My favorite things Poland
No, I am not there now, but Adam D. emails me and requests this, so here goes:
1. Novel: Stanislaw Lem, Solaris, all about identity and erotic guilt. Next in line would be any number of Isaac Singer novels, I don’t have a favorite offhand. Soon I will try The Family Moskat. Gombrowicz is probably wonderful, but I don’t find that it works for me in translation. Quo Vadis left me cold.
2. Chopin works: The Preludes, there are many fine versions, and then the Ballades. The Etudes excite me the most, the Mazurkas and piano sonatas #2 and #3 are most likely to surprise me at current margins of listening. I find it remarkable how I never tire of Chopin, in spite of his relatively slight output.
3. Painter: This one isn’t as easy as it ought to be.
4. Architect: Daniel Libeskind was born in Poland. But more generally one can cite Krakow, and I suspect the older versions of Gdansk.
The wooden churches and folk art of southern Poland also deserve mention.
5. Political thinker: Czesław Miłosz, The Captive Mind, about the capitulations of artists to communism, though subtler than just an anti-state polemic. He once stated: ” I have never been a political writer and I worked hard to destroy this image of myself.” I do not feel I can judge his poetry, though last year’s biography of him was a good book.
6. Astronomer and originator of the quantity theory of money: Copernicus.
7. Television show: The Decalogue, perhaps #4 is my favorite. Here is good NPR coverage.
8. Movie: Any of the Andrzej Wajda classics would do, maybe start with Kanal or Ashes and Diamonds. More recently I would opt for Ida. I like Kieślowski’s TV more than his films, and prefer Hollywood Polanski to Polish Polanski.
9. Classical pianist: There are many, but I will cite Kristian Zimerman over Artur Rubinstein. The former plays the piano better. Josef Hofmann deserves mention, but there are dozens of picks here.
10. Jazz musician: Trumpeter Tomasz Stańko.
11. Economists: There is Kalecki, Hurwicz, the now-underrated Oskar Lange (doesn’t Singaporean health care work fine?), and Victor Zarnowitz. I had thought Mises was born in Poland, but upon checking it turned out to be Ukraine.
Overall the big puzzle is why there isn’t more prominence in painting, given Poland’s centrality in European history.
That was then, this is now, rent control vs. building deregulation edition
By early 1919 many New Yorkers — even many who held that the long-term solution to the housing problem was “to build more homes and build them now” — had come to believe that neither private enterprise nor public authority could do much to alleviate the housing shortage in the near future. From this belief it was only a short step to the conclusion that the state legislature had to take action to stop the city’s rapacious landlords from raising the rent…
Here you will find a recent WSJ article (or read this ungated) about municipalities once again turning to rent control…
The above passage is from the highly useful and deeply comprehensive The Great Rent Wars: New York, 1917-1929, by Robert M. Fogelson. Note that back then both rent control and “building more” won. As for today, Megan has a relevant column.
Thursday assorted links
Why is idiosyncratic stock market volatility so low?
We find that the historically low IR [idiosyncratic risk] can be explained by the changes in firm characteristics that take place since the 1990s.
…the number of listed firms has fallen dramatically and the composition of listed firms has changed considerably, with public firms becoming larger and older. We show that there is a stable relation between firm-level idiosyncratic risk and firm characteristics…we find no evidence that IR increases with institutional ownership…
That is from Bartram, Brown, and Stulz, in the NBER working paper series.
Is legal marijuana more potent?
Yes, here is Keith Humphreys from Wonkblog:
Although some people believe prohibiting drugs is what makes their potency increase, the potency of marijuana under legalization has disproved that idea. Potency rises in both legal and illegal markets for the simple reason that it conveys advantages to sellers. More potent drugs have more potential to addict customers, thereby turning them into reliable profit centers.
In other legal drug markets, regulators constrain potency. Legal alcohol beverage concentrations are regulated in a variety of ways, including through different levels of tax for products of different strengths as well as constraints on labeling and place of sale. In most states, for a beverage to be marketed and sold as “beer,” its alcohol content must fall within a specified range. Similarly, if wine is distilled to the point that its alcohol content rises too high, some states require it be sold as spirits (i.e., as “brandy”) and limit its sale locations.
As states have legalized marijuana, they have put no comparable potency restrictions in place, for example capping THC content or levying higher taxes on more potent marijuana strains. Sellers are doing the economic rational thing in response: ramping up potency.
