Why sleep in a McDonald’s?

by  Tyler Cowen in

The number of people sleeping in McDonald’s outlets has increased six-fold over the past five years, a trend partly driven by rising rents and substandard housing that makes life especially unbearable in the city’s baking weather, a study has found.

The survey, organised by Junior Chamber International and conducted in June by volunteers, found 334 people had slept in a McDonald’s outlet nightly over at least the past three months. Of the 110 branches that operate 24 hours in the city, 84 had seen overnight sleepers.

This is a six-fold increase from a similar study in 2013, which found only 57 such people, popularly dubbed McRefugees or McSleepers.

A branch in Tsuen Wan hosted more than 30 sleepers, the highest among all branches, according to the latest study.

Researchers were able to interview 53 McRefugees aged between 19 and 79 in depth, and found 57 per cent of them had a job and 71 per cent of them had flats that they rented or owned, contrary to the common belief that these people tended to be jobless and homeless.

Saving on air conditioning costs, as well as comfort and security, topped a list of reasons given by these interviewees, followed by high rents, conflict with family members, the ability to develop social relations at the chain and substandard housing.

Here is the full story, via the excellent Kevin Lewis.

Airplane Maintenance is Offshored

by  Alex Tabarrok in

Where are most airplanes fixed? In foreign countries where the price of skilled labor is lower than in the United States.

US Airways and Southwest fly planes to a maintenance facility in El Salvador. Delta sends planes to Mexico. United uses a shop in China. American still does much of its most intensive maintenance in-house in the U.S., but that is likely to change in the aftermath of the company’s merger with US Airways.

Vanity Fair had a piece on this “Disturbing Truth” a few years ago. The VF piece presents a few anecdotes of safety violations at foreign maintenance facilities to stoke up fear. Naturally, no comparison to safety violations at US maintenance facilities is given. More serious data doesn’t bear out the worries of Vanity Fair. Worldwide airline safety is at an all time-high. Consider this amusing bit:

Even engine repairs and overhaul—the highly skilled aircraft-maintenance work that has remained largely in the U.S. and Europe—may follow heavy maintenance to the developing world. Emirates, the airline owned by the Gulf states, is constructing a $120 million state-of-the-art engine-repair-and-overhaul facility in Dubai.

Amusing because the world’s safest airline according to the German JACDEC (Jet Airliner Crash Data Evaluation Centre) is Emirates based in Dubai. Etihad the UAE’s second largest airline follows up closely. Chinese and South American airlines such as Sichuan Air score above most US airlines and Avianca, the El Salvador-Columbia airline, also scores highly. Of course, crashes are so rare that none of these rankings should be taken very seriously except in the sense that all of these airlines are very safe. Thus, I don’t worry much about where maintenance occurs. Indeed, if maintenance can be done for less we ought to buy more, so less expensive can mean safer.

Rather than fearing the offshoring of airplane maintenance we ought to ask how we can expand the concept. Medical tourism, for example, is growing. If foreign airplane maintenance is good enough for Delta then foreign human maintenance is good enough for me. Why don’t more US health insurance companies pay for medical procedures performed abroad? If a major medical insurer started to test and rate foreign providers and count some of them as in-service this could great alleviate fear increasing demand, lower costs, and put price pressure on US providers. Of course, we could also let in more foreign trained physicians and airplane mechanics.

Hat tip: Connor.

The microfoundations of intersectionality

by  Tyler Cowen in

Here is the introduction to the Wikipedia page on intersectionality:

Intersectionality is an analytic framework which attempts to identify how interlocking systems of power impact those who are most marginalized in society.[ Intersectionality considers that various forms of social stratification, such as class, race, sexual orientation, age, disability and gender, do not exist separately from each other but are interwoven together. While the theory began as an exploration of the oppression of women of color within society, today the analysis is potentially applied to all social categories (including social identities usually seen as dominant when considered independently).

So why might intersectionality matter?  I can think of a few reasons:

1. Perhaps the signal extraction problem becomes more difficult in a non-linear fashion, when you are trying to peer through discrimination and identify underused talent for those with “multiple non-conformities.”  You might have a good sense of what an undervalued black student will look like, but find it harder — indeed much harder — to identify an undervalued Surinamese Haitian trans female student in a wheelchair.

