Why isn’t crypto an effective hedge?
That is the topic of my latest Bloomberg column, here is one excerpt:
The last few months of chaos show what Bitcoin and other crypto assets are good for: They are advanced tools of globalization, luxury goods for complex, well-functioning markets — not protections against the depredations of hostile governments.
One common story, especially popular in libertarian circles, has been that when inflation runs rampant and governments confiscate private wealth, crypto will be a vital refuge. It increasingly appears that this story is wrong.
The world has been in turmoil, with a major war, wealth confiscations, and much higher inflation rates. Yet mostly crypto prices have fallen. More theoretically:
Think of some of the possible legitimate use cases for crypto. Perhaps entrepreneurs will build a significant online metaverse, spanning national boundaries and allowing for fruitful interactions, including commercial ones. For many transactions, especially micropayments, crypto transfers might make more sense than trying to process all the trades through current dollar networks. There is at least the promise that crypto will be faster, more reliable and more secure.
In this scenario, crypto is worth the most when global trading networks, and internet connections, are stable. Right now they are moving in the opposite direction, and as a result the price of crypto is falling. The reality is that the crypto world has been a globalized product from the very beginning.
Recommended.
Wednesday assorted links
Writing Matters
We estimate the causal effect of writing quality by comparing how experts judge the quality of 30 papers originally written by PhD students in economics. We had two versions of each paper: one original and one that had been language–edited. The language editing was done by two professional editors, who aimed to make the papers easier to read and understand. We then asked 18 writing experts and 30 economists to judge some of the original and edited papers. Each of these experts judged five papers in their original versions and five papers in their edited version, spending around 5 minutes per paper. None of the experts saw both versions of the same paper. None of the experts knew that some of the papers were edited. The writing experts judged the writing quality and the economists judged the academic quality of the papers. All economists in our sample have PhDs in economics and their academic positions range from postdoc to full professor; four of them are editors of academic journals; and all of them are regularly involved in judging the quality of academic papers as referees or members of conference committees. We estimate the effect of language editing on perceived writing quality and perceived academic paper quality by comparing the average judgement of original and edited papers.
Our results show that writing matters. Writing experts judged the edited papers as 0.6 standard deviations (SD) better written overall (1.22 points on an 11–point scale). They further judged the language–edited papers as allowing the reader to find the key message more easily (0.58 SD), having fewer mistakes (0.67 SD), being easier to read (0.53 SD), and being more concise (0.50 SD). These large improvements in writing quality translated into still substantial effects on economists’ evaluations. Economists evaluated the edited versions as being 0.2 SD better overall (0.4 points on an 11–point scale). They were also 8.4 percentage points more likely to accept the paper for a conference, and were 4.1 percentage points more likely to believe that the paper would get published in a good economics journal. Our heterogeneity
analysis shows that the effects of language editing on writing quality and perceived academic quality are particularly large if the original versions were poorly written.
From a very well written paper by Jan Feld, Corinna Lines and Libby Ross.
Did Turkish Islamization make people more religious?
No:
This paper first evaluates the impact of a two-decade-long Islamization policy carried out by a pro-Islamist party, which came to power in 2002 in Turkey, on the attitudes of Turkish people toward religious values, religious practices, and clergy. In this regard, how the importance of religion, frequency of going to mosques, and trust in the clergy have changed among Turkish Muslims between 2002 and 2018 were examined by using World Values Survey data and employing logistic regression analysis. Estimation results indicated a reduction in belief in God, attendance to mosques, and trust in clergy, which imply the failure of the Islamization policy. Second, we explored what caused the failure by using the same data set and methodology. Our estimations suggested that the symbiotic relationship between the pro-Islamist government and religious clergy and institutions may explain the failure. As the government is identified with religion in the eye of the public, dissatisfaction with the government turned to dissatisfaction with religious values.
Here is the paper by Murat Çokgezen, via the excellent Kevin Lewis.
Clash of Civilizations?
