Results for “department why not”
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Zoning Out Shade

Is it too hot to walk around the block? Sure, blame global warming, but in many parts of the country there is also a noticeable absence of shade. Why? As Nolan Gray, a city planner in New York, argues one reason is that shade has been zoned out.

…vernacular architecture in the U.S. was often designed around natural climate control. In the humid Southeast, large windows and central corridors encouraged airflow. In the arid Southwest, thick facades and small windows kept cool air inside. In both cases, most houses were packed tightly together to cast shadows over streets, with awnings, balconies, and roof overhangs used to protect indoor spaces from direct sunlight.

These design elements survive and thrive in cities built before air conditioning, like New Orleans, but are conspicuously absent from most modern Sun Belt metros. With houses sitting squat and far back from the street, and most commercial spaces sitting behind a veritable desert of parking, shade in cities like Phoenix and Atlanta is few and far between. 

The irony here is that the cities that most need shade are the least likely to have it…Older, urban cities with mild summers—think Boston—have shade in spades, while our newer Sun Belt cities —think Las Vegas—have virtually no shade at all, resulting in an unhealthy dependence on air conditioning. 

Why did this happen? A big reason is the way we started planning cities in the twentieth century. Beginning in the 1910s, planners declared a war on shade as a means of responding to slum conditions and high-rises. As described by researcher Sonia Hirt, early land-use planners were inspired by the vision of the detached single-family house on a large lot—a development pattern that’s fine for cloudy Massachusetts, but spells trouble for sunny Florida. Assuming no shade as the ideal, the framers of modern zoning set out to design a system of regulations that make many naturally cooling design elements practically illegal.

…In most suburbs, for example, houses are legally prevented from sitting close to the lot line by setbacks, which prevent any shade from being cast on sidewalks or neighboring homes. 

Strict rules surrounding building heights and density cap most suburban buildings at a standard height of 35 feet, well below what could potentially cast a cooling shadow. And shadows from high-rises are treated as an unambiguous evil in planning hearings, even in otherwise dense urban environments like San Francisco.

The criminalization of shade goes beyond land-use regulations; it extends to the way we design public spaces. Despite more and more cities encouraging street trees as a valuable source of shade, many state transportation offices continue to ban them, privileging ease of maintenance over outdoor comfort.

Trees in particular would not only create more shade but also reduce air pollution.

One of the Greatest Environmental Crimes of the 20th Century

It was one of the fastest decimations of an animal population in world history—and it had happened almost entirely in secret. The Soviet Union was a party to the International Convention for the Regulation of Whaling, a 1946 treaty that limited countries to a set quota of whales each year. By the time a ban on commercial whaling went into effect, in 1986, the Soviets had reported killing a total of 2,710 humpback whales in the Southern Hemisphere. In fact, the country’s fleets had killed nearly 18 times that many, along with thousands of unreported whales of other species. It had been an elaborate and audacious deception: Soviet captains had disguised ships, tampered with scientific data, and misled international authorities for decades. In the estimation of the marine biologists Yulia Ivashchenko, Phillip Clapham, and Robert Brownell, it was “arguably one of the greatest environmental crimes of the 20th century.”

That’s from an excellent piece by Charles Homans in the Pacific Standard. The Soviets killed some 180,000 whales illegally, driving several species to the brink of extinction. But why? The obvious answer is wrong:

…the Soviet Union had little real demand for whale products. Once the blubber was cut away for conversion into oil, the rest of the animal, as often as not, was left in the sea to rot or was thrown into a furnace and reduced to bone meal—a low-value material used for agricultural fertilizer, made from the few animal byproducts that slaughterhouses and fish canneries can’t put to more profitable use….Why did a country with so little use for whales kill so many of them?

The actual answer has a lot to say about the impossibility of rational economic calculation under socialism (and also the lesser but still important problem under capitalism of mispricing in the presence of externalities and the difficulty of aligning private and social incentives.) The answer did not appear until 2008 when, long after his death, the memoir of Alfred Berzin, a Soviet-era fisheries scientist, was translated and published. Homans summarizes:

The Soviet whalers, Berzin wrote, had been sent forth to kill whales for little reason other than to say they had killed them. They were motivated by an obligation to satisfy obscure line items in the five-year plans that drove the Soviet economy, which had been set with little regard for the Soviet Union’s actual demand for whale products. “Whalers knew that no matter what, the plan must be met!” Berzin wrote. The Sovetskaya Rossiya seemed to contain in microcosm everything Berzin believed to be wrong about the Soviet system: its irrationality, its brutality, its inclination toward crime.

