Results for “average is over” 1568 found
My TechCrunch interview about *Average is Over*
It was done with the excellent Andrew Keen, here is part of their write-up:
…Cowen isn’t a dystopian and he doesn’t believe that smart machines are taking jobs from human beings. ‘The smartest and most successful people in the future, he believes, will manage the smart machines. And as these smart machines become more central in how we manage our education and healthcare, he says, “human psychology” – the art and science of motivation – will become increasingly valuable. This is what he calls “the next big thing.” In the future, Cowen insists, power will lie with the humans who partner with rather than own the algorithm. And in this age of the smart human/machine partnership, traditional algorithm-centric companies like Google will be old businesses – “like GM”, he predicts.
“Marketing”, Cowen writes in Average Is Over, is the “seminal sector for our future economy.” But Cowen’s intriguing definition of marketing lies in figuring out how to motivate people and to get them to feel better about themselves. Everyone in the future economy – from doctors to educators to entrepreneurs – will be coaches. But who is going to own the operating platform in the age of the smart machine? That’s the trillion-dollar question which even Tyler Cowen isn’t smart enough to answer.
Average is Still Over
Unemployment fell from 3.3 to 3.2 percent for people with a bachelor’s degree or more, and from 5.7 to 5.5 percent for those with some college. But it actually rose from 6.3 to 6.5 percent for people with only a high school diploma, and from 8.9 to 9.1 percent for those without one.
In other words, our polarized labor market isn’t getting any less so. The Cleveland Fed points out that routine jobs disappeared during the Great Recession, and haven’t come back during the not-so-great-recovery — which partly explains why our economic upswing, such as it is, has been much less dramatic for the least educated.
That is Matt O’Brien, there is more here.
How average is perceived as being over
If you actually take a close look at the numbers, it turns out that of the people who identified as middle class in 2008, nearly a third of them now identify as lower middle or lower class.1 This is even more dramatic than it seems. Class self-identification is deeply tied up with culture, not just income, and this drop means that a lot of people—about one in six Americans—now think of themselves as not just suffering an income drop, but suffering an income drop they consider permanent. Permanent enough that they now live in a different neighborhood, associate with different friends, and apparently consider themselves part of a different culture than they did just six years ago.
There is more here, from Kevin Drum.
Alex Murrell, The Age of Average
One of the best essays of this year, though I think the author considerably underrates how much heterogeneity we are building on the internet, globally, and also through GPT models. Nonetheless an excellent read with some hard-hitting points and good photos to illustrate. Here is one excerpt:
This article argues that from film to fashion and architecture to advertising, creative fields have become dominated and defined by convention and cliché. Distinctiveness has died. In every field we look at, we find that everything looks the same.
Welcome to the age of average.
Here is a photo of some (supposedly different) current cars:
You can read the whole thing here. Note that in my model, the homogenizations we do observe spring precisely from the greater diversity on the fringes of the distribution. People at the edges can get exactly what they want, so the fight over the mainstream middle becomes all the more mainstream, as it is targeting the true conformists in that particular area.
The link between IQ and income is overrated
Garett Jones was the one who first put me on to this idea, now it is in a Bloomberg column, excerpt:
The evidence is striking. One study of CEOs of large Swedish companies found that on average they ranked at the 83rd percentile of measured IQ (for CEOs of smaller companies, the rank was the 66th percentile). That’s above average, but it’s hardly a cluster at the top of the distribution. Many CEOs undoubtedly achieved their position through hard work, charisma, people skills and other abilities, not to mention luck.
In the broader distribution, the connection between IQ and income is also positive but underwhelming. One study concluded that moving from the 25th to the 75th percentile of IQ correlates with a 10% to 16% boost in earnings. That may feel significant when you get it, but it doesn’t push you into a whole new socioeconomic class.
The connection between IQ and achievement at the very highest tiers is in my view still an open question. Here are some recent results, in my view not yet confirmed as the correct overall point of view:
One recent study, also based on Swedish data, showed two results of significance. First, much of the intelligence-earnings correlation weakens significantly and plateaus above salaries of 60,000 euros a year. Second, and perhaps more surprising, people in the top 1% of earners had lower IQs than the earners immediately beneath them.
Why that is the case, it’s hard to say. But one possibility is that the very smartest people prefer a more balanced life rather than working all the time. Or perhaps they prefer occupations with higher status and somewhat lower pay. Money isn’t the only thing you can enjoy. Maybe having a lot of it can make it harder to trust potential friends or spouses.
Recommended.
Overrated or underrated?
