Ryan Bourne reports from the AEA meetings
During the first full morning of the conference (Friday), I decided to note down some rough compliance figures . With the health warning that this only reflects the experience of sessions I attended, compliance initially was about 90 percent for those I judge to be in their 40s and younger and only about 30 percent among over 50s.
Now, I am less interested in the debate about the efficacy of mask wearing or indeed whether individuals choose freely to wear one based on their subjective judgements of the risks, costs, and benefits. What was interesting to me is that at an AEA *population*-level, compliance rates with the rule appeared negatively correlated with the age-related risks of COVID-19 itself. At this stage when those risks are well known, that strongly suggests a lot of signaling going on, whether that be potential job market applicants looking to signal their compliant personalities, masks as a political statement, or something else. What it does not show is some well-grounded understanding of “the science.” It was little surprise that, as the weekend wore on, and given their experience in the rest of the city, all groups’ adherence to the rule waned.
And this:
To summarize: there were roughly three times as many sessions featuring papers on each of race, gender, and climate as there were sessions on the topics of inflation or growth. For the conference as a whole, that means 13.2 percent of all sessions featured gender issues, 12.6 percent climate, 12.4 percent race, against just 4.4 percent for inflation and growth (some sessions featured more than one of these listed topics).
Here is more, and note I have seen reports on Twitter that the AEA lost almost a million dollars on this conference. When will there be an inquiry into how this decision — the very strict Covid-related requirements — was made? Probably never.
The economics of non-competes
That is the topic of my latest Bloomberg column, here is one excerpt:
The value of noncompete clauses is easy to illustrate. Say you run a hedge fund. Many members of your trading team will have partial access to your firm’s trading secrets, and if they leave they can take those secrets with them. In the absence of noncompete agreements, firms would be more likely to “silo” information — becoming less efficient and less able to pay higher wages.
Nondisclosure agreements for workers in such positions are common, but they are difficult to enforce — making noncompete agreements more relevant. How exactly might you find out if some other newly created hedge fund is using your trading algorithms?
Or say you are a sales company with a customer list, or a nonprofit with a donor list. An employee who sees those lists could use that information to start a competing business, or take that information to competitors. It seems reasonable in such cases to restrict the ability of employees to “jump ship.”
If noncompetes are banned outright, to repeat, the effect will be less information-sharing within the company. New workers in particular, who have not demonstrated their long-term loyalty, will have a hard time getting access to information and getting ahead. More senior employees will have the advantage, hardly a formula for boosting economic opportunity.
I call for federalism and piecemeal regulation of the practice, not the all-out federal ban proposed by Lina Khan’s once again overreaching FTC.
My St. Andrews talk on Effective Altruism
About 25 minutes of talk, the rest is Q&A — recommended!
Thursday assorted links
2. Five trends that will shape urban Africa.
3. Is the Fed losing money on QE?
4. Do Asian-Americans have the world’s highest life expectancy?
5. On immigration (and authority) Daniel Klein is correct.
6. Can ChatGPT pass medical licensing exams? Speculative GPT thoughts. And “I taught ChatGPT a language.” And “The return of the Socratic method, at scale and on demand.” Get ready people! “Rewrite this article so it sounds like a human.” And Chat GPT recommends the best books on AI. Get with the program! Yes, I mean you. Only yesterday I found the beast very helpful in prepping questions for Glenn Loury (thanks Glenn, that was a great episode!).
7. Roman vs. modern concrete, updated and revised.
Powell: The Fed is Independent but for that Reason Must be Limited
An excellent and forceful speech by Federal Reserve Chair Jerome Powell. He defends the Fed’s independence but clearly and directly argues that the only way that deal can be credible is if the Fed stays out of big political issues.
…the case for monetary policy independence lies in the benefits of insulating monetary policy decisions from short-term political considerations.1 Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy. The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors. I believe that the benefits of independent monetary policy in the U.S. context are well understood and broadly accepted.2
…It is essential that we stick to our statutory goals and authorities, and that we resist the temptation to broaden our scope to address other important social issues of the day.4 Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence.
…Addressing climate change seems likely to require policies that would have significant distributional and other effects on companies, industries, regions, and nations. Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections.