You can find Bezin’s memoir here. It’s bitter, sardonic, sad and funny.

Whalers knew that no matter what, the plan must be met! Looking for whales they would go farther and farther from the islands and bring rotten baleen whales to the stations, those which could not be used for food. This was not regarded as a problem by anybody. The plan—at any price! And whalers were killing everything.

Why bring in rotten whales? Without prices the Soviets had to calculate in very crude terms, most notably gross output. In the famous cartoon, the nail factory is supposed to produce X tons of nails and finds the easiest way to do this is to produce a single large nail. The cartoon illustrated a real problem in the Soviet economy which many have documented including Bezin.

Another concept—no less frightening, ugly, and absurd—was that of “gross output.” This was a typical creation of socialism and would be impossible in any other system. Gross output: this is when nobody is interested in a living object itself, and the only thing they care about is the size of the catch. It is reports giving figures in tsentner [100 kilos, AT] and metric tons, even if it is fish that were thrown out, or rotten whales.

The whalers were paid well but it wasn’t just positive incentives. The history of the industry was never far from mind. Quoting Homans again:

Whaling fleets that met or exceeded targets were rewarded handsomely, their triumphs celebrated in the Soviet press and the crews given large bonuses. But failure to meet targets came with harsh consequences. Captains would be demoted and crew members fired; reports to the fisheries ministry would sometimes identify responsible parties by name.

Soviet ships’ officers would have been familiar with the story of Aleksandr Dudnik, the captain of the Aleut, the only factory ship the Soviets owned before World War II. Dudnik was a celebrated pioneer in the Soviet whaling industry, and had received the Order of Lenin—the Communist Party’s highest honor—in 1936. The following year, however, his fleet failed to meet its production targets. When the Aleut fleet docked in Vladivostok in 1938, Dudnik was arrested by the secret police and thrown in jail, where he was interrogated on charges of being a Japanese agent. If his downfall was of a piece with the unique paranoia of the Stalin years, it was also an indelible reminder to captains in the decades that followed.

Bezin, a scientist, writes about who got to the top in the Soviet system:

..As a rule, the people who became commissars were the ones who couldn’t find another job. They were not very smart but were very conceited, self important individuals, especially after they had been given a taste of power, and especially over other people. Those who were thinking about a career in the party system, who could speak loudly and authoritatively from a podium, and who curried favor with the boss, these people could climb the party ladder quickly, and high up.

…Russian people have a good sense of humor, and even when they should be crying they laugh…Here is [a Russian joke]: On the counter of a store there are different types of brains. Among them are commissar brains, which are being sold for a price many times higher than those of farm animals. “Why are the commissar brains so expensive?” asks a customer. The assistant replies, “Do you know how many commissars we have to slaughter to get one kilo of brains?”

The whole system was built on lies and had to be built on lies:

For seventy Soviet years the industry of lies was created, shaped, and perfected in the country. Lies were encouraged and cultivated, and people were forced to lie. Lies in art, lies in movies, on TV, on the radio, and in newspapers. One of my colleagues was saying: “Why do I need Crocodile? When I go to work I buy the newspaper Pravda and all the way to the institute I am dying from laughter.” Lies in the numbers of the Central Statistics Department. And facts about Chernobyl were lies, dreadful and inhumane, deserving of damnation. Lies about the history of our country, which the leaders of the country changed to suit their needs. To the latter, people reacted with a wicked grin: “An institute of experimental history has been created!”

…People were lying whether they needed to or not, and I would say that the lying was pathological and at all levels. From the most blatant lie at the international level…to naïve but proud lies like: “Soviet means the best.” Sometimes they were self-assured but silly, as for example in this poetic sentence: “As it’s known, the earth begins with the Kremlin”; or they were absolutely idiotic: “The whole Soviet country is song and dance all day long.” Just think of the meaning of these words! You could hear on radio and at concerts singing like: “Like an owner, a person walks through the boundless native land,” or “How wonderful it is to live in the Soviet country. . .” And all of these were promulgated in the 1930’s when the country was surrounded by the barbed wire of fearful GULAG’s . . .

Hat tip: The Browser.

Addendum: See the HBO series Chernobyl, brilliant cinematography and compelling storytelling, for a closely related story.

My Conversation with Jordan Peterson

Here is the transcript and audio, here is the summary:

Jordan Peterson joins Tyler to discuss collecting Soviet propaganda, why he’s so drawn to Jung, what the Exodus story can teach us about current events, his marriage and fame, what the Intellectual Dark Web gets wrong, immigration in America and Canada, his tendency towards depression, Tinder’s revolutionary nature, the lessons from The Lord of the Rings and Harry Potter, fixing universities, the skills needed to become a good educator, and much more.

