Wednesday assorted links
1. “The study shows that users with many more criminal verdicts, more time spent in foster care, better primary school grades, and higher childhood socioeconomic status are more hostile on social media, in part, because such factors predict online engagement in political discussions, which is a major correlate of hostility.” Link here.
2. Is annoyance the essence of love?
3. Mark Skousen on Gross Output and national income accounting.
5. “…the paper also describes seven pragmatic near-term reforms to promote anti-aging medicines.”
6. Daniel Ellsberg was a consistent doomster, made no excuses.
Holy Frak
Dialogue between an economist and a physicist
Interesting, but I think highly flawed on both sides. Here is one excerpt from the physicist:
Physicist: True enough. So we would likely agree that energy growth will not continue indefinitely. But two points before we continue: First, I’ll just mention that energy growth has far outstripped population growth, so that per-capita energy use has surged dramatically over time—our energy lives today are far richer than those of our great-great-grandparents a century ago [economist nods]. So even if population stabilizes, we are accustomed to per-capita energy growth: total energy would have to continue growing to maintain such a trend [another nod].
Second, thermodynamic limits impose a cap to energy growth lest we cook ourselves. I’m not talking about global warming, CO2 build-up, etc. I’m talking about radiating the spent energy into space. I assume you’re happy to confine our conversation to Earth, foregoing the spectre of an exodus to space, colonizing planets, living the Star Trek life, etc…
At that 2.3% growth rate, we would be using energy at a rate corresponding to the total solar input striking Earth in a little over 400 years. We would consume something comparable to the entire sun in 1400 years from now. By 2500 years, we would use energy at the rate of the entire Milky Way galaxy—100 billion stars! I think you can see the absurdity of continued energy growth.
I think it is easy enough for the economist to argue that energy, at some margin, has diminishing returns for creating utility. So we then have dematerialized economic growth, not an ever-growing population (oscillation back and forth?), and thus we do not fry the planet, or for that matter the galaxy. A general lesson of national income statistics is that if you play out exponentials for long enough, over centuries you are simply talking about very different things, rather than a simple exponential growth of present conditions.
Don’t bet against the dollar
That is the topic of my latest Bloomberg column, here is one point of several:
The crypto revolution also seems to be heading in some dollar-friendly directions. Much recent crypto growth has come in the area of stablecoins, as evidenced by Stripe’s acquisition last week of Bridge. Most stablecoins are denominated in dollars, and typically they are backed by dollar-denominated securities, if only to avoid exchange-rate risk. If “programmable monies” have a future, which seems likely, that will further help the dominant currency — namely, the US dollar.
You might think that other monies will become programmable too. But since stablecoins often are most convenient for international transactions, as well as for internet-connected transactions, the most likely scenario is that stablecoins concentrate interest in the dollar. The US has by far the most influence of any nation over how the internet works.
The piece has other points of note.
The robustness of coal?
Coal consumption in 2030 is now estimated 6% higher than only a year ago. That may sound small, but it amounts to adding the equivalent of the consumption of Japan, the world’s fourth-largest coal burner. By 2030, the IEA now believes coal consumption will remain higher than it was back in 2010…
One notable statistic: Two-thirds of the total increase in energy demand in 2023 was met by fossil fuels, according to the IEA.
Here is more from Javier Blas at Bloomberg. Via Nicanor.
New report on nuclear risk
Phil Tetlock is part of the study, from the Forecasting Research Institute. Obviously this is very importnt. From Tetlock’s email to me:
“In brief, this study is the largest systematic survey of subject matter experts on the risk posed by nuclear weapons. Through a combination of expert interviews and surveys, 110 domain experts and 41 experienced forecasters predicted the likelihood of nuclear conflict, explained the mechanisms underlying their predictions, and forecasted the impact of specific tractable policies on the likelihood of nuclear catastrophe.
Key findings include:
- We asked experts about the probability of a nuclear catastrophe (defined as an event where nuclear weapons cause the death of at least 10 million people) by 2045, the centenary of the bombings of Hiroshima and Nagasaki. Experts assigned a median 4.5% probability of a nuclear catastrophe by 2045, while experienced forecasters put the probability at 1%.
a. Respondents thought that a nuclear conflict between Russia and NATO/USA was the adversarial domain most likely to be the cause of a nuclear catastrophe of this scale, however risk was dispersed relatively evenly among the other adversarial domains we asked about: China/USA, North Korea/South Korea, India/Pakistan, and Israel/Iran.