Ramagopal asks: Peter Bauer, Mises, Joan Robinson
1. Peter Bauer is underrated. He was a brilliant development economist who wrote seminal early and detailed books on the rubber sector and also networks of West African trade. He also recognized the importance of the informal sector early on. He then moved into a more polemic mode, writing books on market-oriented development strategies and very critical of foreign aid. I believe at the time he was largely correct about foreign aid, though I would recognize also that since then the quality and effectiveness of foreign aid has improved considerably, most of all because the receiving governments have on average improved in quality.
His family had a coat of arms, linked above at his name.
I once met Bauer at a seminar at NYU, way back when. He reminded me of a character from LOTR and he had a thick mane of white hair. I believe Bauer was also one of the first well-known economists to come out as gay.
2. Mises is underrated. His 1922 book Socialism is still the best and also historically most important critique of socialism, ever. His earlier articles about the impossibility of economic calculation under socialism are among the most important economics articles, ever. Those are already some pretty important contributions, and yet he is often talked of as a crank, perhaps because in part some of his followers were indeed cranks.
Liberalism I quite like. His book Bureaucracy is underdeveloped but still pretty interesting, and his hypotheses about the logic of cascading interventionism, if not entirely correct, still are an important contribution to public choice. They do explain a lot of the data. Human Action is big, cranky, and dogmatic, but for some people a useful tonic and alternative to the usual stuff. I can’t say I have ever really liked it, and in an odd way the whole emphasis on “Man acts” undoes at least one part of marginalism. The early Theory of Money and Credit was a pretty good early 20th century book on monetary theory.
Hayek somehow ended up as “the reasonable face of classical liberalism,” but in fact Mises was far more politically correct by current standards.
Obviously there is a sliver of people who very much overrate Mises. Here is a guy who hardly anyone rates properly. I’m still sticking with considerably underrated.
3. Joan Robinson’s Theory of Imperfect Competition was a very important book, and it laid the groundwork for a lot of later thinking about market structure, both geometrically and conceptually. But she didn’t understand actual economics, was a Maoist, and seemed to like the regime of North Korea. So I have to say overrated. Her Accumulation of Capital also was no great shakes, though hardly her greatest sin. Her growth theory was far too Marxian, and far too fond of “Golden Rule” constructs, which are mechanistic rather than insightful as models ought to be. Her writings in Economic Philosophy were not profound. So she has one truly major contribution, but I can’t get past the really bad stuff.
Underpoliced and Overprisoned, revisited
I’ve been writing for years that the United States is underpoliced and overprisoned. Time for a review:
NYTimes: “The United States today is the only country I know of that spends more on prisons than police,” said Lawrence W. Sherman, an American criminologist on the faculties of the University of Maryland and Cambridge University in Britain. “In England and Wales, the spending on police is twice as high as on corrections. In Australia it’s more than three times higher. In Japan it’s seven times higher. Only in the United States is it lower, and only in our recent history.”
…Dr. Ludwig and Philip J. Cook, a Duke University economist, calculate that nationwide, money diverted from prison to policing would buy at least four times as much reduction in crime. They suggest shrinking the prison population by a quarter and using the savings to hire another 100,000 police officers.
Here’s a graph from Daniel Bier on the ratio of police to prison spending comparing the United States to Europe. The US spends relatively less on police and more on prisons than any European country.
And here’s a graph from President Obama’s CEA report on incarceration and the criminal justice system. The graph shows that the United States employs many more prison guards per-capita than does the rest of the world. Given our prison population that isn’t surprising. What is surprising is that on a per-capita basis we employ 35% fewer police than the world average. That’s crazy.
Our focus on prisons over police may be crazy but it is consistent with what I called Gary Becker’s Greatest Mistake, the idea that an optimal punishment system combines a low probability of being punished with a harsh punishment if caught. That theory runs counter to what I have called the good parenting theory of punishment in which optimal punishments are quick, clear, and consistent and because of that, need not be harsh.
Increasing the number of police on the street, for example, would increase capture rates and deter crime and by doing so it would also reduce the prison population. Indeed, in a survey of crime and policing that Jon Klick and I wrote in 2010 we found that a cost-benefit analysis would justify doubling the number of police on the street. We based our calculation not only on our own research from Washington DC but also on the research of many other economists which together provide a remarkably consistent estimate that a 10% increase in policing would reduce crime by 3 to 5%. Using our estimates, as well as those of some more recent papers, the Council of Economic Advisers also estimates big benefits (somewhat larger than ours) from an increase in policing. Moreover, what the CEA makes clear is that a dollar spent on policing is more effective at reducing crime than a dollar spent on imprisoning.