Here is one bit:

COWEN: Your peers in the Intellectual Dark Web — the best of them — what is it they’re wrong about?

PETERSON: Oh, they’re wrong about all sorts of things. But at least they’re wrong in all sorts of interesting ways. I think Sam Harris, for example — I don’t think that he understands. I don’t think that he’s given sufficient credence to the role that religious thinking plays in human cognition.

I think that’s a huge mistake for someone who’s an evolutionary biologist because human religious thinking is a human universal. It’s built into our biology. It’s there for a reason. Although Sam is an evolutionary biologist, at least in principle, with regards to his thinking, he’s an Enlightenment rationalist when it comes to discussing the biology of religion, and that’s not acceptable.

It’s the wrong time frame. You don’t criticize religious thinking over a time frame of 200 years. You think about religious thinking over a time frame of 50,000 years, but probably over a far greater time span than that.

COWEN: So if that’s what Sam Harris doesn’t get —


COWEN: If we turn to senior management of large American companies, as a class of people — and I know it’s hard to generalize — but what do you see them as just not getting?

PETERSON: I would caution them not to underestimate the danger of their human resources departments.

Much more than just the usual, including a long segment at the end on Jordan’s plans for higher education, here is one bit from that:

Universities give people a chance to contend with the great thought of the past — that would be the educational element. To find mentors, to become disciplined, to work towards a single goal. And almost none of that has to do with content provision. Because you might think, how do you duplicate a university online? Well, you take lectures and you put them online, and you deliver multiple-choice questions. It’s like, yeah, but that’s one-fiftieth of what a university is doing.

So we’ve just scrapped that idea, and what we’re trying to do instead is to figure out, how can you teach people to write in a manner that’s scalable? That’s a big problem because teaching people to write is very, very difficult, and it’s very labor intensive and expensive. So that’s one problem we’d really like to crack. How can you teach people to speak? And can you do that in a scalable manner as well?

Definitely recommended, even if you feel you’ve already heard or read a lot of Jordan Peterson.

My Conversation with Rebecca Kukla

She is a philosopher at Georgetown, here is the audio and transcript, I thought it was excellent and lively throughout.  Here is part of the summary:

In her conversation with Tyler, Kukla speaks about the impossibility of speaking as a woman, curse words, gender representation and “guru culture” in philosophy departments, what she learned while living in Bogota and Johannesburg, what’s interesting in the works of Hegel, Foucault, and Rousseau, why boxing is good for the mind, how she finds good food, whether polyamory can scale, and much more.

Here is one bit:

KUKLA: What’s interesting in Hegel? Okay. You ask hard questions. This is why you’re good at your job, right?

I think Hegel’s fascinating. I think the main idea in Hegel that is fascinating is that any cultural moment, or set of ideas, or set of practices is always internally contradictory in ways it doesn’t notice, that there are tensions built into it. What happens, over time, is that those tensions bubble up to the surface, and in the course of trying to resolve themselves, they create something newer and better and smarter that incorporates both of the original sides.

That was a much more Hegelian way of putting it than I wanted it to come out, basically — the idea that going out and looking for consistency in the world is hopeless. Instead, what we should do is figure out how the contradictions in the world are themselves productive, and push history forward, and push ideas forward, is what I take to be the key interesting Hegelian idea.

COWEN: Michel Foucault. How well has it held up?

KUKLA: Oh, you’re asking me about people I mostly love.

COWEN: But empirically, a lot of doubt has been cast upon it, right?

KUKLA: On the details of his empirical genealogical stories, you mean?


KUKLA: Yes, but I think that the basic Foucauldian picture, which is — let’s reduce Foucault to just two little bits here. One basic piece of the Foucauldian picture is that power is not a unify-unilateral, top-down thing. Power expresses itself in all of the little micro interactions that go on between people and between people and their environments all the time.

Power isn’t about a big set of rules that’s imposed on people. Power is about all of the little things that we do with one another as we move through the world. All of those add up to structures of power, rather than being imposed top-down. I think that has been, at least for me and for many other people, an incredibly fertile, productive way of starting to think about social phenomenon.

The other bit of the Foucauldian picture that I think is incredibly important is the idea that a lot of this happens at the level of concrete, fleshy bodies and material spaces. Power isn’t sets of abstract rules. Power is the way that we are trained up when we are little kids — to hold our legs in a certain way, or to hold our face in a certain way, or to wear certain kinds of clothing. Power is the way that schools are built with desks in rows that enforces a certain direction of the gaze, and so on.

