Capitalism debate at MIT
September 16, 7-8.30, 2-190: “Is Capitalism Defensible?”, with Tyler Cowen (GMU Economics), and Alexander Gourevitch (Brown Political Science). Please register here.
Here is the link.
Mpox Vaccines Stuck in Limbo: WHO is at Fault
In 2022, Mpox, a viral disease endemic to parts of Africa and primarily transmitted through close contact—especially sexual contact between men—spread to developed countries, including the United States. The U.S. saw over 30,000 cases and approximately 58 deaths. Despite two available vaccines there was not nearly enough supply to vaccinate even the high-risk populations. Fortunately, health authorities adopted vaccination strategies my colleagues and I had recommended for COVID such as first doses first and fractional dosing. For example, several small studies (e.g. here and here) suggested that 1/5 doses delivered intradermally could be effective and the FDA, EMA, and the UK all recommended this fractional dosing strategy. As result, the US was able to vaccinate around 800,000 people and the epidemic ended (natural immunity and other preventive measures also played a role).
Unfortunately, a new Mpox variant is now spreading in the Democratic Republic of the Congo and nearby countries. Here’s the crazy part: despite declaring Mpox a public health emergency on August 14, the WHO has not approved any Mpox vaccines. You might think, “Who cares what the WHO authorizes?” After all, the FDA, EMA, and the UK have all granted emergency approval. But here’s the catch: the WHO’s approval is crucial for GAVI, the vaccine alliance that donates vaccines to developing countries. Without WHO approval, GAVI is reluctant to provide vaccines to the Congo. To add insult to injury, the Congo itself has approved the Jynneos and LC16 vaccines. Yet, the WHO refuses to authorize and GAVI to donate these vaccines, citing vague concerns about safety and efficacy.
Stephanie Nolen at the NYTimes has a very good piece on this mess:
Three years after the last worldwide mpox outbreak, the W.H.O. still has neither officially approved the vaccines — although the United States and Europe have — nor has it issued an emergency use license that would speed access.
One of these two approvals is necessary for UNICEF and Gavi, the organization that helps facilitate immunizations in developing nations, to buy and distribute mpox vaccines in low-income countries like Congo.
While high-income nations rely on their own drug regulators, such as the Food and Drug Administration in the United States, many low- and middle-income countries depend on the W.H.O. to judge what vaccines and treatments are safe and effective, a process called prequalification.
But the organization is painfully risk-averse, concerned with a need to protect its trustworthiness and ill-prepared to act swiftly in emergencies, said Blair Hanewall…
In addition, no one has followed the other practice my colleagues and I recommended for COVID (which Operation Warp Speed did), namely advance market commitments. So the vaccine manufacturers have basically been twiddling their thumbs and not gearing up for greater production. (The Congo can also be faulted for not buying more on their own account.)
All of this means that when the WHO does authorize and the vaccines begin to flow, we will still desperately need strategies like fractional dosing.
Hat tip: Ben H. and special thanks to Witold Wiecek.
It is wonderful to put inefficient firms out of business
The differences between the most and least productive companies can be startlingly high. By one estimate, in the US alone the most productive firms in a sector can be more than two to four times more cost-effective than the least productive ones. Given the size of those discrepancies, any expansion of trade or innovation that makes it possible to replace less efficient producers could help a sector economize a significant part of its production costs.
That is from my latest Bloomberg column. And this:
There is a converse worry about efficiency changing an economy too quickly — such as the current panic in some quarters over the speed of change that AI might bring.
What I see, however, is that a lot of institutions are unwilling or unable to adopt new, AI-intensive methods of doing business. Another year or two of prodding probably will not change that reality. Then, as AI becomes more important as a competitive edge, firms that do not deploy AI effectively will go out of business. This process could take 10 years or more, coming in fits and spurts, as has happened with most previous major technological innovations.
The column also has other points of interest.