Can we increase the number of police? Not today but in recent years large majorities of blacks, hispanics and whites have said that they support hiring more police. It is true that blacks are more skeptical than whites of police and have every reason to be. Some of the communities most in need of more police are also communities with some of the worst policing problems. Better policing and more policing, however, complement one another. Demilitarize the police, end the war drugs, regulate people less, restrain police unions and eliminate qualified immunity so that police brutality can be punished and the bad apples removed and the demand for police will soar.
As we reform and unbundle policing let us remember that lower crime has been one of the greatest benefits to African American men over the past 30 years.
…the most disadvantaged people have gained the most from the reduction in violent crime.
Though homicide is not a common cause of death for most of the United States population, for African-American men between the ages of 15 and 34 it is the leading cause, which means that any change in the homicide rate has a disproportionate impact on them. The sociologist Michael Friedson and I calculated what the life expectancy would be today for blacks and whites had the homicide rate never shifted from its level in 1991. We found that the national decline in the homicide rate since then has increased the life expectancy of black men by roughly nine months.
…The everyday lived experience of urban poverty has also been transformed. Analyzing rates of violent victimization over time, I found that the poorest Americans today are victimized at about the same rate as the richest Americans were at the start of the 1990s. That means that a poor, unemployed city resident walking the streets of an average city today has about the same chance of being robbed, beaten up, stabbed or shot as a well-off urbanite in 1993. Living in poverty used to mean living with the constant threat of violence. In most of the country, that is no longer true.
More police on the street is one cause, among many, of lower crime. Chicago just had a horrendous day with 18 innocent people murdered in mostly random drive-by shootings, in part because the police were occupied with protests and riots. As we reform, unbundle, and reimagine, let’s be careful not to reverse nearly thirty years of falling crime which has produced a tremendous increase in the standard of living of the poorest Americans.
We need better policing so that we can all be comfortable with more policing.
Is U.S. average body temperature decreasing?
In the US, the normal, oral temperature of adults is, on average, lower than the canonical 37°C established in the 19th century. We postulated that body temperature has decreased over time. Using measurements from three cohorts–the Union Army Veterans of the Civil War (N = 23,710; measurement years 1860–1940), the National Health and Nutrition Examination Survey I (N = 15,301; 1971–1975), and the Stanford Translational Research Integrated Database Environment (N = 150,280; 2007–2017)–we determined that mean body temperature in men and women, after adjusting for age, height, weight and, in some models date and time of day, has decreased monotonically by 0.03°C per birth decade. A similar decline within the Union Army cohort as between cohorts, makes measurement error an unlikely explanation. This substantive and continuing shift in body temperature—a marker for metabolic rate—provides a framework for understanding changes in human health and longevity over 157 years.
That is from a new paper by Protsiv, Ley, Lankester, Hastie, and Parsonnet. Via the excellent Kevin Lewis.
Sweden recovers in the PISA tables
The 2013 edition of the survey was a wake-up call for Sweden, which experienced a sharp drop in the results of 15-year-old students, pushing them below the OECD average and sparking debate about the country’s schools.
But Tuesday’s release of the 2018 Pisa ranking suggests that Swedish schools have further improved on a recovery that started with the 2016 edition, with above-average scores in reading, mathematics and science.
The report notes that Sweden is back at levels observed in early rankings, despite a rapid increase in the proportion of immigrant students, who tend to score below native-born students, in recent years. In 2018 around 20 percent of students in Sweden had an immigrant background, up from 12 percent in 2009.
Here is the full story. You will note that way back when people blamed the 2013 PISA score plunge on Swedish school privatization and vouchers, and also it led to a lot of fury about immigrants. Others blamed “progressive schooling” techniques. In any case, the Swedish performance has recovered notably and is back to its previous levels. Don’t overreact to particular data points, people! Of course it remains possible that the next measure in three years will show renewed decline, but do not overtheorize based on very limited trends.
Get Government Out of the Construction Business
USA Today: Nearly three years after city voters approved a $1.2 billion construction program over 10 years, the city has yet to see the first building completed. Average per-apartment costs have zoomed more than $100,000 past prior predictions, the study by city Controller Ron Galperin finds.
…At an average cost of $531,373 per unit – with many apartments costing more than $600,000 each – building costs of many of the homeless units will exceed the median sale price of a market-rate condominium.
…Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing. Those items comprise up to 40% of the cost of a project, the study found. By contrast, land acquisition costs averaged only 11% of the total costs.
Based on a recent audit of the program.