I could go on and on, but the way that the materiality of our bodies and our habits and our environments is where power gets a hold, and where our social patterns and norms are grounded, rather than in some kinds of high-level principles or laws, is also, I think, very fertile.

That’s independent of the details of his genealogical stories. Because, yeah, he does seem to have played fairly fast and loose with actual historical details in a lot of cases.

Here is another segment:

COWEN: Let me start with a very simple question about feminism. What would be a rhetorical disadvantage that many women are at that even, say, educated or so-called progressive men would be unlikely to see?

KUKLA: A rhetorical disadvantage that we’re at — that’s a fascinating question. I think that there is almost no correct way for a woman to use her voice and hold her body to project the proper kind of expertise and authority in a conversation.

I think that there’s massive — I don’t even want to call it a double bind because it’s a multidimensional bind — where if we sound too feminine, sounding feminine in this culture is coded as frivolous and unserious. If we sound too unfeminine, then we sound like we are violating gender norms or like we are unpleasant or trying to be like a man.

I think that almost any way in which we position ourselves — if we try to be polite and make nice, then we come off as weak. If we don’t make nice, then we’re held to a higher standard for our appropriate behavior than men are. I think there’s almost no way we can position ourselves so that we sound as experts. So oftentimes, the content of our words matters less than our embodied presentation as a woman.

Definitely recommended.

52 things learned by Kent Hendricks

Here are a few:

Contrary to the beliefs of roughly 33% of Americans, Kansas is not the flattest state. In fact, it’s the 9th flattest state, and it’s one of only two Great Plains states to make the top ten (the other is North Dakota). The flattest state is actually Florida, the second flattest state is Illinois, and the least flattest is West Virginia. (Disruptive Geo)

…The average high school GPA of a representative sample of 700 millionaires in the United States is 2.9. (Eric Barker, Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong)

…Dinosaurs roamed the earth for a long time. Tyrannosaurus Rex is closer in time to humans than to Stegosaurus. (Peter Brannen, The Ends of the World: Volcanic Apocalypses, Lethal Oceans, and Our Quest to Understand Earth’s Past Mass Extinctions)

…Pepperoni pizza is subject to more government regulation than plain cheese pizza. That’s because cheese pizzas are regulated by the Food and Drug Administration, while pepperoni pizzas—which have meat—are regulated by the Department of Agriculture. (Baruch Fischhoff and John Kadvany, Risk: A Very Short Introduction)

Here is the full list, interesting throughout.

Monday assorted links

1. Henry on Tom Lehrer and IDW.

2. 536 A.D. sucked (Icelandic volcano at fault?).

3. Few people are trapped in filter bubbles.

4. The battle to control your mindfulness (WSJ).

5. “Not a single company has borrowed money through the $1.2tn US high-yield corporate bond market this month. If that drought persists, it would be the first month since November 2008 that not a single high-yield bond priced in the market…”  Here is more from the FT.

6. Why construction costs are rising.

7. Google meets Jane Jacobs.

*A Life of Experimental Economics, volume I*, by Vernon Smith

I learned a great deal from this stimulating and highly unorthodox biography.  Here are a few points from the book:

1. It offers a brief but excellent early economic history of Wichita, where Vernon grew up.

2. Vernon, at the time, was very critical of the use of the atomic bombs on Japan, which he considered to be a disproportionate use of force.

3. In the 1940s he became active in CORE and its fight against racial discrimination.

4. In 1948 Vernon was an antiwar pacifist and a supporter of Norman Thomas.

5. At MIT, Paul Samuelson was a show-off lecturer, according to Vernon.

6. The book has plenty of sentences like: “Grandpa Smith and Uncle Norman were always a delight to have around — lots of jokes, wisecracks, and laughs.”

7. pp.163-164: “The details, as we came to know them, were not the least bit complicated…It was at first thought that she had considered using the knife on herself, but apparently the knife was there because she considered cutting a length from a nearby piece of rope.  Instead, she used a chain.  It was so like my mother — a clean job with no mess.  Everyone who knew her knew that she would never have used the butcher knife.  Even the hanging could never have occurred in the house.  No fuss, no mess; a clean job, with no room for error.”

8. On attention-switching: “I have always had what my mind has gradually come to recognize — by comparative observation of others — as a brain task-switching problem.  When I am thinking, writing, or composing, I pass into another world of experience, a world that is isolated from my surroundings…I experience many chaotic but loosely connected thought.  One, then another, rises and there emerges a hint of how they are to come together.”  He notes that interruptions are very costly to him, and he much prefers one-to-one conversations rather than group dialogues.  Furthermore, he argues that his capacity to “hyper-focus” is more valuable than his measured IQ of 130.

