Thursday assorted links
1. J.D. Vance models the UAP world.
2. “…wages at 50 are better predicted by cognitive skills at 16 than by cognitive skills at 50.”
3. Mississippi River fact of the day.
4. NYT profile of Helen DeWitt.
5. Do food stamps increase spending on food?
6. “More than 100 people have been injured by bears in Japan this year, and 11 have died, a record. Now the government is preparing to dispatch the military to one hard-hit area to help deal with the problem.” (NYT)
The microfoundations of the baby boom?
Between 1936 and 1957, fertility rates in the U.S. increased 62 percent and the maternal mortality rate declined by 93 percent. We explore the effects of changes in maternal mortality rates on white and nonwhite fertility rates during this period, exploiting contemporaneous or lagged changes in maternal mortality at the state-by-year level. We estimate that declines in maternal mortality explain 47-73 percent of the increase in fertility between 1939 and 1957 among white women and 64-88 percent of the increase in fertility among nonwhite women during our sample period.
Here is the full article by Christopher Handy and Katharine Shester, via the excellent Kevin Lewis. Overall, I take this as a negative for the prospect of another, future baby boom? We just cannot make maternity all that much safer, starting from current margins.
My Conversation with the excellent Jonny Steinberg
Here is the audio, video, and transcript. Here is the episode summary:
Tyler considers Winnie and Nelson: Portrait of a Marriage one of the best books of the last decade, and its author Jonny Steinberg one of the most underrated writers and thinkers—in North America, at least. Steinberg’s particular genius lies in getting uncomfortably close to difficult truths through immersive research—spending 350 hours in police ride-alongs, years studying prison gangs and their century-old oral histories, following a Somali refugee’s journey across East Africa—and then rendering what he finds with a novelist’s emotional insight.
Tyler and Jonny discuss why South African police only feel comfortable responding to domestic violence calls, how to fix policing, the ghettoization of crime, how prison gangs regulate behavior through century-old rituals, how apartheid led to mass incarceration and how it manifested in prisons, why Nelson Mandela never really knew his wife Winnie and the many masks they each wore, what went wrong with the ANC, why the judiciary maintained its independence but not its quality, whether Tyler should buy land in Durban, the art scene in Johannesburg, how COVID gave statism a new lease on life, why the best South African novels may still be ahead, his forthcoming biography of Cecil Rhodes, why English families weren’t foolish to move to Rhodesia in the 1920s, where to take an ideal two-week trip around South Africa, and more.
Excerpt:
COWEN: My favorite book of yours again is Winnie and Nelson, which has won a number of awards. A few questions about that. So, they’re this very charismatic couple. Obviously, they become world-historical famous. For how long were they even together as a pair?
STEINBERG: Very, very briefly. They met in early 1957. They married in ’58. By 1960, Mandela was no longer living at home. He was underground. He was on the run. By 1962, he was in prison. So, they were really only living together under the same roof for two years.
COWEN: And how well do you feel they knew each other?
STEINBERG: Well, that’s an interesting question because Nelson Mandela was very, very in love with his wife, very besotted with his wife. He was 38, she was 20 when they met. She was beautiful. He was a notorious philanderer. He was married with three children when they met. He really was besotted with her. I don’t think that he ever truly came to know her. And when he was in prison, you can see it in his letters. It’s quite remarkable to watch. She more and more becomes the center of meaning in his life, his sense of foundation, his sense of self as everything else is falling away.
And he begins to love her more and more, and even to coronate her more and more so that she doesn’t forget him. His letters grow more romantic, more intense, more emotional. But the person he’s so deeply in love with is really a fiction. She’s living a life on the outside. And you see this very troubling line between fantasy and reality. A man becoming deeply, deeply involved with a woman who is more and more a figment of his imagination.
COWEN: Do you think you learned anything about marriage more generally from writing this book?
STEINBERG: [laughs] One of the sets of documents that I came across in writing the book were the transcripts of their meetings in the last 10 years of his imprisonment. The authorities bugged all of his meetings. They knew they were being bugged, but nonetheless, they were very, very candid with each other. And you very unusually see a marriage in real time and what people are saying to each other. And when I read those lines, 10 different marriages that I know passed through my head: the bickering, the lying, the nasty things that people do to one another, the cruelties. It all seemed very familiar.