It’s absurd for a government to be building houses, a task for which it is manifestly unsuited. What the government should be doing is easing restrictions on building, improving public transportation which increases the supply of effective housing and dealing with any shortfalls by using housing vouchers.
Is the IT Revolution Over? An Asset Pricing View
I develop a method that structures financial market data to forecast economic outcomes. I use it to study the IT sector’s transition to its long-run share in the US economy. The method uses a model which links economy-wide growth with IT’s market valuation to match transition data on macroeconomic quantities, the sector’s life cycle patterns, and, importantly, market valuation ratios. My central estimates indicate that the revolution ends between 2028 and 2034 and that future average labor productivity growth will fall to 1.7 percent from the 2.7 recorded over 1974–2015. I show empirically the IT sector’s price-dividend ratio univariately explains over half of the variation in future productivity growth.
By Colin Ward. Speculative, as they say! Still, interesting to see someone go through the exercise. Via the excellent Kevin Lewis.
Sovereign Bonds since Waterloo — better than you had thought
This paper studies external sovereign bonds as an asset class. We compile a new database of 220,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering 91 countries. Our main insight is that, as in equity markets, the returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns averaged 7% annually across two centuries, including default episodes, major wars, and global crises. This represents an excess return of around 4% above US or UK government bonds, which is comparable to stocks and outperforms corporate bonds. The observed returns are hard to reconcile with canonical theoretical models and with the degree of credit risk in this market, as measured by historical default and recovery rates. Based on our archive of more than 300 sovereign debt restructurings since 1815, we show that full repudiation is rare; the median haircut is below 50%.
That is from Josefin Meyer, Carmen M. Reinhart, and Christoph Trebesch in a new NBER working paper.
Government Medical Research Spending Favors Women
It is commonly believed that medical research spending is biased against women. Here are some representative headlines: Why Medical Research Often Ignores Women (Boston University Today), Gender Equality in Medical Research Long Overdue, Study Finds (Fortune), A Male Bias Reigns in Medical Research (IFL Science). Largely on the basis of claims like this the NIH set up a committee to collect data on medical research funding and gender and they discovered there was a disparity. Government funded medical research favors women.
The Report on the Advisory Committee on Research on Women’s Health used the following criteria to allocate funding by gender:
All funding for projects that focus primarily on women, such as the Nurses’ Health Study, the Mammography Quality Standards Act, and the Women’s Health Initiative, should be attributed to women. For research, studies, services, or projects that include both men and women, recommended methods to calculate the proportion of funds spent on women’s health are as follow:
a. If target or accrual enrollment data are available, multiply the expenditure by the proportion of female subjects included in the program. For example, if 50 percent of the subjects enrolled in a trial, study, service, or treatment program are women, then 50 percent of the funds spent for that program should be counted as for women’s health. On the other hand, for diseases, disorders, or conditions without enrollment data, expenditures can be calculated based on the relative prevalence of that condition in women.
b. Where both males and females are included, as may be the case for many basic science research projects, multiply the expenditure by 50 percent.
On the basis of these criteria the report finds that in almost every category there is more female-focused NIH funding than male-focused NIH spending with the totals more than two to one in favor of females ($4.5 billion to $1.5 billion). Now personally I don’t regard this as a terrible “bias” as most spending ($25.7 billion) is for human beings and I don’t see any special reason why spending on women and men should be equal. It does show, however, that the common wisdom is incorrect. The Boston University Today piece I linked to earlier, for example, motivated its claim of bias in funding with the story of a female doctor who died of lung cancer. The NIH data, however, show a large difference in favor of women–$180 million of NIH lung cancer funding was focused on women while just $318 thousand was focused on men ($135 million wasn’t gender focused).
What about clinical trials? Well for NIH-funded clinical trials the results favor women:
Enrollment of women in all NIH-funded clinical research in FY 15 and FY 16 was 50 percent or greater. Enrollment of women in clinical research was highest in the intramural research program at 68 percent for both FY 15 and FY 16.
In the most clinically-relevant phase III trials:
NIH-defined Phase III Clinical Trials are a subset of NIH Clinical Research studies. The proportion of female participants enrolled in NIH-defined Phase III Clinical Trial was 67 percent in in FY 15 and 66 percent in FY 2016.
Historically, one of the reasons that men have often been more prevalent in early stage clinical trials (trials which are not always meant to treat a disease) is that after the thalidomide disaster the FDA issued a guidance document which stated that women of child-bearing age should be excluded from Phase 1 and early Phase 2 research, unless the studies were testing a drug for a life-threatening illness. That guidance is no longer in effect but the point is that interpreting these results requires some subtlety.