9. There are considerable and interesting discussions of autism, Asperger’s and ADHD.

10. The book offers an excellent account of why Purdue was an important economics department in the 1950s and 1960s.

11. In 1957, Vernon considered going to work for a private railroad and leaving Purdue for St. Louis.  He didn’t.

You can buy the book here, vol.II is good too.

How is Obamacare doing?

Yes, it is more popular, but how is it doing?:

Obamacare has continued to devastate the individual health insurance market:

  • In March of 2016, there were 20.2 million people covered in the individual health insurance market according to a hard count of state insurance department filings done by Mark Farrah and Associates.
  • In March of 2017 that count was down to 17.7 million.
  • In March of 2018 the count was 15.7 million–a 22% drop in two years.

This means 4.5 million people lost their individual health insurance in just two years.

Hardest hit are the 40% of middle class individual market consumers who are not eligible for a subsidy.

  • In March of 2016 there were 7,520,939 people covered in the off-exchange individual health insurance market where subsidies are not available.

  • In March of 2017 5,361,451 were covered.

  • In March of 2018 4,004,522 were covered–a 47% drop in two years.

And, the Obamacare subsidies paid to consumers are hardly sustainable.

According to the CBO, the average Medicaid outlay for a non-disabled adult is $4,230–a program that virtually has no premiums and co-pays. But because the risk pool is so bad and therefore expensive in the Obamacare exchanges, the average subsidy cost for taxpayers is $6,300–and that doesn’t include what the consumer pays in premiums and out-of-pocket expenses for Obamacare coverage.

Why has the Obamacare individual market melted-down in these last two years? Because its premiums and deductibles are sky high–for all but the lowest income participants.

In Northern Virginia, for example, the cheapest 2019 Obamacare individual market Silver plan for a family of four (mom and dad age-40) making a subsidy eligible $65,000 a year costs $4,514. That plan has a $6,500 deductible meaning the family would have to spend $11,014 on eligible health care costs before collecting other than nominal first dollar benefits.

That same family, but making too much for a subsidy, as 40% of families do, and a typical family in the affluent Virginia 10th, would have to spend $19,484 in premiums plus a $6,500 deductible, for a total of $25,984 in eligible costs before they would collect any meaningful benefits.

That is from Robert Laszewski, with additional interesting points at the link.  Do see my earlier post on what does and does not make sense in Obamacare — the risk pool for the individual market simply isn’t big or robust enough.

Smell markets in everything

Previously, she has made dairy products from the perspiration of Bill Gates and Mark Zuckerberg.

Here is the full article.  And:

In one exhibition, [Sissel] Tolaas captured the armpit sweat of severely anxious men from Greenland to China, recreated their individual smells and painted them onto the walls of the installation. (“There was a composite odor of anxiety that just infused the whole room, and it was really unhinging,” said Howes, who saw it in Basel, Switzerland). After the smell of fear, Tolaas recreated the smell of violence from cage fighters in East London. She has recreated the scents of Berlin’s famed Berghain nightclub, New York’s Central Park in October, World War I, communism and the ocean. Her shows are immersive and emotional in a distracted world. They aim to grip audiences right by the lizard brain.


Tolaas also invented 1,500 “smell memory kits” — abstract odors that have never been smelled before. When you want to remember an event, you open the amulet and inhale, sealing the moment in your emotional core. For the London Olympics, she made a Limburger cheese sourced from David Beckham’s sweaty socks, which was served to VIPs.

File under “Department of Why Not?”


The Richmond Fed has a good overview of apprenticeships in the United States and some of the academic literature:

According to a 2013 World Bank and International Labour Office study, only about 0.3 percent of the total U.S. workforce is in registered apprenticeships — about a 12th of the share in Germany. But some states, including South Carolina, have expanded “dual system” apprenticeships in recent years by building partnerships between colleges and firms and, in some cases, offering tax credits. Through the state’s “Apprenticeship Carolina” program, about 27,000 workers have been trained since 2007, including many at foreign-owned firms. Nationwide, there were about 505,000 registered apprentices in 2016, according to the U.S. Labor Department.

The review offers some useful ideas on why apprenticeships are less common in the United States. One problem is cultural:

In other countries, it’s more likely that college is seen as one option among many, and apprenticeships are con­sidered a worthwhile route to middle-class employment. In the United States, parents are more likely to see college as a vital investment without considering other alterna­tives…

As I said in Launching the Innovation Renaissance:

The U.S. has paved a single road to knowledge, the road through the classroom. “Sit down, stay quiet, and absorb. Do this for 12 to 16 years,” we tell the students, “and all will be well.” Most of them, however, crash before they reach the end of the road — some drop out of high school and then more drop out of college. Who can blame them? Sit-down learning is not for everyone, perhaps not even for most people. There are many roads to knowledge.