How about the Netherlands?:
The study was conducted in the Netherlands, where marijuana is legally available through “coffee shops.” The researchers examined the level of delta-9-tetrahydrocannabinol (THC), the main intoxicant in marijuana, over a 16-year period. Marijuana potency more than doubled from 8.6 percent in 2000 to 20.3 percent in 2004, which was followed by a surge in the number of people seeking treatment for marijuana-related problems. When potency declined to 15.3 percent THC, marijuana treatment admissions fell thereafter. The researchers estimated that for every 3 percent increase in THC, roughly one more person per 100,000 in the population would seek marijuana use disorder treatment for the first time.
The Dutch findings are relevant to the United States because high THC marijuana products have proliferated in the wake of legalization. The average potency of legal marijuana products sold in the state of Washington, for example, is 20 percent THC, with some products being significantly higher.
I believe that marijuana legalization has moved rather rapidly into being an overrated idea. To be clear, it is still an idea I favor. It seems to me wrong and immoral to put people in jail for ingesting substances into their body, or for aiding others in doing so, at least provided fraud is absent in the transaction. That said, IQ is so often what is truly scarce in society. And voluntary consumption decisions that lower IQ are not something we should be regarding with equanimity. Ideally I would like to see government discourage marijuana consumption by using the non-coercive tools at its disposal, for instance by making it harder for marijuana to have a prominent presence in the public sphere, or by discouraging more potent forms of the drug. How about higher taxes and less public availability for more potent forms of pot, just as in many states beer and stronger forms of alcohol are not always treated equally under the law?
What is a non-mood-affiliated way to get up to speed on climate change issues?
That query was messaged to me, so I thought I would pass it along to all of you for your non-mood-affiliated feedback. I thank you all in advance. Do note this is for a person of very high IQ and objectivity.
Wednesday assorted links
1. Swedish summer seminar in classical liberalism. And Bryan Caplan says something nice about me (I am not suggesting this is rare, though).
2. Personal bests act as reference points.
3. “In the inner London borough of Wandsworth, a home measuring just 91 inches across is on the market for about $1.4 million (£1 million).” Link here.
4. Who will be the next PM of Singapore?
5. Jerry Z. Muller on the tyranny of metrics.
6. Vincent Geloso’s nominations for the best economic history papers of 2017.
The signaling start-up culture that is Finland
Intrepid entrepreneurs have plunged into icy Finnish water in an eccentric contest to win funding for their business ideas.
Polar Bear Pitching allows start-up firms to put forward their projects to investors for as long as they can stand in the freezing temperatures.
The final of the Dragon’s Den-style competition will see a dozen companies put their plans under the noses of investors.
The winner of the two-day contest — which takes place in frozen sea near Oulu on February 6 and 7 — will receive €10,000.
Start-ups who have secured funding say standing in such cold water helps convince investors they are serious.
Here is the article and photo, via Danica Porobic.
The Uber Pay Gap
Using data on over one million Uber drivers and millions of trips, Cody Cook, Rebecca Diamond, Jonathan Hall, John A. List, and Paul Oyer show that female Uber drivers earn 7% less than male drivers. What makes this paper new, however, is that UBER’s extensive data lets the authors understand in great detail why the pay gap exists. It’s not discrimination:
Uber uses a gender-blind algorithm and drivers earn according to a transparent formula based on the time and distance of trips. There are no negotiated pay rates or convex returns to long hours worked, factors that have been shown to open a gender earnings gap in other settings. Our research also finds that both average rider ratings of drivers and cancellation rates are roughly equivalent between genders and we find no evidence that outright discrimination, either by the app or by riders, is driving the gender earnings gap.
The authors find that three factors explain the gap; driving speed, experience, and choices about where to drive.
First, driving speed alone can explain nearly half of the gender pay gap. Second, over a third of the gap
can be explained by returns to experience, a factor which is often almost impossible to evaluate
in other contexts that lack high frequency data on pay, labor supply, and output. The remaining
∼20% of the gender pay gap can be explained by choices over where to drive.
Male Uber drivers, like other males, drive a bit faster than female drivers, about 2.2% faster after controlling for experience and location. Since Uber pays by time as well as by distance the returns to speed are not very high and the difference in speed is small but overall this results in an increase in pay for males of about 50 cents an hour.
