Gender and competition

From American Economic Journal, Applied Economics:

“Do Women Give Up Competing More Easily? Evidence from the Lab and the Dutch Math Olympiad,” by Thomas Buser and Huaiping Yuan.

We use lab experiments and field data from the Dutch Math Olympiad to show that women are more likely than men to stop competing if they lose. In a math competition in the lab, women are much less likely than men to choose competition again after losing in the first round. In the Math Olympiad, girls, but not boys, who fail to make the second round are less likely to compete again one year later. This gender difference in the reaction to competition outcomes may help to explain why fewer women make it to the top in business and academia.

Here is the link to the paper.  Here are earlier, ungated versions.

Is Bitcoin Halal?

Press TV: A report by Iran’s Mehr news agency last week showed that bitcoin miners were using power in buildings and properties that enjoy a lower price for electricity, including factories, greenhouses, government offices and mosques.

…A spokesman of Iran’s Ministry of Energy said on Monday that the country’s power grid had become unstable as a result of increased mining of cryptocurrencies.

Bitcoin mining in a mosque may seem outré but at least it’s not money lenders in the mosque. In fact, Bitcoin is halal, at least according to one source (quoted here):

As a payment network, Bitcoin is halal. In fact, Bitcoin goes beyond what more conventional closed banking networks offer. Unlike conventional bank networks which use private ledgers where there’s no guarantee that the originator actually owns the underlying assets, Bitcoin guarantees with mathematical certainty that the originator of the transfer owns the underlying assets. Conventional banks operate using the principle of fractional reserve, which is prohibited in Islam.

Muhammad was a merchant and much more open to business than some traditional Christian interpretations. For example, compare Jesus, “it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God” with one of Muhammad’s sayings:

Abu Said related that the Prophet said: The truthful and trustworthy businessman will be in the company of Prophets, saints and martyrs on the Day of Judgment. (Darimi, Tirmidhi)

Libra as a medium of exchange

I’ve already outlined the case for how Libra might be able to significantly lower the 7-8% costs and commissions currently charged for making remittances.  That would make Libra a widely used means of payment.  I am less optimistic, however, about Libra being widely used as a medium of exchange.

Let’s say the core rate of inflation in a country is eight percent, which is about the current rate of price inflation in Myanmar.  It is still not the case that an unbanked farmer holds currency for the entire year (he is more likely to buy land or animals as a means of large-scale saving).  I am not sure what monetary velocity is for this group of people (readers?), but say currency turns over four times a year on average.  That is in essence a two percent tax on currency holdings, not an eight percent tax.  I don’t think that individuals will switch monies for such a small gain, noting that decreasing their demand for money (i.e., increasing currency velocity) is another possible response.

If an unbanked farmer is in debt, I would think the velocity of currency would be well over 4x a year (consider monthly microcredit borrowings and repayments), although certainly some MR readers can enlighten us here.

A few decades ago, when inflation was much more common, it was generally believed that people were not very interested in switching monies until inflation rates hit about forty percent.  I am not sure if that same number would hold today, but of course that is pretty high.  Furthermore, the countries with the highest inflation rates, such as Venezuela, can be impossible to do business in.

Don’t forget that Libras are specified as paying zero nominal interest throughout.

You might think that Libras have some advantages over current e-monies and smart phone banking systems.  It is hard to make that judgment for a product which does not exist yet, but it is unlikely those advantages will run close to the range of seven to eight percent.

For those reasons I am more optimistic about Libra as a means of payment — most of all for remittances — than as a general medium of exchange.

Is free college a good idea?