2. Multiple non-conformities are like tolls on a river.  When there are multiple tolls, it doesn’t help commerce much to remove any one of them.  Similarly, you might fix one dent in your car, but it may not be worthwhile to fix fifteen dents or indeed any one of them.  No, I am not saying that individuals with multiple non-conformities are, in a quality sense, like dents in a car.  Rather there is a common logic involving threshold effects.  If you will come across as highly unusual in any case, perhaps you will not spend money to buy a nice suit.  Or perhaps outside parties are more likely to help a person who has only one main “disability” or non-conformity to overcome, perceiving a much higher chance of success with the aid.  Non-linear effects can discourage effort in a wide variety of cases.

3. Marginalized or minority communities may themselves exhibit prejudice against other non-conformities (for instance, some parts of the Jamaican community seem to be especially biased against gay individuals).  That can make it harder for persons with multiple non-conformities to find allies.

4. Note that intersectionality may operate in a favor of a person rather than always operating against a person’s interests.  For instance, black women arguably face less labor marker discrimination than do black men.

Overall, I believe the intersectionality concept is underrated by many people in the mainstream and on the political Right.  It suffers from some of the problems that would be predicted by…the intersectionality concept.

Television and the frequency of sex

by  Tyler Cowen in

Substitutes are indeed everywhere:

This paper examines the association between television ownership and coital frequency using data from nearly 4 million individuals in national household surveys in 80 countries from 5 continents. The results suggest that while television may not kill your sex life, it is associated with some sex life morbidity. Under our most conservative estimate, we find that television ownership is associated with approximately a 6% reduction in the likelihood of having had sex in the past week, consistent with a small degree of substitutability between television viewing and sexual activity. Household wealth and reproductive health knowledge do not appear to be driving this association.

That is from a new NBER paper by Adrienne Lucas and Nicholas Wilson.

Middle-aged man for rent

by  Tyler Cowen in

He allows himself to be hired by anyone, for nearly any purpose — not involving physical contact — as long as they pay his hourly wage: a mere 1,000 yen (about US $9). And he loves it.

And:

With gray hair, visible lines on his face and loss of youthful slimness, he is more like a free-spirited bohemian in a strange disguise.

Throughout an hourlong Skype interview, in which comments are tediously ferried back and forth through an interpreter, his energy and enthusiasm never flag, and his answers grow more expressive and thoughtful with each question.

It’s all part of his job as a rented “ossan,” the Japanese word for a middle-aged man.

And:

“Forty percent of my ossan rental clients want something to do with the violin,” Sasaki said. “Another 40% are questions about IT work, and the other 20% are asking advice for their lives. These are mainly younger people.

“My profile on the ossan rental website has a very light-hearted atmosphere,” he said. Though he notes his occupation in IT, he bills himself as someone who plays the violin and shogi, or Japanese chess.

Here is the full story, via the excellent Samir Varma.

Sequestered Capital

by  Alex Tabarrok in

Sequestered capital is capital that is hidden or unseen by the market. R&D is often sequestered capitaI. New goods in production can be sequestered capital. Sequestered capital is special because it doesn’t inform price signals. In a series of papers, McClure and Thomas use the idea of sequestered capital to explain market anomalies. In this paper they look at sequestered capital and the Dutch tulipmania.

Framing tulipmania in terms of sequestered capital – capital whose quantities, usages and future yields are hidden from market participants – offers a richer and more straightforward explanation for this famous financial bubble than extant alternatives. Simply put, the underground planting of the tulip bulbs in 1636 blindfolded seventeenth-century Dutch speculators regarding the planted quantities and their development and future yields. The price boom began in mid November 1636, coinciding with the time of planting. The price collapse occurred in the first week of February 1637, coinciding with the time of bulb sprouting – signaling bulb quantities, development and future yields. Also consistent with our explanation is the initial price collapse location, in the Dutch city of Haarlem, where temperature and geography favored early sprouting and sprout visibility.

In a working paper (with Steve Horwitz) they look at sequestered capital and closed end funds. Sequestered capital is an interesting idea perhaps with many other applications.

Why does tech have so many political problems?

by  Tyler Cowen in

These are originally derived from written notes, a basis for comments by somebody else, from a closed session on tech.  I have added my own edits:

  1. Most tech leaders aren’t especially personable. Instead, they’re quirky introverts. Or worse.
  2. Most tech leaders don’t care much about the usual policy issues. They care about AI, self-driving cars, and space travel, none of which translate into positive political influence.
  3. Tech leaders are idealistic and don’t intuitively understand the grubby workings of WDC.
  4. People who could be “managers” in tech policy areas (for instance, they understand tech, are good at coalition building, etc.) will probably be pulled into a more lucrative area of tech. Therefore ther is an acute talent shortage in tech policy areas.
  5. The Robespierrean social justice terror blowing through Silicon Valley occupies most of tech leaders’ “political” mental energy. It is hard to find time to focus on more concrete policy issues.
  6. Of the policy issues that people in tech do care about—climate, gay/trans rights, abortion, Trump—they’re misaligned with Republican Party, to say the least. This same Republican party currently rules.
  7. While accusations of deliberate bias against Republicans are overstated, the tech rank-and-file is quite anti-Republican, and increasingly so. This limits the political degrees of freedom of tech leaders. (See the responses to Elon Musk’s Republican donation.)
  8. Several of the big tech companies are de facto monopolies or semi-monopolies. They must spend a lot of their political capital denying this or otherwise minimizing its import.
  9. The media increasingly hates tech. (In part because tech is such a threat, in part because of a deeper C.P. Snow-style cultural mismatch.)
  10. Not only does tech hate Trump… but Trump hates tech.
  11. By nature, tech leaders are disagreeable iconoclasts (with individualistic and believe it or not sometimes megalomaniacal tendencies). That makes them bad at uniting as a coalition.
  12. Major tech companies have meaningful presences in just a few states, which undermines their political influence. Of states where they have a presence — CA, WA, MA, NY — Democrats usually take them for granted, Republicans write them off.  Might Austin, TX someday help here?
  13. US tech companies are increasingly unpopular among governments around the world. For instance, Facebook/WhatsApp struggles in India. Or Google and the EU. Or Visa and Russia. This distracts the companies from focusing on US and that makes them more isolated.
  14. The issues that are challenging for tech companies aren’t arcane questions directly in and of the tech industry (such as copyright mechanics for the music industry or procurement rules for defense). They’re broader and they also encounter very large coalitions coming from other directions: immigration laws, free speech issues on platforms, data privacy questions, and worker classification on marketplaces.
  15. Blockchain may well make the world “crazier” in the next five years. So tech will be seen as driving even more disruption.
  16. The industry is so successful that it’s not very popular among the rest of U.S. companies and it lacks allies. (90%+ of S&P 500 market cap appreciation this year has been driven by tech.) Many other parts of corporate America see tech as a major threat.
  17. Maybe it is hard to find prominent examples of the great good that big tech is doing. Instagram TV. iPhone X. Amazon Echo Dot. Microsoft Surface Pro. Are you impressed? Are these companies golden geese or have they simply appropriated all the gold?

Those new service sector jobs (Star Wars markets in everything)

by  Tyler Cowen in

Darth Vader Is in Demand at Summer Weddings

Forget flower girls. Couples want stormtroopers throwing petals, and Vader leading the congo line.

There is, however, a shortage.  Note this:

Disney forbids the garrisons from participating in certain events without approval, such as gatherings that promote a local business or professional sporting events. Weddings are allowed because they’re considered “community service.”

The 501st has had to adopt an unofficial list of rules to narrow the number of wedding requests. That includes sufficient space to get dressed in costume and having drinking water available on hot days. The plastic and rubber costumes offer no ventilation. “They’re basically death traps,” said Mr. Johnson, who recently returned from a Star Wars event in Singapore where three people dressed as stormtroopers passed out from the heat.

Here is the full WSJ story, via the excellent Samir Varma.

Does the NIH fund edge science?

by  Tyler Cowen in

That is a new paper by Mikko Packalen and Jay Bhattacharya, here is the abstract:

The National Institutes of Health (NIH) plays a critical role in funding scientific endeavors in biomedicine that would be difficult to finance via private sources. One important mandate of the NIH is to fund innovative science that tries out new ideas, but many have questioned the NIH’s ability to fulfill this aim. We examine whether the NIH succeeds in funding work that tries out novel ideas. We find that novel science is more often NIH funded than is less innovative science but this positive result comes with several caveats. First, despite the implementation of initiatives to support edge science, the preference for funding novel science is mostly limited to work that builds on novel basic science ideas; projects that build on novel clinical ideas are not favored by the NIH over projects that build on well-established clinical knowledge. Second, NIH’s general preference for funding work that builds on basic science ideas, regardless of its novelty or application area, is a large contributor to the overall positive link between novelty and NIH funding. If funding rates for work that builds on basic science ideas and work that builds on clinical ideas had been equal, NIH’s funding rates for novel and traditional science would have been the same. Third, NIH’s propensity to fund projects that build on the most recent advances has declined over the last several decades. Thus, in this regard NIH funding has become more conservative despite initiatives to increase funding for innovative projects.