The NIH funds more clinical trials than any other entity but overall more clinical trials are conducted by industry. FDA data indicate that in the United States overall (the country where by far the most people are enrolled in clinical trials) the ratios are close to equal, 49% female to 51% male, although across the world there are fewer women than men in clinical trials, 43% women to 57% men for the world as whole with bigger biases outside the United States.
It would be surprising if industry research was biased against women because women are bigger consumers of health care than men. The Centers for Medicare and Medicaid Services, find, for example, that:
Per capita health spending for females was $8,315 in 2012, approximately 23 percent more than for males, $6,788
Also:
Research indicates that women visit the doctor more frequently, especially as they have children, and tend to seek out more preventive care. The National Center for Health Statistics found that women made 30% more visits to physicians’ offices than men between 1995 and 2011.
Nor is it the case that physicians ignore women. In one study of time use of family physicians and thousands of patients:
After controlling for visit and patients characteristics, visits by women had a higher percent of time spent on physical examination, structuring the intervention, patient questions, screening, and emotional counseling.
Of course, you can always find some differences by gender. The study I just cited, for example, found that “More eligible men than women received exercise, diet, and substance abuse counseling.” One often quoted 2008 study found that women in an ER waited 65 minutes to men’s average of 49 minutes to receive a pain killer. Citing that study in 2013 the New York Times decried that:
women were still 13 to 25 percent less likely than men to receive high-strength “opioid” pain medication.
Today, of course, that same study might be cited as a bias against men as twice as many men as women are dying of opioid abuse. I don’t know what the “correct” numbers are which is why I am reluctant to describe differences in the treatment of something as complex as pain to bias.
Overall, spending on medical research and medical care looks to be favorable to women especially so given that men die younger than women.
Hat tip: Discussants on twitter.
Addendum: I expect lots of pushback and motte and baileying on this post. Andrew Kadar wrote an excellent piece on The Sex-Bias Myth in Medicine in The Atlantic in 1994 but great memes resist data. Also, school summer vacation is not a remnant from when America was rural and children were needed on the farm.
Reassessing the quality of government in China
For a while I have been arguing that China is much more of a meritocracy than many outsiders (or for that matter insiders) believe. You have to distinguish type I from type II error; the princelings do unjustly well but smart people from rural areas are elevated at fairly high rates. Most important jobs are filled by very smart people. Therefore I am happy to see this new paper by Margaret Boittin, Gregory Distelhorst, and Francis Fukuyama:
How should the quality of government be measured across disparate national contexts? This study develops a new approach using an original survey of Chinese civil servants and a comparison to the United States. We surveyed over 2,500 Chinese municipal officials on three organizational features of their bureaucracies: meritocracy, individual autonomy, and morale. They report greater meritocracy than U.S. federal employees in almost all American agencies. China’s edge is smaller in autonomy and markedly smaller in morale. Differences between the U.S. and China lessen, but do not disappear, after adjusting for respondent demographics and excluding respondents most likely to be influenced by social desirability biases. Our findings contrast with numerous indices of good government that rank the U.S. far above China. They suggest that incorporating the opinions of political insiders into quality of government indices may challenge the foundations of a large body of cross-national governance research.
That is based on questionnaires, but the basic comparative results hold up when you consider only those Chinese officials who are willing to make negative remarks about their own government elsewhere on the questionnaire. Still, to some extent the American and Chinese respondents simply may be understanding the scales in different terms.
There are other interesting results in the body of the paper. The only U.S. federal agencies with higher meritocratic self-assessment than the Chinese mean are the Nuclear Regulatory Commission, the SEC, the OPM, and Education. Homeland Security, Agriculture, and HUD do the worst, with the performance of the branches of the military being poor as well (see Figure 3, p.32). For the participation variable, NASA and the SEC do best of the U.S. agencies, Homeland Security again doing the worst and the military again not doing well (Figure 4, p.33). It’s a pretty consistent picture for the variable of morale, with NASA, the NRC, Education, SEC, and OPM at the top, in that order, and guess again which agency comes in at the very bottom? (Figure 5, p.34)
You will note that Chinese civil service jobs are highly coveted, and on average there are fifty applicants for each slot, making those jobs more exclusive than Ivy League universities.
Don’t lose sleep over this one
A one-hour increase in location-average weekly sleep increases wages by 1.3% in the short run and by 5% in the long run.
Here is the paper, by Matthew Gibson and Jeffrey Shrader (pdf). Schrader, from UCSD, is on the job market this year. His job market paper is on expectations and adaptation to environmental risks (pdf).