C’mon people, this one should be a no-brainer, can’t you at least call upon your craven loyalty to the higher education lobby to reject the free tuition proposals from Warren and Sanders?:

Just three German universities placed in the top 100 world institutions in rankings compiled by Quacquarelli Symonds, a British education consultancy…

In Germany, public funds covered $14,092 per student in 2015, the latest year for which the OECD has compiled numbers. In the United States, public funds covered $10,563 per student. But once private money was taken into account, U.S. university spending was far higher: $30,003 per student, compared with $17,036 in Germany…

“The best German universities look a lot like the University of Colorado. It’s not going to be like the top privates. It’s not even going to be like the top publics,” said Alex Usher, a Canadian education consultant who has studied how countries fund their university systems. “They’re perfectly good schools. They churn out good graduates. They’re not as focused on creating an elite. And in many ways that’s what the top systems in the United States are trying to do.”

The German system is entirely defensible if you believe that higher education is largely a matter of wasteful signaling; that is not my view, but believe it or not I know a few people who hold it.

The simple reality is that when it comes to higher education policy, President Trump is much better than the Democratic Party thought leaders.


Here is the full WaPo article by Michael Birnbaum.


New Yorker: On May 13, 1943, Axis forces in North Africa surrendered. The Allies suddenly found themselves saddled with nearly three hundred thousand prisoners of war, including the bulk of General Erwin Rommel’s famed Afrika Korps. Unable to feed or house their share, the British asked their American comrades to relieve them of the burden. And so, by the tens of thousands, German soldiers were loaded aboard Liberty Ships, which had carried American troops across the Atlantic. Eventually, some five hundred P.O.W. camps, scattered across forty-five of the forty-eight United States, housed some four hundred thousand men. In every one of those camps, the Geneva conventions were adhered to so scrupulously that, after the war, not a few of the inmates decided to stick around and become Americans themselves. That was extraordinary rendition, Greatest Generation style.

That’s the opening to a piece by Hendrik Hertzberg from 2011 and thus the piece is motivated neither by President Trump nor about separating children from their parents on the border. For that reason it is perhaps more relevant to these issues than otherwise. We can and have been worse but let no one say that we have not and cannot be better.

Hat tip: Jason Kuznicki.

Model this (spoiled rich kids edition)

  • “About 80 percent of respondents reported drinking alcohol at least two or three times a month, and 39 percent reported drinking at least twice a week.” (60% reported drinking once a week or more)
  • “Students who came from lower-income households were much less likely to drink than their wealthier peers; 35 percent of respondents whose parents make less than $40,000 in combined income drank at least once a week while that figure was 69 percent for students whose parents make at least a combined $250,000.”

Via Tyler R.

Is Los Angeles the next Silicon Valley?

That is the theme of my latest Bloomberg column, here is one excerpt:

How could L.A.’s tech scene develop even further? Imagine that virtual reality is the “next big thing” and the gamification of just about everything, including education, proceeds apace. For the next generation of startups, that might throw the balance of power in the direction of expertise in entertainment and design — a sense of the theatrical, in other words, intermediated through tech. That could favor the culture of Los Angeles and Hollywood. Southern California also has a strong background in aerospace and military contracting, two areas that could produce a spillover effect for the next tech booms, especially if they involve transportation. The region also remains the leading U.S. manufacturing center, and that too could be a source of future synergies.


Northern California had an original advantage over Southern California as a center of free thinking and thus as a tech hub. Think back to Haight-Ashbury, the 1960s, Beatniks, LSD and the Whole Earth Catalog, the psychedelic movement, the bohemian and gay cultures of San Francisco. All of that bred an atmosphere of rebellion, and it helped birth the personal computer and a large movement of non-conformist hippie programmers, often working out of their proverbial garages.

But those cultural roots have largely faded, and if anything today San Francisco and the Bay Area are better known for political correctness and a conformist culture of scolding and groupthink. That can’t be good for the region’s long-term creativity.

There is much more at the link.