John Arnold on economic polarization
As divisive as the political rhetoric is, the policy divide between the two parties seems more narrow today than any time in recent memory. Bipartisan bills in immigration, energy permitting, and the child tax credit have been negotiated and waiting for political window to reopen. Foreign aid and military spending bills both passed in past year with strong bipartisan support. Same with infrastructure bill in 2021 and CHIPS Act in 2022. Both parties are anti-China, favorable to India, and increasingly supportive of industrial policy and tariffs. Both talk about lowering the cost of housing, more funding for the police, and are leery of big tech. Neither party is proposing big changes in health care, K-12 or social security. College loan forgiveness is in the courts. Abortion is now in the states. GOP opposition to the IRA climate provisions are around the edges, like EV subsidies. Dems aren’t proposing any new significant climate policies. Dems have enacted minor policies against oil and gas but production continues to reach record highs. Both say no new taxes for <$400k. Increasing number of Rs have joined Ds supporting increase in corp tax rates. Perhaps the biggest difference is how to pay for TCJA extension: Dems want higher taxes on the wealthy; Trump wants universal tariffs; the rest of GOP hasn’t been specific. There are other differences for sure. Dems want more subsidies for housing and child care. GOP wants more deportations (though logistically difficult). Dems would be more aggressive against consolidation, health care costs, and junk fees. GOP wants to restucture civil service rules. But there just aren’t many major fault lines on policy between the parties today. Maybe this is why so little of this election cycle is about policy.
Here is the full tweet. I would add that “ten percent tariffs” vs. “25% tax on unrealized capital gains” is a big difference, but at least one of those is never going to happen, even if the Republicans do not capture the Senate.
Jon Haidt on causality (from my email)
“Hi Tyler,
i have big news about the debate over social media harming teens.
So much of it hangs on the claim that the evidence is just correlational, not causal.
Zach Rausch and I show that this is not true; the experiments DO show causation, very clearly and consistently.
Here are my 2 tweets about the post:
https://x.com/JonHaidt/status/1829163166066205168
https://x.com/JonHaidt/status/1829165292460859869
A lot of people heard our discussion, and enjoyed how spirited and yet civil it was.
Might you include the link to this post in your daily email:
https://www.afterbabel.com/p/the-case-for-causality-part-1
We have 3 more coming. We think we can prove causality using just the existing experiments.
thanks for considering it.
jon”
TC again: I received this email this morning, and told Jon I would post it on MR without response from me, so here it is.
Thursday assorted links
1. How AI will impact back office support in the Philippines (Bloomberg).
2. Toward a theory of (Finnish) woke. Not directly related to sauna activity.
3. Immigrant cooks as anthropologists.
4. How NYC’s Park Avenue used to look, and maybe will once again.
5. A left market anarchist canon.
6. David Pilling on Benin and T-shifts (FT). The country continues to grow in the six percent range.
7. In many states, having a state-appointed guardian means you cannot vote (NYT).
8. Andreas Backhaus on the recent Jim Crow paper.
9. Just change the step-up basis upon death. The actual proposal is perhaps the worst economic policy idea I have heard since the fall of communism.
Failing Banks
From Sergio Correia, Stephan Luck, and Emil Verner:
Why do banks fail? We create a panel covering most commercial banks from 1865 through 2023 to study the history of failing banks in the United States. Failing banks are characterized by rising asset losses, deteriorating solvency, and an increasing reliance on expensive non-core funding. Commonalities across failing banks imply that failures are highly predictable using simple accounting metrics from publicly available financial statements. Predictability is high even in the absence of deposit insurance, when depositor runs were common. Bank-level fundamentals also forecast aggregate waves of bank failures during systemic banking crises. Altogether, our evidence suggests that the ultimate cause of bank failures and banking crises is almost always and everywhere a deterioration of bank fundamentals. Bank runs can be rejected as a plausible cause of failure for most failures in the history of the U.S. and are most commonly a consequence of imminent failure. Depositors tend to be slow to react to an increased risk of bank failure, even in the absence of deposit insurance.
Theory of bank runs: overrated.
Do consumers hate on-line ads?
