazil’s anti-corruption efforts. Initiatives like Operation Car Wash, which reclaimed R$3.28 billion out of R$6.2 billion in misappropriated funds, are now being undermined by political backlash. This underscores the urgent need for robust institutions that can effectively combat corruption without succumbing to political pressure. 

Brazil’s circumstances resonate regionally due to its leadership role. As Ian Bremmer recently stated, commenting on the Supreme Court making former president Jair Bolsonaro ineligible for the next eight years, “Brazil [is] setting the standard for U.S. democracy”. This political meddling could influence other countries, potentially eroding the rule of law in other democracies. 

Strengthening Brazil’s commitment to the rule of law transcends national borders — it’s a regional imperative. The advantages span from curbing corruption to advancing large infrastructure projects unimpeded by interference, as well as bolstering economic relationships given Brazil’s significant role in regional trade.

SuperFreakonomics on Geoengineering, Revisited

Geoengineering first came to much of the public’s attention in Levitt and Dubner’s 2009 book SuperFreakonomics. Levitt and Dubner were heavily criticized and their chapter on geoengineering was called patent nonsense, dangerous and error-ridden, unforgivably wrong and much more. A decade and a half later, it’s become clear that Levitt and Dubner were foresighted and mostly correct.

The good news is that climate change is a solved problem. Solar, wind, nuclear and various synthetic fuels can sustain civilization and put us on a long-term neutral footing. Per capita CO2 emissions are far down in developed countries and total emissions are leveling for the world. The bad news is that 200 years of putting carbon into the atmosphere still puts us on a warming trend for a long time. To deal with the immediate problem there is probably only one realistic and cost-effective solution: geoengineering. Geoengineering remains “fiendishly simple” and “startlingly cheap” and it will almost certainly be necessary. On this score, the world is catching up to Levitt and Dubner.

Fred Pearce: Once seen as spooky sci-fi, geoengineering to halt runaway climate change is now being looked at with growing urgency. A spate of dire scientific warnings that the world community can no longer delay major cuts in carbon emissions, coupled with a recent surge in atmospheric concentrations of CO2, has left a growing number of scientists saying that it’s time to give the controversial technologies a serious look.

“Time is no longer on our side,” one geoengineering advocate, former British government chief scientist David King, told a conference last fall. “What we do over the next 10 years will determine the future of humanity for the next 10,000 years.”

King helped secure the Paris Climate Agreement in 2015, but he no longer believes cutting planet-warming emissions is enough to stave off disaster. He is in the process of establishing a Center for Climate Repair at Cambridge University. It would be the world’s first major research center dedicated to a task that, he says, “is going to be necessary.”

Similarly, here is climate scientist David Keith in the NYTimes:

The energy infrastructure that powers our civilization must be rebuilt, replacing fossil fuels with carbon-free sources such as solar or nuclear. But even then, zeroing out emissions will not cool the planet. This is a direct consequence of the single most important fact about climate change: Warming is proportional to the cumulative emissions over the industrial era.

Eliminating emissions by about 2050 is a difficult but achievable goal. Suppose it is met. Average temperatures will stop increasing when emissions stop, but cooling will take thousands of years as greenhouse gases slowly dissipate from the atmosphere. Because the world will be a lot hotter by the time emissions reach zero, heat waves and storms will be worse than they are today. And while the heat will stop getting worse, sea level will continue to rise for centuries as polar ice melts in a warmer world. This July was the hottest month ever recorded, but it is likely to be one of the coolest Julys for centuries after emissions reach zero.

Stopping emissions stops making the climate worse. But repairing the damage, insofar as repair is possible, will require more than emissions cuts.

…Geoengineering could also work. The physical scale of intervention is — in some respects — small. Less than two million tons of sulfur per year injected into the stratosphere from a fleet of about a hundred high-flying aircraft would reflect away sunlight and cool the planet by a degree. The sulfur falls out of the stratosphere in about two years, so cooling is inherently short term and could be adjusted based on political decisions about risk and benefit.

Adding two million tons of sulfur to the atmosphere sounds reckless, yet this is only about one-twentieth of the annual sulfur pollution from today’s fossil fuels.