Uh-oh:
Samuel Huntington, the ‘Clash of Civilizations’ theorist, had this to say in a 1993 issue of ‘Foreign Affairs’: “If (the concept of) civilization is the key, then the probability of violence between Russians and Ukrainians should be low.” The moral of the story, for me, is that with this military intervention by Russia in Ukraine, we have definitive proof (because we have many others) that the ‘Clash of Civilizations’ theory does not work, even though it inspires many thinkers in geostrategy. The idea that the collapse of the Soviet Union was irreversible and that we were now heading for a ‘Christianity versus Islam’ confrontation is collapsing and we can see that it has never played a role in Putin’s vision. Since Catherine II, Russia has always integrated Muslims into the Empire. And Putin has an imperial vision, he is definitely not having a religion based geostrategy, as some of the European right and extreme right believed.
The facts were quite clear. Among Putin’s four military interventions in the former Soviet space, three targeted Christian and Orthodox countries.
That is from an interview with Olivier Roy, via Alexander Le Roy.
What should I ask Marc Andreessen?
I will be doing a Conversation with him. So what should I ask?
New nuclear security grants
- Longview Philanthropy, where I work, launched a nuclear security grantmaking programme in December 2021.
- We are hiring a grantmaker to co-lead this programme alongside Carl Robichaud.
- The co-leads will make grants potentially totalling up to $10 million initially, a figure which could grow substantially if they find or create sufficiently strong opportunities.
- So far, we have committed a single $1.6 million grant to the Council on Strategic Risks. Future grants will be directed by the programme co-leads.
- We are also hiring a grantmaker who will work on other existential risks.
Here is the link with more information, via Stefan Schubert.
Tuesday assorted links
1. Fin Moorhouse suggests some EA writing projects.
3. The economics of Bloomberg Media.
5. James Hamilton on oil prices and inflation.
6. An excellent piece on how to practice, ice skating is the accidental topic. Also known as “the Nils van der Poel production function.” Recommended, a strong piece of real interest.
Ukraine Take Shelter
On March 3 — three days and only five hours of sleep later — they launched Ukraine Take Shelter, a site in 12 languages where Ukrainian refugees fleeing war can immediately find hosts with spare rooms, unused resort condos, mother-in-law apartments and school dormitories…
“What we’ve done is put out a super fast, stripped-down version of Airbnb,” he said.
That is a project by Avi Schiffman and Marco Burstein of Harvard, still both teenagers. We are very happy to have Avi as a former EV winner for his Covid work and now to be supporting this project. Here is the full story. As of yesterday, there were over 100 million reads of the database.
How to find good TV shows
Chris asks:
You’ve written a lot about your reading habits in the past, but I’m curious to know more about how you find and watch TV shows. You’ve mentioned before that you watch very little TV (in explaining your productivity), and yet you speak highly of the shows you do watch. Do you have any strategies to find good TV, how to watch television “well”, how to avoid getting sucked in to mediocre TV, etc.? And, I’d be curious to know what specific shows you think are worth the time sink to watch.
All of this comes from my somewhat-conflicting desires 1.) To not waste time and 2.) To enjoy the best art there is, in all of its forms.
Here are my rather brutal answers, noting they probably are not helpful for most people:
1. Most TV shows are not good. The key problems are that too much quality scripting is required, and that the incentives are to try to get the show extended for another season. Plus too much of the audience “just wants something to watch.”
2. Most TV shows that your smart friends tell you to watch also are not good. See #1.
3. You should almost always watch a movie rather than a TV show. If you have to, watch the movie in hour or half-hour segments. Movies are better and smarter, at least if you can figure out which are the quality films. But that is not so hard, as standard critical opinion does OK there.
4. “The Golden Age of TV” doesn’t change any of this, though Hollywood movies have become worse, due to tent pole franchises and pressures for serialization, which give them some of the problems of television shows. At the margin, almost everyone should be watching more foreign films. Do you really know them all? How well do you know the best of African cinema? Iranian cinema? And so on.
5. I will try a TV show if two people I know, in the very top tier of smarts, recommend it. Even then I usually don’t like it. I thus infer there is at least a single dimension where I differ strongly from just about all my friends.
6. Could I name twenty TV shows that I think are worth watching, relative to the best movies you haven’t seen and the best books you haven’t read? Not sure. Attention is that which is scarce. But it shouldn’t be. Just pay better attention and read that book or watch that movie. There is also plenty on YouTube that beats TV shows, and if you are old you may not consume much YouTube content at all.