Libra and remittances

Dante Disparte, as interviewed by Ben Thompson ($$, but you should subscribe to Ben):

One example is the use case of international money transfers or remittances. Globally, the remittance cash flow is projected to be about $715 billion in 2019, and on average…you are seeing between seven and ten percent of transfer costs, and in some instances much higher than that in the teens. For a product and an outcome from the sender and receiver point of view, that is not only very slow, it often takes a few days to clear on the receiving end, it is [extremely expensive]. There are direct payment rails that are just technology powered that do a lot in terms of advancing efficiency, but pre-blockchain it would have been very, very hard to conceive of a network of international payments that could do that at near zero cost instantaneously while at the same time not sacrificing the type of ledgering and transaction information that would enable the world to begin to do that securely. So that would be one amazing use case that could put billions and billions of dollars back into the market by eliminating as many of these fees as possible, while at the same time putting billions of dollars into the hands of people around the world in real time.

Here is my current understanding of Libra/Calibra, at least within this particular context, noting again that my understanding may be wrong or incomplete.  These transfers would not go through the current banking system as we know it, but rather through a blockchain with say 100 or so (quite legitimate) participants enforcing some kind of “proof of stake” standard.  Some form of “proof of stake-equivalent of mining fees” would have to be paid, either explicitly or implicitly, and those arguably could be much lower than current remittance costs, noting that the actual operation of proof of stake in this setting remains to me murky.  Still, it would largely avoid the current mining fees associated with Bitcoin.  On net, one is trading in the current regulatory and clearing and Western Union branch costs for these future proof of stake costs.  Do you think the Libra Association can run a proof of stake system for less say than $100 billion?

“But don’t you have to convert your Libras back into mainstream fiat currencies?”  Well, maybe you might, but that is simply the cost of showing up at the relevant financial institutions and claiming redemption.  Those costs also could be much lower than the current fees associated with remittances.  What is sent through the blockchain network simply can be Libras, as I understand it, with varying assumptions on how much people will hold Libras rather than converting them.

To use a historical analogy, think of this as substituting “the transfer of paper claims to gold” for “claims to gold,” but in a one hundred percent reserves setting.  It can be (and indeed was) much cheaper to send around the paper than the gold, and yet the paper still was a claim to the gold.  The Libra is a kind of parallel, redeemable currency, legally not within standard banking systems, but still redeemable in terms of mainstream fiat currencies which are within standard banking systems.  “Create a synthetic claim which can be traded more cheaply” would be my version of the ten-word slogan.

Another slightly wordier slogan might be: “let’s actually separate the means of payment from the medium of exchange by creating a new synthetic asset, because those two things actually should not be the exact same asset.”

Of course it still remains to be seen in which countries regulators will allow this to happen.  How persuasive is the promise of one hundred percent reserves?  I don’t mean to speak for Libra/Calibra here, but I believe they are suggesting (or implying?) that the proof of stake system for making and validating transfers could in essence enforce relevant regulations against money laundering, illegal transfers, and the like.

It is a quite separate (but possible) claim to believe that libras could serve as an effective medium of exchange at a retail level, and perhaps I will cover that in a separate post.  That would mean that both the medium of exchange and means of payment should be new and different assets, a much stronger claim.

Here are my earlier questions about Libra, with responses.

How to fight neo-Nazis is beer supply really so inelastic in the short run?

Residents in Ostritz, Germany, banned together recently to stick it to a group of neo-Nazis in the only way they know how — by buying up all the town’s beer before they do.

More than 200 crates were scooped up by locals as they prepared for the arrival of “Shield and Sword” (SS) festival attendees, who have a notorious reputation for being far-right activists obsessed with Nazi culture, the BBC reports

Residents began buying up all the booze because they were worried that festivalgoers would try to purchase some at local stores and supermarkets, according to the BBC, which cited interviews with the German newspaper Bild.

Here is the full article, via Ian Bremmer.

Will price transparency in health care markets work?

The scholarship suggests that more transparency in health care could backfire, causing prices to rise instead of fall…

“I don’t know if you have had the misfortune of having health economists tell you about Danish cement,” said Amanda Starc, an associate professor of strategy at the Kellogg School of Management at Northwestern, one of several scholars who mentioned a paper with a punny name: “Government-Assisted Oligopoly Coordination? A Concrete Case.”

