The fox

Sen. Leahy has a Facebook pixel, invisible to users, that gathers user data of Facebook users who visit the site. (For a quick primer on what “pixels” do, visit Facebook’s resource guide on the data-gathering tool.)

That’s right, if you visit Senator Leahy’s campaign website, it’s likely your data, including your demographics and what pages you looked at on the site, have been placed into a custom data targeting audience by Leahy’s team.

Here is more, via @tedfrank.  You will note that Leahy was one of the interlocutors who confronted Zuckerberg over the privacy issue.

Thursday assorted links

The Chinese corporate apology

When does a corporate apology become a political self-confession, or jiantao (检讨), an act of submission not to social mores and concerns, but to those in power? The line can certainly blur in China. But the public apology today from Zhang Yiming (张一鸣), the founder and CEO of one of China’s leading tech-based news and information platforms, crosses deep into the territory of political abjection.

Zhang’s apology, posted to WeChat at around 4 AM Beijing time, addressed recent criticism aired through the state-run China Central Television and other official media of Jinri Toutiao, or “Toutiao” — a platform for content creation and aggregation that makes use of algorithms to customize user experience. Critical official coverage of alleged content violations on the platform was followed by a notice on April 4 from the State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT), in which the agency said Toutiao and another service providing live-streaming, Kuaishou, would be subject to “rectification measures.”

Read through Zhang’s apology and it is quickly apparent that this is a mea culpa made under extreme political pressure, in which Zhang, an engineer by background, ticks the necessary ideological boxes to signal his intention to fall into line.

At one point, Zhang confesses that the “deep-level causes” of the problems at Toutiao included “a weak [understanding and implementation of] the “four consciousnesses”. This is a unique Xi Jinping buzzword, introduced in January 2016, that refers to 1) “political consciousness” (政治意识), namely primary consideration of political priorities when addressing issues, 2) consciousness of the overall situation (大局意识), or of the overarching priorities of the Party and government, 3) “core consciousness” (核心意识), meaning to follow and protect Xi Jinping as the leadership “core,” and 4) “integrity consciousness” (看齐意识), referring to the need to fall in line with the Party. Next, Zhang mentions the service’s failure to respect “socialist core values,” and its “deviation from public opinion guidance” — this latter term being a Party buzzword (dating back to the 1989 crackdown on the Tiananmen Square protests) synonymous with information and press controls as a means of maintaining Party dominance.

Zhang also explicitly references Xi Jinping’s notion of the “New Era,” and writes: “All along, we have placed excessive emphasis on the role of technology, and we have not acknowledged that technology must be led by the socialist core value system, broadcasting positive energy, suiting the demands of the era, and respecting common convention.”

In the list of the company’s remedies, there is even a mention of the need to promote more content from “authoritative media,” a codeword for Party-controlled media, which suggests once again that the leadership has been unhappy with the idea of algorithms that wall users off from official messaging if they show no interest in such content.

Here is the full story, via Anecdotal.

Software engineer and psychologist wanted

AI Grant (aigrant.org) is a distributed AI research lab. Their goal is to find and fund the modern day Einsteins: brilliant minds from untraditional backgrounds working on AI.

They need a software engineer. The qualifications are twofold: an intrinsic interest in the problem of identifying talented people across the world, and a demonstrated ability to ship software projects without much supervision. This doesn’t have to be through traditional means. It could just be side-projects on Github.

They’re also looking for a psychologist with experience in personality and IQ modeling.

Bay Area location is a big plus, but not a requirement. If you’re interested in learning more, email team@aigrant.org with information about yourself.

This is not a paid ad, but I am seeking to do a favor for the excellent and highly talented Daniel Gross (and perhaps for you), with whom you would get to work.  Do please mention MR if you decide to apply!

Wednesday assorted links

My Conversation with Agnes Callard

She is a philosopher at the University of Chicago, here is the transcript and audio.  We covered Plato and Socrates, what Plato is on about at all, the virtues of dialog and refutation, whether immortality would be boring, Elena Ferrante, parents vs. gangsters and Beethoven vs. Mozart, my two Straussian readings of her book, Jordan Peterson, Shakespeare’s Hamlet, the best defense of reading the classics, and the Agnes Callard production function (physics to classics to philosophy), all in suitably informationally dense fashion.