- We asked participants about their beliefs on the likely effectiveness of several policy options aimed at reducing the risk of a nuclear catastrophe. Two policies emerged as clear favorites for most participants: a crisis communications network and nuclear-armed states implementing failsafe reviews. The median expert thought that a crisis communications network would reduce the risk of a nuclear catastrophe by 25%, and failsafe reviews would reduce it by 20%.”
You will find the report here.
Assorted links
1. How much do homeowners dislike density?
2. The views of the American public on AI.
3. Centaur is an AI that mimics human behavior, rather trying to be as smart as possible.
4. Nicholas Decker on how to learn economics.
5. Ezra interviews Vivek (NYT).
AfD vs. Bauhaus
By their aesthetics shall ye know them:
It shaped modern industrial design and continues to inspire architects and product designers the world over, but to some on Germany’s far right, Bauhaus is nothing to celebrate.
As the East German city of Dessau prepares to celebrate next year’s centenary of the famed design school’s move there, the far-right Alternative for Germany (AfD) has urged local legislators not to glorify Bauhaus’ cosmopolitan style ethos, saying it negated regional traditions.
The AfD’s proposal, debated and roundly rejected by the state parliament of Saxony-Anhalt earlier this week, sparked a predictable outcry: Bauhaus was part of the interwar flourishing of German avant-garde culture that was stamped out by the Nazis when they came to power in 1933.
There are many losers, so it is a debatable question today which political movement has the best aesthetics…
The Health and Employment Effects of Employer Vaccination Mandates
Health care facilities considering mandating staff vaccination face a difficult tradeoff. While additional vaccination coverage will directly reduce disease transmission within the facility, the imposition of a mandate may also cause vaccine-hesitant staff to quit, which could harm patient care. To study this tradeoff, we leverage comprehensive administrative data covering virtually all US nursing homes, including payroll-based records on approximately 500 million daily nurse shifts and weekly data on COVID transmission and mortality at each facility. We use a difference-in-differences framework to estimate the impact of employer-imposed vaccine mandates at 581 nursing homes on disease spread, employment outcomes, and several patient care metrics. While mandates did slightly increase staff turnover, the effects were concentrated on staff working less than 20 hours per week, and resulted in a reduction of less than two minutes per patient-day. Furthermore, there is only limited evidence of lower levels of care at mandate facilities in typically-monitored conditions such as patient falls, pressure ulcers, or urinary tract infections. In contrast, implementing a vaccine mandate led to large increases in staff vaccinations at mandate facilities, which directly led to less transmission of and lower patient mortality from COVID. We estimate that vaccine mandates saved one patient life for every two facilities that enacted a mandate, a large effect given the typical facility has around 100 beds. Our results suggest that the health benefits of mandates far outweigh the costs in terms of reduced patient care from staff turnover.
Yup. For some of you, it is time to read it and weep. Here is the full paper by
Sentences to ponder about 1812 America
…even with a population of only about 7.5 million, U.S. already had more business corporations than any other country, and possibly more than all other countries put together, securing its role as the world’s first “corporation nation.”
That is from Sylla and Wright, via the excellent Kevin Lewis.
Apologies, the great Frank Fukuyama still lives!
Good.
Monday assorted links
Apologies, the great Frank Fukayama still lives!
Good!
Principles of Economics Textbooks and the Market for Ice Cream
Rey Hernández-Julián and Frank Limehouse writing in the Journal of Economics Teaching write that very few principles of economics textbooks deal with modern information and digital tech industries:
The main takeaways of our review are highlighted by two stand-alone textboxes found in Mankiw’s (2023) textbook. This textbook has been regarded as one of the most dominant players in the principles of economics textbook market for over 20 years. In the introductory chapter of the 10th Edition (2023), “Ten Principles of Economics” there is a stand-alone textbox with the Netflix logo with the following caption: “Many movie streaming services set the marginal cost of a movie equal to zero”. However, there is no further explanation of this statement in the chapter and no presentation of the concept of zero marginal cost pricing in the remainder of the entire textbook. In Chapter 2 (“Thinking Like an Economist”), there is an In the News article from the New York Times, “Why Tech Companies Hire Economists”, but very little coverage in the text on how to apply microeconomic concepts to the tech industry. These two discussions of the tech industry in Mankiw’s text exemplify many of our findings from other texts….updated examples from the modern economy seem to be afterthoughts and detached from the central discussion of the text.