Monday assorted links

1. Unpopular ideas about blockchains?

2. GMU economics job market candidates.

3. “Even so, Yudkowsky endorses anti-modesty for his book readers, who he sees as better than average, and also too underconfident on average.”  From our very own Robin Hanson.

4. What happened to the Notre Dame economics department?

5. American gun culture as stemming in part from Native Americans.

6. An early, metallurgical great stagnation?

Nobel Prize awarded to Richard Thaler

This is a prize that is easy to understand.  It is a prize for behavioral economics, for the ongoing importance of psychology in economic decision-making, and for “Nudge,” his famous and also bestselliing book co-authored with Cass Sunstein.

Here are previous MR posts on Thaler, we’ve already covered a great deal of his research.  Here is Thaler on Twitter.  Here is Thaler on  Here is the Nobel press release, with a variety of excellent accompanying essays and materials.  Here is Cass Sunstein’s overview of Thaler’s work.

Perhaps unknown to many, Thaler’s most heavily cited piece is on whether the stock market overreacts.  He says yes this is possible for psychological reasons, and this article also uncovered some of the key evidence in favor of the now-vanquished “January effect” in stock returns, namely that for a while the market did very very well in the month of January.  (Once discovered the effect went away.)  Another excellent Thaler piece on finance is this one with Shleifer and Lee, on why closed end mutual funds sell at divergences from their true asset values.  This too likely has something to do with market psychology and sentiment, as the same “asset package,” in two separate and non-arbitrageable markets, can sell for quite different prices, sometimes premia but usually discounts.  This was one early and relative influential critique of the efficient markets hypothesis.

Another classic early Thaler piece is on a phenomenon known as “mental accounting,” for instance you might treat a dollar in your pocket as different from a dollar in your bank account.  Or earned money may be treated different from money you just chanced upon, or won that morning in the stock market.  This has significant implications for predicting consumer decisions concerning saving and spending; in particular, economists cannot simply measure income but must consider where the money came from and how it is perceived by consumers, namely how they are performing their mental accounting of the funds.  Have you ever gone on a vacation with a notion that you would spend so much money, and then treated all expenditures within that range as essentially already decided?  The initial piece on this topic was published in a marketing journal and it has funny terminology, a sign of how far from the mainstream this work once was.  It is nonetheless a brilliant piece.  Here is more Thaler on mental accounting.

Thaler, with Kahneman and Knetsch, was a major force behind discovering and measuring the so-called “endowment effect.”  Once you have something, you value it much more!  Maybe three or four times as much, possibly more than that.  It makes policy evaluation difficult, because as economists we are not sure how much to privilege the status quo.  Should we measure “willingness to pay” — what people are willing to pay for what they don’t already have?  Or “willingness to be paid” — namely how eager people are to give up what they already possess?  The latter magnitude will lead to much higher valuations for the assets in question.  This by the way helps explain status quo bias in politics and other spheres of life.  People value something much more highly once they view it as theirs.

This phenomenon also makes the Coase theorem tricky because the final allocation of resources may depend quite significantly on how the initial property rights are assigned, even when the initial wealth effect from such an allocation may appear to be quite small.  See this Thaler piece with Knetsch.  It’s not just that you assign property rights and let people trade, but rather how you assign the rights up front will create an endowment effect and thus significantly influence the final bargain that is struck.

With Jolls and Sunstein, here is Thaler on a behavioral approach to law and economics, a long survey but also constructive piece that became a major trend and has shaped law and economics for decades.  He has done plenty and had a truly far-ranging impact, not just in one or two narrow fields.

Thaler’s “Nudge” idea, developed in conjunction with Cass Sunstein over the course of a major book and some articles, has led policymakers all over the world to focus on “choice architecture” in designing better systems, the UK even setting up a “Nudge Unit.”  For instance, one way to encourage savings is to set up pension systems for employees so that the maximum contribution is the default, rather than an active choice people must make.  This is sometimes referred to as a form of “soft” or “libertarian paternalism,” since choice is still present.  Here is Thaler responding to some libertarian critiques of the nudge idea.