COWEN: How is it you think she managed his career from a distance, so to speak?
STEINBERG: Well, she was a really interesting woman. She arrived in Johannesburg, 20 years old in the 1950s, where there was no reason to expect a woman to want a place in public life, particularly not in the prime of public life. And she was absolutely convinced that there was no position she should not occupy because she was a woman. She wanted a place in politics; she wanted to exercise power. But she understood intuitively that in that time and place, the way to do that was through a man. And she went after the most powerful rising political activists available.
I don’t think it was quite as cynical as that. She loved him, but she absolutely wanted to exercise power, and that was a way to do it. Once she became Mrs. Mandela, I think she had an enormously aristocratic sense of politics and of entitlement and legitimacy. She understood herself to be South Africa’s leader by virtue of being married to him, and understood his and her reputations as her projects to endeavor to keep going. And she did so brilliantly. She was unbelievably savvy. She understood the power of image like nobody else did, and at times saved them both from oblivion.
COWEN: This is maybe a delicate question, but from a number of things I read, including your book, I get the impression that Winnie’s just flat out a bad person…
Interesting throughout, this is one of my favorite CWT episodes, noting it does have a South Africa focus.
Noah Smith has economic ideas for Japan
Excerpt from the opening:
Fortunately, Japan is in an OK macroeconomic situation right now. Government debt, the country’s thorniest problem, is actually falling as a percent of GDP, thanks in part to higher inflation and in part to rising corporate profits and tax revenues…
The deflation problem that bedeviled Japan for decades has finally been defeated. And at the same time, unemployment in Japan remains very low…
This means that Takaichi and her cabinet don’t need to focus as much energy and attention on macroeconomics, as Abe did. There is no need for further stimulus, monetary or fiscal. Instead, Takaichi is free to concentrate on improving Japan’s underlying economic model, in order to promote productivity and growth.
Noah has six specific ideas of note, starting with improving capital markets. Here is the whole post.
Wednesday assorted links
The Game Theory of House of Dynamite
In the comments to yesterday’s review of House of Dynamite, some people balked at the movie’s central premise: that the U.S. has to decide—immediately—whether to launch a retaliatory nuclear strike. “Why not wait?” they asked. “Why not take a few days, even a few months, to figure out who actually fired the missile?”
That question even came up at GMU lunch, so it’s worth explaining why the time pressure is realistic. No real spoilers.
The U.S. doesn’t know whether the missile came from China, Russia, or North Korea and that seems to weigh in favor of waiting and gathering evidence. But here’s the problem: Russia, China, and North Korea don’t know what the U.S. knows. Suppose Russia thinks the U.S. believes Russia launched the strike. Then Russia expects retaliation. Expecting retaliation makes it rational for Russia to attack first. So Russia mobilizes.
The mobilization convinces the U.S. that Russia is preparing to attack—so now it’s rational for the U.S. to strike first. Which, of course, confirms Russia’s fears and pushes them closer to launching.
Even if the U.S. doesn’t actually think Russia fired the missile, it might still attack. Why? Because it believes that Russia believes the U.S. believes Russia did.
In this belief spiral, delay brings doom not clarity. In the film, Jake Baerington tries to break the doom loop but the logic is strong and amplified by speed and fear. Breaking the loop isn’t impossible, but as the movie suggests, it requires an act that cuts against immediate self-interest.
Informative jury disagreement
The article introduces a counterintuitive argument, contending that jury disagreement on the defendant’s guilt-a nonunanimous conviction-may well provide a more informative signal, compared to consensus. Because stronger consensus implies higher likelihood of herding, it is shown that beyond some threshold, further accumulation of votes to convict would carry negligible epistemic contribution, barely enhancing the posterior probability of guilt. On the other hand, while dissenting votes provide a direct signal of innocence, they indicate that herding has not been involved in the decision-making process, hence increase the epistemic contribution of any vote generated by said processincluding votes to convict-and may thus offer an indirect signal of guilt, potentially increasing the posterior. This unravels the informational value of dissent and the possible disadvantageousness of consensus.
That is from a new paper by Roy Baharad, via the excellent Kevin Lewis.