7. For sure, there are fifteen TV shows worth watching, but you really need to have very very strong filters. Whatever your filters may be, make them stronger. Don’t trust those friends of yours!
8. By this point, you are probably not very interested in knowing which are those fifteen shows.
Stock Volatility and the War Puzzle
U.S. stock volatility is 33 percent lower during wartime and periods of conflict. This is true even for World Wars I and II, which would seemingly increase uncertainty. In a seminal paper, Schwert (1989) identified the “war puzzle” as one of the most surprising facts from two centuries of stock volatility data. We propose an explanation for the puzzle: the profits of firms become easier to forecast during wartime due to massive government spending. We test this hypothesis using newly-constructed data on more than 100 years of defense spending. The aggregate analysis finds that defense spending reduces stock volatility. The sector level regressions show that defense spending predicts lower stock volatility for firms that produce military goods. Finally, an event-study demonstrates that earnings forecasts of defense firms by equity analysts become significantly less disperse after 9/11 and the invasions of Afghanistan (2001) and Iraq (2003).
That is from a new NBER working paper by Gustavo S. Cortes, Angela Vossmeyer, and Marc D. Weidenmier.
Effective Altruism is and will be more influential than you think
One of the privileges of reading Emergent Ventures applications is that I get a cross-sample — admittedly a skewed one — of who and what is actually influencing people.
When it comes to smart and many of the very smartest young people, the influence of Effective Altruism on their thought is radically underreported and underrepresented.
That’s it! File under “true.”
US Pandemic Policy: Failures, Successes, and Lessons
My talk at Bowling Green State University on US Pandemic Policy: Failures, Successes, and Lessons
This was not a black swan event. This was an entirely predicted and predictable event. We knew it was going to happen….And yet, we weren’t ready.
I am told that my talk made many people angry (not at me, natch).
What I’ve been reading
1. Charles Clover, Black Wind, White Snow: The Rise of Russia’s New Nationalism. An excellent look at all the icky ideas that have been circulating around Russia for the last few decades. This book also brings the relevant characters to life, for better or worse. Recommended.
2. Christopher Prendergast, Living and Dying with Marcel Proust. Unlike most of the secondary literature, this book actually makes In Search of Lost Time sound like it is worth reading.
3. Elizabeth Popp Berman, Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy. A useful book, and many people should read it, that said I have some caveats. Was “equality” ever the standard? Why isn’t there more public choice/political economy analysis in here?
4. Joseph Sassoon, The Global Merchants: The Enterprise and Extravagance of the Sassoon Dynasty. A fun read, I had not known the family was Iraqi-Jewish, or so heavily involved in the opium trade in 19th century China. The author, by the way, is a distant relation to the main family tree, but it turns out he can read all the relevant languages for deciphering the family archives (and hardly anyone else can).
5. Elizabeth Bowen, Eva Trout. Bowen has to be one of the most underrated writers of the twentieth century. No human ever has told me to read one of her books! Yet this one is a subtle knockout.
Why Artificial Intelligence Increases the Importance of Humans in War
Recent scholarship on artificial intelligence (AI) and international security focuses on the political and ethical consequences of replacing human warriors with machines. Yet AI is not a simple substitute for human decision-making. The advances in commercial machine learning that are reducing the costs of statistical prediction are simultaneously increasing the value of data (which enable prediction) and judgment (which determines why prediction matters). But these key complements—quality data and clear judgment—may not be present, or present to the same degree, in the uncertain and conflictual business of war. This has two important strategic implications. First, military organizations that adopt AI will tend to become more complex to accommodate the challenges of data and judgment across a variety of decision-making tasks. Second, data and judgment will tend to become attractive targets in strategic competition. As a result, conflicts involving AI complements are likely to unfold very differently than visions of AI substitution would suggest. Rather than rapid robotic wars and decisive shifts in military power, AI-enabled conflict will likely involve significant uncertainty, organizational friction, and chronic controversy. Greater military reliance on AI will therefore make the human element in war even more important, not less.
That is from a new paper by Avi Goldfarb and Jon R. Lindsay, via the excellent Kevin Lewis.