At the same time, in my view, the Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision.6 The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.
But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals.7 We are not, and will not be, a “climate policymaker.”
My excellent Conversation with Katherine Rundell
One of my favorite CWTs, here is the audio, video, and transcript. Here is part of the summary:
She joined Tyler to discuss how she became obsessed with John Donne, the power of memorizing poetry, the political implications of suicide in the 17th century, the new evidence of Donne’s faith, the contagious intensity of thought in 17th century British life, the effect of the plague on national consciousness, the brutality of boys’ schooling, the thrills and dangers of rooftop walking, why children should be more mischievous, why she’d like to lower the voting age to 16, her favorite UK bookshop, the wonderful weirdness of Diana Wynne Jones, why she has at least one joke about Belgium in every book, what T.S. Eliot missed about John Donne, what it’s like to eat tarantula, the Kafka book she gives to toddlers, why The Book of Common Prayer is underrated, and more.
Here is one excerpt:
COWEN: Now, you have two books, Rooftoppers and Skysteppers, about rooftop walking. Some might call them children’s books. I’m not sure that’s exactly the right description, but what is the greatest danger with rooftop walking?
RUNDELL: Oh, it’s falling off.
COWEN: What leads you to fall off? If you’re rooftop walking, if you were to fall off, what would be the proximate cause of that event?
RUNDELL: Philippe Petit, who is, of course, one of the great roof walkers of the world and the man who strung the wire between the Twin Towers in 1977, talks about vertigo as a beast that has to be tamed piece by piece, that can never be overcome all at once.
Vertigo, he says, is not the fear that you will fall. It is the fear that you will jump. That, of course, is the thing that, when you are roof walking, you are taming. You are trying to unmoor your sense of danger and of not being able to trust yourself not to jump from your sense of beauty and the vision of a city that you get up high.
I roof-walk for very practical reasons: to see views that would otherwise be not really available to me in an increasingly privatized City of London.
And:
COWEN: For you, what is most interesting in Donne’s sermons?
RUNDELL: The thing I find most interesting would be the radical honesty that he has — that you will find in so few other sermons of the time — about the difficulty of finding God. He is a man who writes often with certainty about the idea of reaching the infinite, the divine. But he also writes this famous passage where he says, “I summon God and my angels, and when God and the angels are there, I neglect them for . . .” I forget what it is. “The sound of a carriage, a straw under my knee, a thought, a chimera, and nothing and everything.”
That sense that, even though he had a brain that could control incredibly rigorous poetry, he did not have a brain that would control itself in prayer. He offered that to his congregation as a vulnerability and a piece of honesty that so few sermoners of the time — who thought of themselves more as a regulatory ideal that should never admit vulnerability — would offer.
Definitely recommended. And Katherine’s recent book Super-Infinite: The Transformations of John Donne was perhaps my favorite book of last year.
The economics of why Noma is closing
Here is the take of yours truly:
Tyler Cowen, a professor of economics at George Mason University in Fairfax, Va., and a devoted restaurant-goer, says that people are misinterpreting Redzepi’s intentions with the closure. Cowen doesn’t think the chef is arguing that he can’t make money with Noma and its grand artistic ambitions. It’s just that he can make more money doing other, perhaps less stressful, things.
“He’s so well-known now, he can just do private events, cook for billionaires, special weddings and work two months a year or whatever and make more than he’s making in the restaurant,” Cowen says. “He’s the one who’s going to earn from here on out. Why slave every night till like 2 a.m. in a restaurant when you can set your own schedule and price discriminate, charging the super wealthy?”
Here is the longer WaPo article by Emily Heil and Tim Carman, presenting other views as well.
Wednesday assorted links
1. Arnold Kling on the Great Re-Evaluation.
2. Lynne Kiesling now has the Knowledge Problem Substack. And Matt Yglesias profile.
3. Some new nasal entry results from Fast Grants-funded research.
4. “A Chinese state-owned bank in Hong Kong is offering customers one shot of an mRNA vaccine if they make a deposit of HK$4mn ($512,000)…” (FT link)
5. An Indian view on who benefits and loses from GPT.
6. Good thread on recent growth miracles.
7. The Americans at Stanford pull the “harmful language” list.
8. Blake Hounshell triibute, RIP, he was great to work with.
Testing Freedom
In the latest Discourse Magazine I discuss the FDA’s long-standing fear and antipathy toward personalized medical tests and how this violates the 1st Amendment.