I first encountered Thaler’s work in graduate school, in the mid-1980s, in particular some of his pieces in the Journal of Economic Behavior and Organization; here is his early 1980 manifesto on how to think about consumer choice.  I thought “this is great stuff,” and I gobbled it up, as it was pretty consistent with some of what I was imbibing from Thomas Schelling, in particular Thaler’s 1981 piece with Shefrin on the economics of self-control, a foundation for many later discussions of paternalism.  I also thought “a shame this work isn’t going to become mainstream,” because at the time it wasn’t.  It was seen as odd, under-demonstrated, and often it wasn’t in top journals.  For some time Thaler taught at Cornell, a very good school but not a top top school of the kind where many Laureates might teach, such as Harvard or Chicago or MIT.  Many people were surprised when finally he received an offer from the University of Chicago Business School, noting of course this was not the economics department.  Obviously this Prize is a sign that Thaler truly has arrived at the very high levels of recognition, and I would note Thaler has been pegged as one of the favorites at least since 2010 or so.  When Daniel Kahneman won some while ago and Thaler didn’t, many people thought “ah, that is it” because many of Thaler’s most famous pieces were written with Kahneman.  Yet as time passed it became clear that Thaler’s work was holding up and spreading far and wide in influence, and he moved into a position of being a clear favorite to win.

Here is Thaler’s book on the making of behavioral economics.  Excerpt:

…my thesis advisor, Sherwin Rosen, gave the following as an assessment of my career as a graduate student: “We did not expect much of him.”

Very lately Thaler on Twitter has been making some critical remarks about price gouging, suggesting we also must take into account what customers perceive as fair.  Here is his earlier piece about fairness constraints on profit-seeking, still a classic.

Thaler has written many columns for The New York Times, here is one on boosting access to health care.  Here are many more of them.  Here is “Unless you are Spock, Irrelevant Things Matter for Investment Behavior.”  Here is Thaler on making good citizenship fun.  He also told us that trading up in the NFL draft isn’t worth it.

Thaler is underrated as a policy economist, here is an excellent NYT piece on the “public option” for health insurance, excerpt: “…instead of arguing about whether to have a public option, argue about the ground rules.”

His last pre-Nobel tweet was: “The web site is using lots of . Advertised rates include cashing in of “points”, cancellation policies not salient if bad…”

A well-deserved prize and one that is relatively easy to explain, and most of Thaler’s works are easy to read even if you are not an economist.  I would stress that Thaler has done more than even many of his fans may realize.

What I’ve been reading

1. Robert Knapp, The Dawn of Christianity: People and Gods in a Time of Magic and Miracles.  Jews, Christians, and polytheists, mostly in the first century after the birth of Christ.  Strongly conceptual, rather than a string of hard-to-remember facts and citations.  Here is a useful summary review.

2. Samanta Schweblin, Fever Dream.  A well-known Argentinean novel, finally available in English.  A kind of ghost story, imagining wondering if the soul of your dying child really has been transferred to another person.  Short and very powerful.  Here is one very good review.

2. Hollis Robbins and Henry Louis Gates, Jr., The Portable Nineteenth-Century African American Women Writers.  Plenty of libertarian thought in here, and many historical tidbits of interest, for instance Julia Caldwell-Frazier, “The Decisions of Time” (1889) p. 486:

What obstacles and failures Prof. Morse encountered when he completed his rough model of the recording electro-magnetic telegraph; but see of what inestimable value his invention has been to mankind! Was not public opinion opposed to the telephone?—styled it “a useless thing.” But within a decade the telephone has become the most patronized means of urban intercommunication. Through all the innumerable obstacles and oppositions, we see, by the decisions of time, science tracing the wild comet in its vast eccentric course through the heavens; we see science bringing down the very lightning from the clouds, making it a remedial agent and a messenger, quick as light, to carry our thoughts.

Here is useful NYT coverage.  There is also:

Michael Vatikiotis, Blood and Silk: Power and Conflict in Modern Southeast Asia, a useful introduction to why that part of the world has not turned into paradise.

Jimmy Soni and Rob Goodman, A Mind at Play: How Claude Shannon Invented the Information Age, is a quality treatment of its topic material.

Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives, is a useful look at why so many cases are leveled against the company rather than the CEO. I found the book worthwhile, but don’t think he offered much of an argument as to why that should be bad.

Bradley M. Gardner, China’s Great Migration: How the Poor Built a Prosperous Nation, is a good introduction to what the title promises.

Which of our public policy institutions are working well right now?

Chad R. asks me:

Which of our public policy institutions are working well right now?

It seems there are plenty of takes about *why* our institutions are under extreme stress, but precious few about which are still working properly.

The Supreme Court comes to mind…

I say plenty of them are working well:

1. The CBO remains independent and effective, even though I think they are treating the health care mandate incorrectly and overestimating its impact.