On a possible China deal
Tyler Cowen, Free Press columnist and Holbert L. Harris Chair of Economics at George Mason University:
What do I want from a U.S. trade deal with China? Most of all, stability and predictability. America has a great deal it needs to do to “deal with China.” That might include boosting our own supplies of rare-earth elements, maintaining our lead in generative AI, and making sure that enough high-quality chips come from somewhere other than Taiwan.
Vigorous action is required on all these fronts. While we are at the wish-making stage, how about better fiscal policies for long-term sustainability, improved science funding, a more rapid and effective military procurement system, and an education system with fewer holes?
But here is the thing—none of those will be accomplished through a trade deal with China. Success or failure on those fronts will depend solely on ourselves. The purpose of a trade deal, at this point, should simply be to put U.S.-China relations back on a normal footing. We are not going to stop significant supplies of dangerous drugs from entering the United States, no matter what China does or does not agree to. We are not going to end China’s trade surplus with us, nor should we fear that trade surplus. And we are not going to end the ability of the Chinese government to have some influence over the real value of its currency, just as we have that same ability.
We could and should turn the drama down a notch. Whether that is what you will get from this episode in the reality TV season, however, remains to be seen.
Here are numerous other contributions, including from Dan Wang and Niall Ferguson.
Tuesday assorted links
1. Did mass species extinctions peak one hundred years ago?
4. “Delegating to an AI whose alignment is unknown.”
5. Those new service sector jobs: pumpkinstylists (WSJ).
6. South Korean stock market is the best performing this year (FT).
What to Watch
A House of Dynamite (Netflix) is an expertly crafted political thriller about living 18 minutes from nuclear annihilation. Directed by Kathryn Bigelow, it shares thematic DNA with two of her previous films, The Hurt Locker and Zero Dark Thirty. (Bigelow also directed the cult classic Point Break and the underrated Strange Days). The film tightens the tension in the first 18 minutes, releases it just enough to breathe, then resets and winds you up again—and then again. There is no climax. That frustrates some viewers, but the ending makes the point: the film is fiction but we are the ones living in a house of dynamite. Nuclear war is underrated as a problem–see previous MR posts. The film is technically and politically well researched, which is one reason the Pentagon is trying to pushback on some figures. If HOD is to be charged with a lack of realism, it’s in the competency of the within 18-minute response (although there are some excellent phone scenes.)
Springsteen: Deliver Me from Nowhere isn’t a conventional rock biopic. It focuses on the making of Nebraska, Springsteen’s bleakest and most intimate album—a solo acoustic recorded at his home in New Jersey on a cassette. Nebraska’s songs portray not the merely unlucky, but the damned: people who drag others down with them.
I saw her standing on her front lawn
Just a-twirling her baton
Me and her went for a ride, sir
And ten innocent people died…I can’t say that I’m sorry
For the things that we done
At least for a little while, sir
Me and her, we had us some fun
Springsteen was depressed at the time. The film has three love stories, the first and least important is between Springsteen and his then girlfriend. The second is Springsteen’s relationship with his troubled father. The third is with his manager, Jon Landau. We should all be so lucky to have someone who loves us as much as Landau loved Springsteen.
Jeremy Allen White, as Springsteen, gives a strong performance; in some shots he looks uncannily like him. He sings most of the songs himself and excels on the Nebraska material, though he can’t match Springsteen’s power and electricity on the brief E Street Band sequences. Jeremy Strong is excellent as Landau.
I liked Deliver Me from Nowhere, but it doesn’t demand a big screen, you can watch at home.
It’s not a movie, but for my money Wings for Wheels: The Making of “Born to Run”, included with the 30th-anniversary edition of BTR, remains the definitive portrait of Springsteen at work. It shows Springsteen driving the E Street Band through take after take, unrelenting and exhausting, in pursuit of the sound in his head—a great study in creative obsession. Pairs well with the very different process documented in Peter Jackson’s Get Back.