In 1972, the FDA confiscated thousands of home pregnancy tests, declaring that they were “drugs” meant to diagnose a “disease” and thus fell under the FDA’s regulatory dominion. The case went to the U.S. District Court for the District of New Jersey, and Judge Vincent P. Biunno ruled that the FDA had overstepped. “Pregnancy,” he said, “is a normal physiological function of all mammals and cannot be considered a disease … a test for pregnancy, then, is not a test for the diagnosis of disease. It is no more than a test for news….” As a result of Judge Biunno’s ruling, home pregnancy tests are easily available today from pharmacies, grocery stores and online shops without a prescription.
These days, debates over home pregnancy tests from the 1970s seem anachronistic and paternalistic. Yet the same paternalistic arguments appear again and again with every new testing technology. In the late 1980s, for example, the FDA simply declared that it would not approve at-home HIV tests, regardless of their safety or efficacy. As with pregnancy tests, the concern was that people could not be trusted with information about their own bodies…the first rapid at-home HIV test was developed and submitted to the FDA in 1987 [but] it took 25 years before the FDA would approve these tests. (Now, you can easily buy such a test on Amazon.)
…The FDA has a vital role in ensuring that tests are clinically accurate—tests should do what they say they do. Tests don’t need to be perfectly accurate to be useful (think of thermometers, personality tests and tire pressure gauges), but if a test advertises that it measures HDL cholesterol, it should do that within the tolerances the firm promises. The FDA has the technical knowledge to ensure that tests work, and that’s a skill that Americans value from the agency.
What Americans don’t want is to be told they can’t handle the truth. Yet when it came to at-home tests such as pregnancy tests, HIV tests and genetic tests, that’s exactly the reasoning the FDA used—and continues to use—to suppress information. The FDA should ensure that tests are safe, but “safety” means physical safety. The FDA may not declare a product unsafe because it might produce dangerous knowledge. Patients have a right to know about their own bodies. Our antibodies, ourselves. The FDA has authority over drugs and devices but not over patients.
Judge Biunno had it right back in 1972 when he said that diagnostic tests produce “news.” Test results, therefore, are a type of speech that fall under the First Amendment right to freedom of speech. The Supreme Court has repeatedly rejected restrictions on freedom of speech based on “a fear that people would make bad decisions if given truthful information”; thus, FDA restrictions on tests based on such fears are unconstitutional. The question of whether consumers will respond “safely” to test results is no more relevant to the FDA’s regulatory authority than the question of whether readers will respond safely to political news published in The New York Times. The FDA does not have the constitutional authority to regulate news.
My ChinaTalk podcast with Jordan Schneider
Here is the transcript, here is the podcast. Excerpt:
Jordan Schneider: You mentioned growing up reading classic novels and scholarship. What do you think will be relevant and not relevant about that sort of stuff in our new AI world?
Tyler Cowen: I suspect the classic texts will re-emerge in value. Reading Plato, Kant, or Adam Smith gives you a sense of a vision and big-picture thinking that the ais won’t be able to give us for some while — maybe never. [If] simply scanning the internet for facts, the AI might give you a very good digest — which you’ll consume in less time — and you’ll then seek out the thing the AI can’t give you at all.
That will, again, be radically original big-picture thinking.
Recommended, interesting throughout. We also talk about education, therapy, China, the person I envy most, the demand for pets, working for the Aztec empire, my own secret book project, and much more.
Do markets expect unaligned AGI risk?
Here is a new essay by Trevor Chow, Basil Halperin, and J. Zachary Mazlish, all favorite thinkers of mine, excerpt and these are their words I will not double indent:
“In this post, we point out that short AI timelines would cause real interest rates to be high, and would do so under expectations of either unaligned or aligned AI. However, 30- to 50-year real interest rates are low. We argue that this suggests one of two possibilities:
- Long(er) timelines. Financial markets are often highly effective information aggregators (the “efficient market hypothesis”), and therefore real interest rates accurately reflect that transformative AI is unlikely to be developed in the next 30-50 years.