Even the Biden White House has signaled that geoengineering is on the table.

Geoengineering remains absurdly cheap, Casey Handmer calculates:

Indeed, if we want to offset the heat of 1 teraton of CO2, we need to launch 1 million tonnes of SO2 per year, costing just $350m/year. This is about 5% of the US’ annual production of sulfur. This costs less than 0.1% on an annual basis of the 40 year program to sequester a trillion tonnes of CO2.

…Stepping beyond the scolds, the gatekeepers, the fatalists and the “nyet” men, we’re going to have to do something like this if we don’t want to ruin the prospects of humanity for 100 generations, so now is the time to think about it.

Detractors claim that geoengineering is playing god, fraught with risk and uncertainty. But these arguments are riddled with omission-commission bias. Carbon emissions are, in essence, a form of inadvertent geoengineering. Solar radiation engineering, by comparison, seems far less perilous. Moreover, we are already doing solar radiation engineering just in reverse: International regulations which required shippers to reduce the sulphur content of marine fuels have likely increased global warming! (See also this useful thread.) . Thus, we’re all geoengineers, consciously or not. The only question is whether we are geoengineering to reduce or to increase global warming.

More on Singapore and public sector talent development

From an anonymous correspondent, I will not indent:

“As a Singaporean, I appreciated your recent post on Singapore and the self-perpetuating nature of its establishment. I wanted to raise three points that may be of interest to you, which seem to also be under-discussed outside of Singapore.

The first is the Singaporean system of scholarships. You write in the post that “In Singapore, civil service jobs are extremely important. They are well paid and attract a very high quality of elite, and they are a major means of networking…” This is partly true, but the salary of civil servants at the entry level and most middle management positions is generally lower (by a small by noticeable amount) than that of comparative private sector employment, for the level of education etc. The real tool by which the government secures manpower for the civil service is a system of government scholarships. Singapore provides scholarships to high-school-equivalent students to fund their university education (either in Singapore or overseas), in exchange for which the student is bonded to work for the government for a period of 4 – 6 years after graduation. For talented low-income students, this is naturally an appealing option, and is win-win from the government’s point of view. What Singapore has successfully done, however, is create a set of social norms in which taking such a scholarship is seen as prestigious, and not something merely done out of need, such that many middle-class or even quite wealthy students take up the scholarship despite not needing it to fund their education. The incentive for them is the fast-tracking of scholars (relative to those employed through normal means) into higher positions within the civil service, a practice which is essentially an open secret. You could also think of this as a modern re-creation of the Chinese imperial exam system, without the bad parts, and I do think the cultural connection is not unimportant.

Singapore is often seen as a model for other developing countries for any number of the policies it adopts. But I think one truly underrated high impact policy is this scholarship system. It largely solves the problem governments in many countries face of keeping talent in the public sector, while redressing some degree of inequality (of course, the scale is limited). To a government, the cost of funding the higher education of a couple hundred students a year (Singapore’s birth cohort is small, after all) is relatively insignificant, even at the most expensive American colleges. I’ve always thought of this policy as one of the single lowest-cost, highest-impact things that other developing countries can borrow from Singapore: a marginal revolution, if you like.

The second point is on how the civil service is enmeshed with the elected government. The PAP often draws its candidates from the civil service, and because of its electoral dominance, it largely has the power to decide on the career pathways of its MPs and ministers. Unlike the UK, therefore, where ministerial promotions are largely dependent on political opportunity, the PAP does do quite a bit of planning about who its ministerial team a few years down the line is going to consist of, and often draws civil servants to fit into that system. If we look at the current Cabinet, for example:

  • Lawrence Wong (deputy PM and heir presumptive)
  • Heng Swee Keat (deputy PM)
  • Ong Ye Kung (Minister for Health)
  • Desmond Lee (Minister for National Development; probably closest to the US Department of the Interior in its scope)
  • Josephine Teo (Minister for Communications and Information)
  • S. Iswaran (previously Minster for Transport, though now under investigation for corruption)
  • Chee Hong Tat (acting Minister for Transport)
  • Gan Kim Yong (Minister for Trade and Industry)

[They] were all ex-civil servants before standing for election, and many more backbenchers and junior MPs could be added to that list. This contributes significantly to the links between the PAP and the establishment structure as a whole, because it means that MPs when coming into power have often been steeped in “the system” for many years before formally standing for election, and the process of selecting and promoting MPs is much more controlled than the relatively freer systems in liberal democracies.