A new critique of RCTs
Randomized Controlled Trials (RCTs) are the gold standard for evaluating the effects of interventions because they rely on simple assumptions. Their validity also depends on an implicit assumption: that the research process itself—including how participants are assigned—does not affect outcomes. In this paper, I challenge this assumption by showing that outcomes can depend on the subject’s knowledge of the study, their treatment status, and the assignment mechanism. I design a field experiment in India around a soil testing program that exogenously varies how participants are informed of their assignment. Villages are randomized into two main arms: one where treatment status is determined by a public lottery, and another by a private computerized process. My design temporally separates assignment from treatment delivery, allowing me to isolate the causal effect of the assignment process itself. I find that estimated treatment effects differ across assignment methods and that these effects emerge even before the treatment is delivered. The effects are not uniform: the control group responds more strongly to the assignment method than the treated group. These findings suggest that the choice of assignment procedure is consequential and that failing to account for it can threaten the interpretation and generalizability of standard RCT treatment effect estimates.
That is the job market paper of Florencia Hnilo, from Stanford, who also does economic history,
Trump and the Americas
That is the topic of my latest Free Press column, here is one excerpt:
And in this system, where is the dominant American sphere of influence likely to be? North America and Latin America. These regions are removed from the rest of the world by large oceans; they share time zones; and there are plenty of Latin Americans in the United States, creating linguistic, personal, and business ties. America’s connections with Canada are even more obvious. China may buy lots of commodities from Latin American countries, but it is unlikely ever to have comparably close connections, if only for reasons of language, distance, and culture.
And this:
Let’s start with Argentina. Milei is trying to bring freer markets and fiscal responsibility to Argentina. If he succeeds, many in the region will copy his formulas. But if he fails, free markets might end up discredited. So, in the Trumpian view, it is very important to throw him a lifeline. Trump sees the United States’ $20 billion economic support package to Argentina not just as a “bailout,” but as an attempt to shape the entire ideological direction of South America.
The article offers many further specific points.
Agustín Etchebarne on Milei and the election
Passed along to me by the excellent Gonzalo Schwarz, I will not double indent:
“Against all odds, Javier Milei achieved a major national victory, surpassing the expectations of polls that had predicted a technical tie, and doing so in a context where markets were deeply pessimistic and heavily dollarized.
Despite having most of the media against him, the president obtained a resounding 41% of the vote, compared with 24% for Kirchnerism and 9% for the more moderate Peronists.
In total, 75% of Argentines rejected a return to populism and endorsed the path of structural reforms and economic openness.This result anticipates a day of strong market recovery: Argentine bonds and stocks are expected to rise sharply, interest rates in pesos to fall, and the dollar to drop significantly on Monday. The outlook points toward an economic recovery.
Even the U.S. Treasury—which invested in peso-denominated instruments under the management of Scott Bessent—will likely make a profit, as the appreciation of the peso will increase the value of those assets.
The message from the ballot box is clear: Argentines support a president who aims to move toward a modern capitalist economy, with the goal of placing the country among those with the highest levels of economic freedom in the world.
Election Results
• La Libertad Avanza swept the country with 40.7% of the vote, compared with 32% for Fuerza Patria (the Kirchnerist coalition), 7.1% for Provincias Unidas—which failed to win in any district—and 4.6% for the six local ruling parties.
• Milei gained 10 points compared with 2023 (when he obtained 30%), while Kirchnerism fell from 36% to 24%.
• LLA won in 16 districts, standing out in Buenos Aires City (Senate) and Mendoza with more than 50%, in Santa Fe and Córdoba with over 40%, and especially in Buenos Aires Province, where Santilli overturned a 13-point deficit from the September 7 election and won with 41.5%.
• Voters also reaffirmed the strategic alliance with the United States, which is now the most explicit in recent history.
• Unlike what happened in 2017 with Macri—when a similar victory was quickly followed by a loss of support—this time the outlook suggests a sustained economic recovery, driven by lower interest rates and accelerated investment.
New Balance of Power in Congress
• In the Chamber of Deputies (house of representatives), the LLA + PRO alliance becomes the largest bloc with 110 seats, followed by Fuerza Patria (the Kirchnerist coalition) + the Left with 100 and the dialogist bloc with 47.
The government will need to negotiate with 19 of the 47 dialogists to pass legislation (127 votes for a simple majority), but it already holds a guaranteed veto power with 85 deputies.
• In the Senate, Fuerza Patria (the Kirchnerist coalition) remains the largest minority, though it loses 7 seats and drops to 26; LLA and PRO reach 24 senators, obtaining the one-third threshold needed to block initiatives.