2. As for the courts, they remain powerful and effective.  But note: while I strongly disagree with Trump’s travel ban, some of the lower courts overstepped their bounds by taking away too much power from the executive, relative to law.  It’s as if the courts have become too strong — perhaps optimally so — in a kind of overshooting model.

3. The Senate.  Even though one party controls all branches of government, a variety of bad health care bills have come to naught, and that is after many earlier votes to repeal Obamacare.  It is less clear to me how the House is working, but that’s why we have bicameralism.  I don’t care how stupid you might think the process is, so far it is generating acceptable results.  Yum, yum, yum, I just love that democracy!

4. The media as investigators have been excellent, though as summarizers of what is really going on I see their performance as much weaker, due to selective reporting.

5. Think tanks: the lack of Trump infrastructure at this level has raised my estimate of think tank importance.  That said, I am not sure how many think tanks are influencing policy right now, but if nothing else the inability to have or assemble a good think tank is indeed important.

6. The bureaucracy, for the most part, including the Fed.  Admittedly, some parts of the bureaucracy, such as the State Department, are being throttled by the Executive branch.

What’s not working well?

I say the executive branch and the White House.  Destroying or limiting the value of alliances is one of the easiest things for a blundering president to do.  I also see a significant opportunity cost from not having a legislation-oriented, detail-savvy White House.  Still, they are doing a good job on regulatory reform and an excellent Supreme Court appointment has been made.

Most of all, the appointments process is not working well, some of that being the fault of the Senate too.

The main lesson?  American government isn’t quite the train wreck you might think, and I haven’t even touched on the states, counties, and cities.

My Conversation with Jill Lepore

Here is the transcript and podcast (no video).  Jill and I discuss Mary Pickford, Dickens in America, why the early United States did not blossom culturally, Steve Bannon as a character from a 19th century painting, what the Tea Party got wrong and right, H.G. Wells, her working class background, Doctor Who and Gilligan’s Island, Elizabeth Bishop, what Americans don’t like about New England, Stuart Little, how she got her start as a secretary at HBS, and many other topics.  Highly intelligent throughout, though note it is not easy to excerpt.  Here is one good bit:

COWEN: You’ve argued at times that people overestimate the connectedness of the present with the American past. It’s not just that the past is a foreign country as Peter Laslett suggested, but it’s indeed stranger in some sense. If we could undo those mistaken intuitions about, “Oh this is like the 1960s” or “This is like Andrew Jackson,” whatever the analogy may be, what’s a concrete example of how that could improve our understanding of the current world?

LEPORE: I like to think about it in a different structural way. That completely understandable desire to find a historical analogy is just like to take an accordion and compress it.


LEPORE: They make then just like now. So, “Oh I know, Trump is just like Andrew Jackson. It’s the same move. He’s appealing to the people. He’s unwilling to enforce the rulings of the Supreme Court. He’s overriding Congress in order to get the mandate.” Whatever it is that you want to say about those two people. And that seems to me really quite kooky.

A different move that I find much more edifying and historically defensible is to pull open the accordion and stretch it open as far as you can, so you can see the distance between now and Andrew Jackson, the distance between Trump and Jackson, and try to understand what happened between those two characters and those two presidencies that helps us to see transformation. It’s a little bit like some of the controversy over how to interpret the Constitution. Because originalism, to me, is like squishing that accordion all the way together. “What would James Madison think?” is the question that originalists want to ask. Whereas I want to know what happened between when Madison thought that and here where we are now. And that’s a very different kind of constitutional interpretation.

In 1987, when it was the 200th anniversary of the Constitutional Convention, there was a lot of hoopla. It was right after the Robert Bork nomination, and then originalism was very much the priority of the Reagan justice department under Edwin Meese, and there’s a lot of conversation about the filial piety of a bicentennial. And this is an exciting thing to think about, that 200th anniversary of the Constitution.

Thurgood Marshall, as you know, the first African American Supreme Court justice who’d argued Brown v. Board of Education in 1954 — he was asked, “Are you going to participate in the hoopla, the bicentennial hoopla of the Constitution?” He gives this incredibly powerful speech in which he says, “No. You know what I’m willing to celebrate, not that document, which was flawed. Let’s just understand the ways in which it was flawed. I will celebrate the 200 years since, the 200 years of struggle to make good on the promises of that document.” And it’s that kind of thinking, that kind of historical thinking that contributes to our popular culture and to our discussions of the relationship between the past and the present, more than that desire to really collapse things and say, “Oh it’s 2008; this is just like 1932.” It’s not. It’s really not like 1932.


LEPORE: I remained somewhat befuddled by how a lot of things happen in the world.