Not so much it seems:
Research on the causal effects of online advertising on consumer welfare is limited due to challenges in running large-scale field experiments and tracking effects over extended periods. We analyze a long-running field experiment of online advertising in which a random 0.5% subset of all users are assigned to a group that does not ever see ever ads. We recruit a representative sample of Facebook users in the ads and no-ads groups and estimate their welfare gains from using Facebook using a series of incentive-compatible choice experiments. We find no significant differences in welfare gains from Facebook. Our estimates are relatively precisely estimated reflecting our large sample size (53,166 participants). Specifically, the minimum detectable difference in median valuations at standard thresholds is $3.18/month compared to a baseline valuation of $31.95/month for giving up access to Facebook. That is, we can reject the hypothesis that the median disutility from advertising exceeds 10% of the median baseline valuation. Our findings suggest that either the disutility of ads for consumers is relatively small, or that there are offsetting benefits, such as helping consumers find products and services of interest.
That is from a new NBER working paper by
The wisdom of Gwern, why should you write?
Much of the value of writing done recently or now is simply to get stuff into LLMs. I would, in fact, pay money to ensure Gwern.net is in training corpuses, and I upload source code to Github, heavy with documentation, rationale, and examples, in order to make LLMs more customized to my use-cases. For the trifling cost of some writing, all the worlds’ LLM providers are competing to make their LLMs ever more like, and useful to, me.
And that’s just today! Who knows how important it will be to be represented in the initial seed training datasets…? Especially as they bootstrap with synthetic data & self-generated worlds & AI civilizations, and your text can change the trajectory at the start. When you write online under stable nyms, you may be literally “writing yourself into the future”. (For example, apparently, aside from LLMs being able to identify my anonymous comments or imitate my writing style, there is a “Gwern” mentor persona in current LLMs which is often summoned when discussion goes meta or the LLMs become situated as LLMs, which Janus traces to my early GPT-3 writings and sympathetic qualitative descriptions of LLM outputs, where I was one of the only people genuinely asking “what is it like to be a LLM?” and thinking about the consequences of eg. seeing in BPEs. On the flip side, you have Sydney/Roose as an example of what careless writing can do now.) Humans don’t seem to be too complex, but you can’t squeeze blood from a stone… (“Beta uploading” is such an ugly phrase; I prefer “apotheosis”.)
This is one of my beliefs: there has never been a more vital hinge-y time to write, it’s just that the threats are upfront and the payoff delayed, and so short-sighted or risk-averse people are increasingly opting-out and going dark.
If you write, you should think about what you are writing, and ask yourself, “is this useful for an LLM to learn?” and “if I knew for sure that a LLM could write or do this thing in 4 years, would I still be doing it now?”
Here is the link, or try this link. Of course not many people have the actual purpose of mind to believe such a thing. But a few do.
From the comments (on regulation)
Wednesday assorted links
1. Can we inherit our way into higher fertility? Maybe not.
2. Paul Romer offers you tech support.
4. All sorts of new cancer drugs and treatments are in the works (FT), p.s. supply is elastic.
5. Can New Hampshire keep just one area code? (WSJ)
6. Murder as measuring rate (speculative).
7. More on the French post-election.
9. “Go long Waterloo youngsters.” (it’s happening)
Prescriptive versus Performance Codes
A great piece in the NYTimes on the history and future of factory produced buildings:
But the most remarkable difference between the United States and Sweden is regulatory. Building codes in the U.S. try to make buildings safe by prescribing exactly what materials must be used and how (a prescriptive code). In Sweden, the government does this by setting goals and letting builders come up with a way to achieve them (a performance code).
So, for instance, U.S. building codes dictate the thickness of drywall that must be used for fire resistance, how many layers are needed and how many nails are required to attach it. In Sweden, the code requires that a wall must resist burning for two hours, say, and lets engineers and manufacturers figure out how to accomplish that. The regulator’s job is to check the engineer’s work.
The result of both is fire resistance and structural safety, but in the United States, each residential building needs to be granted a permit. During construction, work often halts for inspectors to make periodic visual inspections. That contributes to a stop-and-go pace that frustrates pretty much everybody except lenders, who get interest on financing. Sweden’s codes require more work on the front end when builders have to demonstrate that their methods are up to snuff, but factory processes that comply with the performance code can be certified. This encourages innovative solutions and results in less waste.