Here is one excerpt:

COWEN: I have a friend who’s interested in longevity research…and he tells me there’s maybe a 10 percent chance that I actually will live forever due to possible scientific advances. I’m skeptical, but let’s just say I were to live forever. How bored would I end up, and how do you think about this question?

CALLARD: [laughs] I think it depends on how good of a person you are.

COWEN: And the good people are more or less bored?

CALLARD: Oh, they’re less bored. One thing is that you’re kind of having to live with yourself for a very long time if you’re immortal, or even just live for a couple thousand years, and a bad self, I think, is hard to live with. By bad, I don’t just mean sort of, let’s say, cruel to people or unjust. I also mean not attuned to things of eternal significance.

I think you can get by in a 100-year life not being too much attuned to things of eternal significance because there’s so much fascinating stuff out there, and one can go from one thing to the next and not get bored. But if we’re talking about eternity, or even thousands of years, you’d better find something to occupy you that is really riveting in the way that I think only eternal things are.

I think that what you’re really asking is something like, “Could I be a god?” And I think, “Well, if you became godlike, you could, and then it would be OK.”

COWEN: Let me give you a hypothesis. You can react to it. That which is cultural, say, listening to music, I would get bored with, even though wonderful music maybe continually will be created. But those activities which are more primeval, more biological — parenting, sex, food, sleep, maybe taking a wonderful shower — that are quite brute, in a way, maybe I would substitute more into those as an immortal? Yes?

CALLARD: I don’t see why you wouldn’t get just as bored of bodily pleasures.

COWEN: You’re programmed for those to be so immediate and riveting, right? You evolve to be maybe an 80-year-old being, or perhaps even a 33-year-old being, so you are riveted on things like reproduction and getting enough sleep. And that stays riveting, even when you’re on this program to live 80,000 years.

CALLARD: I think that at least some of those activities stay riveting for us over the course of our lives because their meaning changes…

And:

COWEN: Let’s turn now to your new book, Aspiration: The Agency of Becoming. There’s a sentence from the book. Let me read it, and maybe you can explain it. “Proleptic reasons allow you to be rational even when you know that your reasons aren’t exactly the right ones.” What’s a proleptic reason?

This was my favorite part, though perhaps few of you will get the joke:

COWEN: On aspiration, what do you think of Jordan Peterson?

CALLARD: I had this odd feeling. He only became known to me quite recently, in the past couple of weeks. I was listening to him talk, and I was thinking he sounds a little bit like Socrates, but not Socrates. I was like, “Who is that? Who is he reminding me of?” And it’s Xenophon’s Socrates.

Here you can buy her just-published book Aspiration: The Agency of Becoming.  You cannot follow her on Twitter.

The Peltzman Model of Regulation and the Facebook Hearings

If you want understand the Facebook hearings it’s useful to think not about privacy or  technology but about what politicians want. In the Peltzman model of regulation, politicians use regulation to tradeoff profits (wanted by firms) and lower prices (wanted by constituents) to maximize what politicians want, reelection. The key is that there are diminishing returns to politicians in both profits and lower prices. Consider a competitive industry. A competitive industry doesn’t do much for politicians so they might want to regulate the industry to raise prices and increase firm profits. The now-profitable firms will reward the hand that feeds them with campaign funds and by diverting some of the industry’s profits to subsidize a politician’s most important constituents. Consumers will be upset by the higher price but if the price isn’t raised too much above competitive levels the net gain to the politician will be positive.

Now consider an unregulated monopoly. A profit-maximized monopolist doesn’t do much for politicians. Politicians will regulate the monopolist to lower prices and to encourage the monopolist to divert some of its profits to subsidize a politician’s most important constituents. Monopolists will be upset by the lower price but if the price isn’t lowered too much below monopoly levels the net gain to the politician will be positive. (Moreover, a monopolist won’t object too much to reducing prices a little since they can do that without a big loss–the top of the profit hill is flat).

With that as background, the Facebook hearings are easily understood. Facebook is a very profitable monopoly that doesn’t benefit politicians very much. Although consumers aren’t upset by high prices (since Facebook is free), they can be made to be upset about loss of privacy or other such scandal. That’s enough to threaten regulation. The regulatory outcome will be that Facebook diverts some of its profits to campaign funds and to subsidize important political constituents.