The last point is about the army. It is not uncommon for ex-soldiers to serve in government in other countries, the US being a prime example, but while in the US this is largely a random process of ex-soldiers themselves choosing to run, in Singapore it’s a much more deliberate effort. First, the SAF (Singapore Armed Forces) awards scholarships too, in a manner similar to the general civil service. In a classically Singaporean way, the scholarships are aggressively tiered, ranging from the most prestigious SAF Scholarship (only around 5 of which are awarded each year) to the SAF Academic Award which funds only local university studies. The degree of scholarship one receives in the army thus determines one’s career progression. The Chiefs of Defence Force (in charge of the SAF as a whole) have all been SAF scholarship recipients, as have almost all of the Chiefs of Army, Navy & Air Force. The relevance of this to your post is the fact that recipients of the more prestigious scholarships are often then cycled out of the army into either the civil service or politics. In Cabinet:

  • Chan Chun Sing (Minister for Education)
  • Teo Chee Hean (Coordinating Minister for National Security)
  • Lee Hsien Loong (PM)

[They] all started their careers in the SAF, and this list could likewise be extended by considering junior MPs. Likewise, many of the heads of the civil service in the various ministries are ex-SAF soldiers, as are the heads of many government agencies like the Public Utilities Board (managing water and electricity) and Singapore Press Holdings, which publishes the establishment newspapers.

Taken together, these three features are I think what contribute to the sense of the “establishment” being a kind of self-contained system that you allude to in your post. In general, young people are attracted to either the civil service or military after leaving high school, and are bonded to the government in exchange for university funding. Although some leave after the bond period, many stay on due to the promise of career progression in both organisations. Eventually, some then become cycled out into the elected government, and the process repeats. This process has, I think, become very attractive to the government because it allows them to exert much more control over the selecting and nurturing of talent, than the more freewheeling British or American systems.”

TC again: Bravo!

States rights tortoise nationalism is the worst tortoise nationalism

You can’t bequeath them to just anyone. Veronica Tomlinson, 52, had thought about leaving Walter, a 24-year-old desert tortoise, to East Coast relatives if she and her husband died first. But state laws prohibit people from moving desert tortoises out of the state where they were adopted. The Tomlinsons, of Las Vegas, have instructions in their will for Walter to be returned to the Tortoise Group, a Nevada-based nonprofit that arranges tortoise adoptions. The couple plan to leave the group their savings and life-insurance money, after paying debts and funeral costs, to cover Walter’s care.

Emphasis is added, not in the original.  Here is the full WSJ story, via Anecdotal.  No Coase theorem for Walter!

On white flight (from the comments)

Are whites fleeing from Asian-heavy California public schools?  One recent paper suggested maybe so, but abc raises some doubts:

I don’t want to dismiss the paper out of hand, as I have seen time and again the challenges communities face both in and outside of the school setting in accommodating demographic change.

However, I don’t think the headline result in this paper is particularly credible. First, there isn’t a well-articulated research question to guide the choice of regression. Second, the authors implicitly rely on the “an instrument is always better” fallacy rather than explaining why their instrument yields more reliable estimates than naive OLS for the (unstated) question of interest. Taken together, the paper is undergrad-thesis level material elevated only by a click bait topic and result. If we want to make bold claims about White animosity towards Asians (a claim that also constructive of such animosity and counter-animosity from Asians towards Whites) we should demand substantive evidence. This paper does not present such evidence.

Some key takeaways:

(1) The authors note that a mechanical housing market replacement would suggest a one-for-one effect, but say that their -1.47 effect is above that threshold. However, if we check the confidence interval using a conservative 1.96 critical value and the estimated standard error of the coefficient estimate, we have -1.47 + 1.96*0.268 = -0.96 so that we are not statistically significantly different from -1 by this measure.