As an example of how a performance code leads to innovation:
..Before Sweden adopted its performance-based code in 1995, wood buildings had been limited to two stories; almost overnight, wooden buildings could be as tall as engineers could prove safe.
Addendum: See the comments for useful argument that the US code is more performance based than the NYTimes article suggests. What would be very useful is to hear from someone with experience in both systems.
Was the Great Stagnation originally a problem of human capital?
That is the topic of my latest Bloomberg column. Here is one key part of the argument:
There are numerous theories as to why [the Great Stagnation started in the early 1970s]: oil price shocks, more stringent government regulations, an increased emphasis on environmental protection over economic growth, and the collapse of the Bretton Woods international monetary order. In my 2011 book The Great Stagnation, I blame the disappearance of the low-hanging fruit that resulted from powerful machines and plentiful fossil fuels.
Some of those likely are factors. Now an economist, Nicholas Reynolds of the University of Essex, claims to have found a new villain in this economic story: a negative shock to the quality of human capital in America.
Americans born after 1947 and before the mid-1960s — the first of whom were just entering their prime working years in 1971 — did not see economic gains comparable to those of their predecessors. But the problems of this cohort are more far-reaching. They had more problems as young children, and they did worse in school in the 1960s, accounting for the educational declines of that era, such as lower test scores and higher dropout rates.
Birthweights also declined in the 1980s, a sign that the post-1947 cohort was less healthy, most of all when it comes to maternal health. You might think that development is due to intervening economic factors. But the post-1947 world is still wealthier than what came before, so it is not obvious why an economic slowdown, but not absolute decline, should have created such significant health problems.
It’s not just that Americans born after 1955 stopped getting taller, whereas Europeans didn’t. There are deeper problems, such as the alarming rise in the midlife mortality rate since 1999. These “deaths of despair” may also be a legacy from this 1947 break in Americans’ quality of health.
I am not sure that is all true, but if so it is very important and would constitute a significant revision in our understanding of 20th century economic history. And what happened in the late 1940s? There it gets tricky:
The obvious question is what exactly happened in about 1947 to put the US on this less constructive path. There is no obvious smoking gun, but the cohort decline seems to start in adolescence, prior to entering labor markets. So perhaps it is something in the structure of American society, or in US public health practices, rather than stemming from traditional macroeconomic factors.
One possible cause is an increase in postwar automobile usage, and thus higher levels of lead exposure, given the lead additives in gasoline at the time. There is no direct evidence for this claim, but lead has been shown to have significant negative impacts on human development, and some researchers blame it for the later higher US crime rates.
Still, it is not obvious why lead should lead to such a sharp break in the data. And if lead is the main culprit, then there should be major improvements forthcoming, as lead additives were fully banned from American gasoline in 1996, with a phase-out starting in the 1970s.
A second possibility is that the baby boom generation was so large that there was a decline in quality of care given to each child.
Very much worth a ponder, and then some.
From Reed and Logchies
Introduction. Your analysis produces a statistically insignificant estimate. Is it because the effect is negligibly different from zero? Or because your research design does not have sufficient power to achieve statistical significance? Alternatively, you read that “The median statistical power [in empirical economics] is 18%, or less” (Ioannidis et al., 2017) and you wonder if the article you are reading also has low statistical power. By the end of this blog, you will be able to easily answer both questions. Without doing any programming.
An Online App. In this post, we show how to calculate statistical power post-estimation for those who are not familiar with R. To do that, we have created a Shiny App that does all the necessarily calculating for the researcher (CLICK HERE).
Here is the link and the full story.
Tuesday assorted links
1. Something, something, French politics, I don’t understand either the equilibrium or the procedure. Does anybody?
2. Kevin Sherwin is an amazing guitarist, and yet no one has heard of him.
3. Bioy Casares on Borges, translated into English, at least in part, you can now pre-order. One of the great Spanish-language books, hitherto unavailable in English.
4. What happened to the gay rights movement in the Caribbean?
5. 48% of NYC riders do not pay the bus fare (NYT).
6. Tech regulation and the logic of obfuscation.
7. Henry Oliver podcast with Hollis Robbins.
8. Good FT piece on how the Midwest, and American economy, needs more migrants.
That is from Mike in VA.