Who will be subsidized? Be sure to watch the key players as there is plenty to go around and the money has only begun to flow but aside from campaign funds look for rules, especially in the political sphere, that will raise the costs of advertising to challengers relative to incumbents. Incumbents love incumbency advantage. Also watch out for a deal where the government limits profit regulation in return for greater government access to Facebook data including by the NSA, ICE, local and even foreign police. Keep in mind that politicians don’t really want privacy–remember that in 2016 Congress also held hearings on privacy and technology. Only those hearings were about how technology companies kept their user data too private.

The value of a statistical human life under Stalin

We examine the value of a statistical life (VSL) in interwar Soviet Union. Our approach requires to address the preferences of Stalin. We model these on the basis of the policy of statistical repression, which was an integral part of the Great Terror. We use regional variation in the victims generated by this policy to structurally estimate the value that Stalin would have been willing to accept for a reduction in citizens’ fatality risk. Our estimate of this value is $43,151, roughly 6% of the VSL estimate in 1940’s US and 29% of the VSL estimate in modern India.

That is from a new paper by Paul Castañeda Dower, Andrei Markevich, and Shlomo Weber.  For the pointer I thank the excellent Kevin Lewis.

Was there a supply overhang before the housing crash?

Kevin Erdmann has a revisionist take, namely no:

How bad was the supply overhang? Surprisingly, the answer may be that there never was one.

We can think about this in terms of stock (the number of homes in the United States) or flow (the rate at which new homes were being built).

In terms of stock, the Census Bureau maintains estimates of both US population and the number of housing units. As shown in figure 1, the ratio of homes to adults in the United States rose in the 1980s as a result of factors such as changing marriage norms. The ratio then declined in the 1990s. The relative number of housing units increased somewhat from 2000 to 2005 but remained below the previous peak level. After the crisis, the decline continued.

…The Census data provide surprisingly little support for the claim that there were too many homes in 2005…

Contrary to Chairman Bernanke’s assumption, at the national level there was no overhang of housing supply that needed to be worked off in 2011. Indeed, even in 2005 there was no national oversupply of housing. Rather, the American economy was burdened by a shortage of housing, especially in the Closed Access cities.

Not surprisingly, three of the worst six “closed” cities are in California (San Francisco, San Diego, and San Jose).

Here is the full study.

Zeynep Tufekci’s Facebook solution — can it work?

Here is her NYT piece, I’ll go through her four main solutions, breaking up, paragraph by paragraph, what is one unified discussion:

What would a genuine legislative remedy look like? First, personalized data collection would be allowed only through opt-in mechanisms that were clear, concise and transparent. There would be no more endless pages of legalese that nobody reads or can easily understand. The same would be true of any individualized targeting of users by companies or political campaigns — it should be clear, transparent and truly consensual.

Who can be against “clear, transparent and truly consensual?”  But this reminds me of those conservatives who wish regulations would be shorter, simpler, easier to write — it’s not always that easy and wishing don’t make it so.  (Try sitting down with someone in the immediate process of writing such a rule.)  That said, let’s think about what maybe will happen.  How about the United States adopting some version of the forthcoming EU GDPR?  That might in fact be an OK outcome (NYT).  But will that be clear and transparent?  Is any EU regulation clear and transparent?  Can anyone tell me, sitting in their seats right now, if it will outlaw the blockchain or not?  Whether it outlaws the blockchain or not, could either of those outcomes be called “consensual”?  I don’t think Tufekci has given an actual proposal yet.

Second, people would have access, if requested, to all the data a company has collected on them — including all forms of computational inference (how the company uses your data to make guesses about your tastes and preferences, your personal and medical history, your political allegiances and so forth).

This is not feasible, as computational inference is usually not transparent and often is understood by nobody.  But even the simpler stuff — what exactly is the call here?  That Facebook has to send you a big zip file?  Is the goal to inform people in some meaningful way?  Or simply to deter Facebook from having the information in the first place?  If it’s the latter, let’s have a more explicit argument that people would prefer a Facebook they have to pay for.  Personally, I don’t think they would prefer that and already have shown as such.