…There are some notable exceptions. The most significant coverage of these questions is in Chapter 16 of Cowen and Tabarrok’s Modern Principles of Microeconomics, 5th edition (2021). In this chapter, the authors discuss platform service providers, such as Facebook, Amazon, Google, Visa, and Uber, and the role they play in competing “for the market,” instead of “in the market.” They also discuss why the prevailing product is not necessarily the best one, how music is a network good, and why these platform services may give away goods for ‘free’.
I would also point out that our example of a constant-cost industry (flat long-run supply curve) is domain name registration! As we write in Modern Principles:
Now consider what happens when the demand for domain names increases. In 2005, there were more than 60 million domain names. Just one year later, as the Internet exploded in popularity, there were more than 100 million domain names. If the demand for oil nearly doubled, the price of oil would rise dramatically, but despite nearly doubling in size, the price of registering a domain name did not increase…the expansion of old firms and the entry of new firms quickly pushed the price back down to average cost.
In short, it’s called Modern Principles for a reason! Tyler and I are committed to keeping up with the times and not just adding the occasional box and resting on our laurels.
See Hernández-Julián and Limehouse for some further examples of how to introduce modern industries into principles of economics.
Effective Altruists and finance theory
One of the most admirable and impressive things about the EA movement is how many people in it will avidly learn about other areas. Whether it be animal welfare, mosquite bed nets, asteroid risk, or the properties of various AI programs, you can find numerous EAs who really have gone out of their way to master many of the details.
They don’t quite acquire expert knowledge, but due to their general facility in the application of reason, often they can outargue the experts themselves.
Yet one thing I have never met — ever — or seen on Twitter, is an EA who understands finance at a comparable level. Never.
And that is odd, because EAs so stress the import of probabilistic thinking.
If you pose the “have you thought through being short the market?” question, one hears a variety of answers that are what I call “first-order wrong.” That is, there may well be more sophisticated defenses of those points of view, but you just hear the first-order response, designed to dispose of the question without much further thought. A few of those responses are:
1. “Why should I have to gamble?” (Given your other views, it is hedging not gambling)
2. “There is already evidence I am right. My friends and I made a lot of money buying Nvidia stock.”
3. “I don’t know how to short the market.” Or “Amateur investors shoulnd’t short the market!”
4. “Did the stock market predict Hitler and WWII?”
5. “How possibly can I cash in if the world ends very suddenly? After all, the AGI has an incentive to deceive us.”
6. “But I don’t know when the world is going to end!”
7. “Why should I short the market when I can earn so much more going long on Nvidia!?”
8. “Well, I am not buying stocks!”
9. “If the world is ending soon, what do I need money for?”
10. “But if the world doesn’t end, things will be really great.”
And more. (I’ve even heard “Are you short the market?”) I will leave it as an exercise to the reader to work out what is wrong with these responses. In most cases o1 and Claude can come to your aid, if needed.
I do believe that Aella, for one, is in essence short the market. Good for her, as she is also pessimistic about AI. But here are two responses I have never ever heard, not once:
11. “I’m going to sit down and study finance and see if I can find a feasible way to short the market. If I can’t I will feel sad, but I might get back to you for further guidance.”
12. “Soon enough, AI will be good enough to tell me how to short the market intelligently. Then I am going to do this — thanks for the tip! ”
Nope never. The absence of the last one from the discourse I find especially odd. “AGI will be powerful enough to destroy us, but not good enough to help me do an effective short!” OK…
The sociology here is more indicative of what is going on than the arguments themselves. Because the EAs, rationality types, and doomsters here generally are very good at learning new things.
Of course, once shorting the market even enters serious contemplation (never mind actually doing it), you also start seeing current market prices as a kind of testing referendum on various doomster predictions. And suffice to say, market prices basically offer zero support for all of those predictions. And that is embarrassing, whether you should end up shorting the market or not. Many EAs and rationality types are also fans of prediction markets in other contexts.
I nonetheless would urge many EA, rationality, and AI doomster types to learn more basic finance. It can liberate you from various mental chains, and it will be useful for the rest of your life, no matter how long or short that may be.
Addendum: So, so many fallacies in the comments. Here is one brief response I wrote: “Just keep on buying puts with a small pct. of your wealth. You don’t have to use leverage, though of course a real pessimist should. What is hard about shorting is that the world isn’t in fact going to end! You are smuggling in categories from very different contexts. And none of this requires anything remotely like a “strong version of market efficiency.” It does require that the end of world is bearish for prices at some point! [once people recognize doom might be coming, not when doom finally arrives]”