Drivers learn by doing and more men than women have driven for Uber for years:
A driver with more than 2,500 lifetime trips completed earns 14% more per hour than a driver who
has completed fewer than 100 trips in her time on the platform, in part because she learn where
to drive, when to drive, and how to strategically cancel and accept trips. Male drivers accumulate
more experience than women by driving more each week and being less likely to stop driving with
Uber.
Overall, female and male Uber drivers behave remarkably similarly but small differences aggregated over large samples produce a small but systematic gender gap in wages of about 7%. The gap, however, is an artifact, a social construct that has no implications for “social justice,” drivers are treated equally.
The author’s conclude:
Overall, our results suggest that, even in the gender-blind, transactional, flexible environment
of the gig economy, gender-based preferences (especially the value of time not spent at paid work
and, for drivers, preferences for driving speed) can open gender earnings gaps. The preference
differences that contribute to pay differences in professional markets for lawyers and MBA’s also
lead to earnings gaps for drivers on Uber, suggesting they are pervasive across the skill distribution
and whether in the traditional or gig workplace.
Valentine’s Day and Understanding the Price System
Valentine’s Day is coming up so here’s a reminder to get your loved one a present! Valentine’s is also a great time to teach your students about globalization, the signaling and incentive role of prices, and the power of the price system–all key aspects of Chapter 7 in our textbook Modern Principles of Economics. We have two superb videos to encourage understanding and discussion of the price system, I, Rose and A Price is a Signal Wrapped up in an Incentive (see below).
In addition, we have created a lesson plan with discussion prompts, exercises, practice questions, and pre- and post-class assignments. Finally, we provide supplementary resources such as additional data sources, relevant news articles and blog posts, and an episode of Planet Money. You can find all of this material in one convenient location here. Enjoy!
*Self-Regulation and Human Progress*
Note that General Motors, with both a direct incentive to closely monitor water quality and the capacity to do something about it, ceased using Flint River water at its engine plant in that city in October 2014.
The author of the book is Evan Osborne and the subtitle is How Society Gains When We Govern Less.
What I’ve been reading and what has arrived in my pile
Jeremy Bailenson, Experience on Demand: What Virtual Reality Is, How It Works, and What It Can Do. Usually I am allergic to “general summary about some new topic in tech” books, but this one is quite good.
Michela Wrong, I Didn’t Do It For You: How the World Betrayed a Small African Nation, is in fact, as a number of you had suggested, probably the best book on Eritrea.
Matthew Engelke, How to Think Like an Anthropologist, is a very good introduction to exactly what the title promises.
Robert Wuthnow tries his hand at The Left Behind: Decline and Rage in Rural America.
Benn Steil, The Marshall Plan: Dawn of the Cold War.
Carl Zimmer, She Has Her Mother’s Laugh: The Powers, Perversions, and Potential of Heredity.
Tuesday assorted links
Title length
Abstract
We document strong and robust negative correlations between the length of the title of an economics article and different measures of scientific quality. Analyzing all articles published between 1970 and 2011 and referenced in EconLit, we find that articles with shorter titles tend to be published in better journals, to be more cited and to be more innovative. These correlations hold controlling for unobserved time-invariant and observed time-varying characteristics of teams of authors.
That is by Yann Bramoullé and Lorenzo Ductor at JEBO, via Michelle Dawson.
Bitcoin and covariance
Bitcoin and stocks bottomed at almost exactly the same moment. This is bad for Bitcoin. Part of Bitcoin’s appeal is that it is weird, and perhaps does not covary with standard financial assets in traditional ways. But at least yesterday it did, and that should be a force pushing Bitcoin lower.
Addendum from DB in the comments:
Matt Levine from yesterday: “Bloomberg tells me that Bitcoin’s daily correlation with the S&P 500 Index was 0.047 in 2017, -0.049 in 2016, 0.07 in 2015 and -0.081 in 2014. That is about as uncorrelated an asset as you could ask for — and a lot of Bitcoin buyers were asking for uncorrelated assets. So far in 2018 the correlation is 0.286. Still pretty uncorrelated! But … less so. When Bitcoin was a weird alternate-currency dream of anarchists, there was no reason for it to be correlated with stocks. When it is just an asset class that regular people trade, buying when they feel confident and selling when they feel nervous, that correlation ticks up.”