- Market inefficiency. Markets are radically underestimating how soon advanced AI technology will be developed, and real interest rates are therefore too low. There is thus an opportunity for philanthropists to borrow while real rates are low to cheaply do good today; and/or an opportunity for anyone to earn excess returns by betting that real rates will rise.
In the rest of this post we flesh out this argument.
- Both intuitively and under every mainstream economic model, the “explosive growth” caused by aligned AI would cause high real interest rates.
- Both intuitively and under every mainstream economic model, the existential risk caused by unaligned AI would cause high real interest rates.
- We show that in the historical data, indeed, real interest rates have been correlated with future growth.
- Plugging the Cotra probabilities for AI timelines into the baseline workhorse model of economic growth implies substantially higher real interest rates today.
- In particular, we argue that markets are decisively rejecting the shortest possible timelines of 0-10 years.
- We argue that the efficient market hypothesis (EMH) is a reasonable prior, and therefore one reasonable interpretation of low real rates is that since markets are simply not forecasting short timelines, neither should we be forecasting short timelines.
- Alternatively, if you believe that financial markets are wrong, then you have the opportunity to (1) borrow cheaply today and use that money to e.g. fund AI safety work; and/or (2) earn alpha by betting that real rates will rise.
An order-of-magnitude estimate is that, if markets are getting this wrong, then there is easily $1 trillion lying on the table in the US treasury bond market alone – setting aside the enormous implications for every other asset class.”
TC again: I am pleased that they wrote a separate companion piece on Cowen’s Third Law.
J. Barkley Rosser, RIP
Alas Barkley has passed away. He was a friend of mine and to many of us at GMU, a well-known economist, a feisty commentator here at MR and much more…here is one profile.
What we know about road deaths during the pandemic
The study verified that the absence of traffic jams played some role in allowing drivers to reach dangerous speeds on too-wide roads, but the researchers also found that the most significant differences between their forecast and real-world death totals happened in the dead of night, when most roads have always been congestion-free.
Between 10 p.mm and 1:59 a.m., deaths were nearly 22 percent higher than expected; during the typical morning rush hours, by contrast, deaths were actually 6.3 percent lower than the model anticipated they’d be. The late afternoon and evening rush hour, meanwhile, “did not differ significantly from the forecast.”
…2020 also saw an increase in hit-and-runs, which clocked in at 31.2 percent higher than originally forecast.
…According to AAA, “about 70 percent of the entire increase in driver fatal crash involvement [between May and December of 2020] was specifically among males under the age of 40.” Tefft suspects that increase may have been particularly driven by the minuscule subset of young, male motorists who were emboldened to do risky things on the road when the world shut down, though the data doesn’t tell him exactly why.
The article has further points of interest.
Tuesday assorted links
1. There are no elected officials left in Haiti.
2. Was the T. Rex actually pretty smart?
3. The Microsoft deal with OpenAI will be big.
4. Non-drinking is on the rise amongst the English.
6. Anti-war Russians, living in Latin America.
7. How the human walk evolved for endurance, not speed (Wired).
8. “A Dutch supermarket chain introduced slow checkouts for people who enjoy chatting, helping many people, especially the elderly, deal with loneliness. The move has proven so successful that they installed the slow checkouts in 200 stores.” Link here.
Why did the gender wage gap stop narrowing?
During the 1980s, the wage gap between white women and white men in the US declined by approximately 1 percentage point per year. In the decades since, the rate of gender wage convergence has stalled to less than one-third of its previous value. An outstanding puzzle in economics is “why did gender wage convergence in the US stall?” Using an event study design that exploits the timing of state and federal family-leave policies, we show that the introduction of the policies can explain 94% of the reduction in the rate of gender wage convergence that is unaccounted for after controlling for changes in observable characteristics of workers. If gender wage convergence had continued at the pre-family leave rate, wage parity between white women and white men would have been achieved as early as 2017.
That is from a new NBER working paper by Peter Q. Blair and Benjamin Posmanick. Might the gender wage gap be one economics topic where a naive, mood-affiliated view on it best predicts a bunch of other bad views on totally separate topics?