(2) The naive OLS estimate in high-SES regions is -0.6, well below the fixed enrollment effect of -1. The authors speculate that OLS may be biased downward because the error term include unmeasured district quality changes that draw in both Asians and Whites. (Note such a correlation only operates if enrollment is not capped, so inconsistent with that model.) The authors don’t document any of these omitted variable issues, however, and just assert that their instrument will be better.

(3) Authors do not substantively engage issues with their IV. First, the IV doesn’t account for changes in composition of immigrants over time (increasing wealth and education of Asian arrivals relative to earlier waves) nor does it account for movement of second-generation Asian families. If there is no omitted variable bias but the instrumented entry is lower than the actual entry, then mechanically the coefficient will have to be higher to offset this effect and restore least-squares minimization.

(4) The instrumented Asian inflows coefficient could pick up effects from Asian-agglomeration effects. A one unit increase in Asian enrollment from pure fixed-pattern immigration flows made lead to shifts of previously settled Asians or shift the direction of subsequent immigration. For example, a settled Korean in Riverside who sees large increases in Korean population in Orange County may see OC as being more attractive than before and move into the area. This induced shift may be only partially captured by the first-stage prediction, leaving the 2nd stage coefficient of interest to increase in magnitude.

(5) Various sensitivities lead to surprising results. First, the instrument behaves poorly in some subsamples, e.g. the bottom-half of the SES scale. Why should we believe an instrument in one data subset when it plainly fails in the complement? Second, the instrument is insignificant in the Bottom Tercile of the above-median SES group (appendix table 2). Third, the IV estimate is only -0.841 in the top tercile of the above-median SES group, again below the key -1 threshold if enrollment caps are binding. Taken together, are we to think that we can identify white flight using this instrument only for the 66.6th to 83.3th percentile bucket?

(6) There’s just a big background trend issue that one has to worry about here. The theory of white flight begs the question of “flight to where?” However if we just look at Appendix Figure 2 during this time period there is a big drop in total White enrollment (and a small decline in Black enrollment) while Asian and Hispanic enrollment see big increases. To what extent are we just finding that aging out of whites in high-SES regions is being replaced disproportionately by Asians?

(7) A couple other wrinkles: how are mixed-race students handled? how would demographic shifts in total enrollment by district affect the 1-to-1 threshold? If child population is shrinking over time (e.g. because families are leaving CA, children per family is declining) then normal churn would predict more than 1-to-1 replacement of new-cohort race versus previous-cohort race.

So perhaps the right answer is “no”?

The order of spousal names on tax returns

Married couples filing a joint return put the male name first 88.1% of the time in tax year 2020, down from 97.3% in 1996. The man’s name is more likely to go first the larger is the fraction of the couple’s allocable income that goes to him, and the older is the couple. Based on state averages, putting the man’s name first is strongly associated with conservative political attitudes, religiosity, and a survey-based measure of sexist attitudes. Risk-taking and tax noncompliance are both associated with the man’s name going first.

Here is the full NBER working paper by Emily Y. Lin, Joel Slemrod, Evelyn A. Smith, and Alexander Yuskavage.

Markets in everything Alaska regulatory arbitrage edition, tribal qualifier added

The shrinking village of Karluk, on the western shore of Kodiak Island, is trying to keep its school viable. So it’s willing to pay a couple of families with three or four children apiece to move there of a year, so that it can draw down state education funds.

Public schools in Alaska need to maintain an enrollment of 10 students to get state funding. Karluk, which had a population of 37 during the 2010 U.S. Census, is now down to about 21 people. The demographics are Native American: 82.14%; two or more races: 17.86%; White: 0%; Black or African American: 0%.

Karluk Tribal Council’s ad says that it will pay a couple of families with enough kids — three or four — to move to the village, all expenses paid, for a year, and will even provide jobs. That money, without question, is passed through from the U.S. and State taxpayer, to pay families so that the village can draw down more government money and open its school.

If this were any other kind of enterprise other than a tribe, these definitions for acceptable applicants would be considered a federal equal opportunity violation. But this is a tribe.

Here is the full story, including means for contacting the village.  Via Martin Kennedy.