Third, the use of any data collected would be limited to specifically enumerated purposes, for a designed period of time — and then would expire. The current model of harvesting all data, with virtually no limit on how it is used and for how long, must stop.

“Must”?  Not “should”?  That is a classic example of trying to establish a conclusion simply by word usage.  In this context, what does “enumerated” mean?  Are we back to GDPR?  Or they send you an email with a long list of what is going on?  Or that information sits behind a home page somewhere?  (So much for simple and transparent.)  You have to opt in to each and every use of the data?  So far it sounds like more bureaucracy and less transparency, and in fact this kind of demand is precisely the origin of those lengthy “opt in” statements that no one reads or understands.

Fourth, the aggregate use of data should be regulated. Merely saying that individuals own their data isn’t enough: Companies can and will persuade people to part with their data in ways that may seem to make sense at the individual level but that work at the aggregate level to create public harms. For example, collecting health information from individuals in return for a small compensation might seem beneficial to both parties — but a company that holds health information on a billion people can end up posing a threat to individuals in ways they could not have foreseen.

Maybe, but there is no example given of harm other than an unspecified speculation.  It also seems to be saying I don’t have a First Amendment right to write personal information into a text box.  And who here is to do the regulating?  Government is one of the biggest violators of our privacy, and also a driving force behind electronic medical records, another massive medical privacy violator (for better or worse), most of all after they are hacked and those who have sought mental illness treatment have their identities put on Wikileaks.  The governmental system of identity and privacy is based around the absurdity of using Social Security numbers.  Government software is generations behind the cutting edge and OPM was hacked very badly, not to mention Snowden made away with all that information.  And government is to be the new privacy guardian?  This needs way, way more of an argument.

I do understand that the author had only a limited word count.  But googling “Zeynep Tufekci Facebook”  does not obviously bring us to a source where these proposals are laid out in more detail, nor is there any link in the on-line version of the article to anyone else’s proposal, much less hers.  So I say this piece is overly confident and under-argued.

What instead?  I would instead start with the sentence “Most Americans don’t value their privacy or the security of their personal data very much,” and then discuss all the ways that limits regulation, or lowers the value of regulation, or will lead many well-intended regulations to be circumvented.  Next I would consider whether there are reasonable restrictions on social media that won’t just cement in the power of the big incumbents.  Then I would ask an economist to estimate the costs of regulatory compliance from the numerous lesser-known web sites around the world.  Without those issues front and center, I don’t think you’ve got much to say.

Tuesday assorted links

Is Economic Research Biased by Partisanship?

The Washington Monthly, a magazine of ideas from the liberal-left, has a profile of me and my paper with Nathan Goldschlag, Is regulation to blame for the decline in American entrepreneurship? The profile ups the “libertarian says regulation not responsible for bad thing!” angle. My earlier paper, finding that more guns leads to more suicides, was also given the “even a libertarian says” angle. In both cases, I was treated fairly and well and since I wrote the papers to be read, I am happy for the publicity. But I am uncomfortable with these takes.

After all, I am not surprised that my research is not biased by partisanship. Why should other people be? Should I not be insulted? Moreover, I don’t think that I am special in this regard. I think that most academic research in economics is not biased by partisanship. Thus, while it’s nice to receive plaudits on twitter for honesty and bravery, they are undeserved. This is normal. Normal for me and normal for other economists. The public perception to the contrary likely comes from two failures–a failure to distinguish partisan commentary from academic research and a failure to consider that ideology influences topic more than findings.

Economic commentary in the media often does come from political partisans but that is a completely different role than publishing peer-reviewed research. Papers published in mainstream economics journals have passed a high bar and are much less likely to be infused with partisan bias–this is true even when the research leads to a blog post or op-ed that may be of partisan interest.

An economist’s ideology probably does influence the topics they choose to research. I’ve written on bounty hunters, privateers, and the private provision of public goods, topics surely influenced by my interest in how markets solve problems usually thought solvable only by governments. Choice of topic, however, does not necessarily determine the outcome. In the aforementioned three cases, my research can be read as broadly supportive of private solutions. The topics of dynamism and regulation, firearms and suicides, and private cities in India were probably also influenced by ideology but in these cases the research can be read as somewhat less supportive of private solutions.1 Let the chips fall where they may. I’ve learnt something in both sets of cases. My academic ideology, “a demand to know the truth,” trumps any narrow political ideology.