The dialogists, with 22 seats, retain negotiating power: the government must reach agreements with 13 senators for a quorum and 12 for a simple majority.
Outlook and Political Message
Milei’s post-victory speech was conciliatory and strategic.
He renewed his call for governors and rational political forces to discuss a package of key structural reforms—labor, pension, and tax—and invited them to revive the May Pact as a meeting point for a new institutional contract.
La Libertad Avanza thus emerges stronger than ever, positioned to build the majorities needed to advance the comprehensive modernization of the state and the economy, consolidating a new stage of growth, stability, and individual freedom.”
Here is the author, here is Gonzalo Schwarz.
Monday assorted links
2. A nuclear fission regulatory blank slate?
3. Chris Ferguson on the latest cellphone ban study: “No, the effect size is near zero. Unpublished study, not peer reviewed. And it conflicts with NAEP data which shows a Florida state-wide decline in standardized scores after implementing cellphone bans. It’s also not a “causal” study…there’s no control group.”
4. Lottery markets in everything.
5. Whither music innovation in NYC?
6. John Cochrane on tariffs and delayed inflation.
7. Kimi 2 tries to write a Neruda poem (in Spanish).
8. The microplastics thing is not really holding up.
9. Report from the Berkeley Progress conference, from Roots of Progres, for me it was very inspiring to be there.
Privatizing Law Enforcement: The Economics of Whistleblowing
The False Claims Act lets whistleblowers sue private firms on behalf of the federal government. In exchange for uncovering fraud and bringing the case, whistleblowers can receive up to 30% of any recovered funds. My work on bounty hunters made me appreciate the idea of private incentives in the service of public goals but a recent paper by Jetson Leder-Luis quantifies the value of the False Claims Act.
Leder-Luis looks at Medicare fraud. Because the government depends heavily on medical providers to accurately report the services they deliver, Medicare is vulnerable to misbilling. It helps, therefore, to have an insider willing to spill the beans. Moreover, the amounts involved are very large giving whistleblowers strong incentives. One notable case, for example, involved manipulating cost reports in order to receive extra payments for “outliers,” unusually expensive patients.
On November 4, 2002, Tenet Healthcare, a large investor-owned hospital company, was sued under the False Claims Act for manipulating its cost reports in order to illicitly receive additional outlier payments. This lawsuit was settled in June 2006, with Tenet paying $788 million to resolve these allegations without admission of guilt.
The savings from the defendants alone were significant but Leder-Luis looks for the deterrent effect—the reduction in fraud beyond the firms directly penalized. He finds that after the Tenet case, outlier payments fell sharply relative to comparable categories, even at hospitals that were never sued.
Tenet settled the outlier case for $788 million, but outlier payments were around $500 million per month at the time of the lawsuit and declined by more than half following litigation. This indicates that outlier payment manipulation was widespread… for controls, I consider the other broad types of payments made by Medicare that are of comparable scale, including durable medical equipment, home health care, hospice care, nursing care, and disproportionate share payments for hospitals that serve many low-income patients.
…the five-year discounted deterrence measurement for the outlier payments computed is $17.46 billion, which is roughly nineten times the total settlement value of the outlier whistleblowing lawsuits of $923 million.
[Overall]…I analyze four case studies for which whistleblowers recovered $1.9 billion in federal funds. I estimate that these lawsuits generated $18.9 billion in specific deterrence effects. In contrast, public costs for all lawsuits filed in 2018 amounted to less than $108.5 million, and total whistleblower payouts for all cases since 1986 have totaled $4.29 billion. Just the few large whistleblowing cases I analyze have more than paid for the public costs of the entire whistleblowing program over its life span, indicating a very high return on investment to the FCA.
As an aside, Leder-Luis uses synthetic control but allows the controls to come from different time periods. I’m less enthused by the method because it introduces another free parameter but given the large gains at small cost from the False Claims Act, I don’t doubt the conclusion:
The results of this analysis suggest that privatization is a highly effective way to combat fraud. Whistleblowing and private enforcement have strong deterrence effects and relatively low costs, overcoming the limited incentives for government-conducted antifraud enforcement. A major benefit of the False Claims Act is not just the information provided by the whistleblower but also the profit motive it provides for whistleblowers to root out fraud.