“Everybody loves the Danish concrete example!” said Matthew Grennan, an assistant professor of health care management at Wharton, who has studied the effects of price transparency on hospital purchases.

The Danish government, in an effort to improve competition in the early 1990s, required manufacturers of ready-mix concrete to disclose their negotiated prices with their customers. Prices for the product then rose 15 percent to 20 percent.

The reason, scholars concluded, is that there were few manufacturers competing for business. Once companies knew what their competitors were charging, it was easy for them to all raise their prices in concert. They could collude without the sort of direct communication that would make such behavior illegal. It wasn’t easy for new companies to undercut the existing ones, because the material hardens so fast that you can’t ship it far…

Research on gasoline markets has likewise found that publicizing prices appears to enable collusion in places where there are only a few competitors. But among more plentiful Israeli supermarkets, a database of prices appears to have lowered them.

Scholars at the Federal Trade Commission put out a paper in 2015 cautioning against the kind of price transparency that the president is embracing.

That is all from Margot Sanger-Katz (NYT).  And via Ilya Novak, here is a recent piece by Zach Y. Brown:

This paper examines whether information frictions in the market for medical procedures lead to higher prices and price dispersion in equilibrium. I use detailed data on medical imaging visits to examine the introduction of a state-run website
providing information about out-of-pocket prices for a subset of procedures. Unlike other price transparency tools, the website could be used by all privately insured individuals in the state, potentially generating both demand- and supply-side effects. Exploiting variation across procedures available on the website as well as the timing of the introduction, estimates imply a 3 percent reduction in spending for visits with information available on the website. This is due in part to a shift to lower cost providers, especially for patients paying the highest proportion of costs. Furthermore, supply-side effects play a significant role—there are lower negotiated prices in the long-run, benefiting all insured individuals even if they do not use the website. Supply-side effects reduce price dispersion and are especially relevant when medical providers operate in concentrated markets. The supply-side effects of price transparency are important given that high prices are thought to be the primary cause of high private health care spending in the US.

I hope we learn more about this soon.

From the comments, on alcohol abuse

I refer you to Prevalence of 12-Month Alcohol Use, High-Risk Drinking, and DSM-IV Alcohol Use Disorder in the United States, 2001-2002 to 2012-2013. My apologies for not being able to locate the primary data sooner.

Key summary quotes below:

Twelve-month alcohol use significantly increased from 65.4% in 2001-2002 to 72.7% in 2012-2013, a relative percentage increase of 11.2%

The prevalence of 12-month high-risk drinking increased significantly between 2001-2002 and 2012-2013 from 9.7% to 12.6% (change, 29.9%) in the total population.

The prevalence of 12-month DSM-IV AUD increased significantly from 8.5% to 12.7% (change, 49.4%) in the total population.

Twelve-month DSM-IV AUD among 12-month alcohol users significantly increased from 12.9% to 17.5% (change, 35.7%) in the total population.

At the end of the day, I am still going to trust outcomes data over survey data. People lie, autopsies don’t. What I know is that acute alcohol poisoning increased by 700% in 20 years. You die from acute alcohol poisoning not because you slowly got sick over years, but because you drank so much so quickly that your body is overwhelmed. And this is in spite of the medical profession getting better at hemodialysis to bring down acutely toxic ethanol poisoning.

What I also know is that alcohol related hepatic deaths bottomed out in 2003 and have since been rising rapidly (~50% increase). This is due to the fact that the generation socialized by prohibition had lower lifetime alcohol use and problematic alcohol use than the generations before or after. As that generation died off, or aged out, successive generations who drank more started refilling the hepatic wards. Even more fun for every age bracket, we are seeing more alcohol related hepatic death than we saw a decade ago for those same age brackets excepting only the youngest cohorts.

These are basically impossible to square with a thesis of no substantial change in drinking patterns. They fit quite nicely with formal epidemiological surveys showing more problematic drinking and a shift in alcohol consumption.

That is from “Sure,” see also his/her other comments in the longer thread.