There’s another problem with praising a “libertarian”, or any researcher with strong beliefs, for honesty when their research conclusions don’t fit narrow priors. It puts their research that does fit narrow priors under a cloud. But only people with strong beliefs are put to this test. No one gets suspicious when a moderate democrat produces lots of research that fits moderate democrat priors. Why not? Do you assume reality is moderate?

I also wonder whether the people lauding me for my honest research–for which I thank them–will draw the correct conclusion. Namely, they should now be more receptive to my work on bounty hunters, privateers, and the private provision of public goods. Fingers crossed.

Let me conclude on a lighter note. There are many reasons why regulation could be costly outside of its effects on dynamism. Thus, for my friends who think that I have gone all-squishy, n.b.:

Not that Tabarrok himself has become a booster for regulation. He doesn’t think much of government’s ability to spark innovation through setting standards; the first thing he did when he last bought a new shower head, he said, was remove its federally mandated flow restrictor.

Read the whole thing.

Addendum 1: I have also written many papers like Would the Borda Count have Avoided the Civil War? and Patent Theory versus Patent Law where the topic was driven out of some non-ideological interest or simply because I had an idea. Publish or perish!

What should I ask Juan Villarino?

I’ll be doing a Conversation with him in early May.  He is often known as “the world’s greatest hitchhiker,” here is a NYT profile of him.  Excerpt:

Villarino has cataloged every ride he has ever caught: 2,350, totaling about 100,000 miles in 90 countries, or enough to circumnavigate the globe four times.

He is from Argentina, and worked for a while in a Belfast cheese factory.  He is described as from a “downwardly mobile middle-class family” and:

In Buenos Aires, three men tried to mug him, but when they realized who he was, the thieves gave him money.

And:

They [Villarino and his wife] continue to live on about $7 a day each and travel as they always have, leading a life almost entirely on the highway, without a fixed address or jobs or bills.

Here is his blog and also a link to his self-published book.  Here is his blog in Spanish.  So what should I ask him?

Which companies are likely to be good or bad at public relations?

That is the topic of my latest Bloomberg column, the community banks are likely to be good, here is one excerpt:

I think of community banks as enjoying relatively high levels of trust. Millions of Americans have walked through the doors of their local banks and dealt with the loan officers, tellers and account managers, giving the business a human face. A community bank cannot serve a region without sending out a fair number of foot soldiers. Banks tend to have longstanding roots in their communities, and a large stock of connections and accumulated social capital.

In turn, community banks have converted this personal trust into political clout. There are community banks in virtually every congressional district, and these banks have developed the art of speaking for many different segments of American society, not just a narrow coastal elite. When these banks mobilize on behalf of a political cause, they are powerful, as illustrated by the likelihood that they will get regulatory relief from the Dodd-Frank Act, probably with bipartisan support. They have such influence that one member of the Federal Reserve Board must be a community banker, even though few economists see much rationale for this provision.

Given their usefulness, it would be wrong to describe community bankers as a stagnant sector of our economy. Still, the same features that make them trusted and politically powerful also make them unlikely to be major sector disruptors.

Already you can see a problem shaping up, as perhaps the faster-growing, higher productivity gain companies will have less experience.  And indeed often the very dynamic, big tech companies are not so good at public relations:

Alternatively, let’s say you were designing a business that, whatever its other virtues might be, would not be very good at public relations.

First, you would make sure the business had come of age fairly recently. That would ensure the company didn’t have a long history of managing public relations, learning how the news media work, figuring out what it will or will not be blamed for, and rooting itself in local communities.

The next thing you might do is to concentrate the company’s broader business sector in one particular part of the country. That would ensure that the companies’ culture didn’t reflect the broadest possible swath of public opinion. Better yet, don’t choose a swing state such as Pennsylvania or Ohio, but rather opt for a region that is overwhelmingly of a single political orientation and viewed by many Americans as a bit crazy or out of touch. How about Northern California?

There is much more at the link.  The clincher of course is this:

And we have been building a political system that favors the time-honored company rather than the radical innovator.