What I’ve been reading

1. Abigail Shrier, Bad Therapy: Why the Kids Aren’t Growing Up.  I agree with many of the anti-therapy arguments in this book, but still I feel that “bad therapy” is a second-order phenomenon, not the initial cause of the growing mental health problems of America’s young people.  Furthermore, the analysis (much like Jon Haidt’s recent work) should be more tightly framed in the context of the “most interventions really don’t matter that much” results in social science at the very general level.

2. Adam Shatz, The Rebel’s Clinic: The Revolutionary Life of Frantz Fanon.  Well-written and well-organized, this checks all the boxes for what I would want from a Fanon biography.  Here is an Adam Shatz NYT Op-Ed on Fanon.

3. Nabila Ramdani, Fixing France: How to Repair a Broken Republic.  What is wrong with France, from a French-Algerian point of view.  The book is full of substance, and there aren’t enough “stand alone books on countries,” so this is a good one whether or not you agree with all of the observations.

4. Michael Bliss, The Discovery of Insulin.  “Tassting the urine was the doctors’ original test for diabetes.”  An excellent biomedical history, noting that the key breakthrough came in Toronto in the 1920s.

And the AEI Press has reprinted the 1951 Edward Banfield classic Government Project.

Rainer Zitelmann has a new book out How Nations Escape Poverty: Vietnam, Poland, and the Origins of Prosperity.

Lewis E. Lehrman has published his autobiography The Sum of It All.  He was one of the important figures behind the Reagan Revolution, in addition to his longstanding presence amongst New York elites.

Saturday assorted links

1. Is Somalia running on electronic money?

2. Lookism and blond privilege?

3. What do states do with fiscal windfalls?

4. Jane Austen fans oppose Jane Austen statue on the grounds that people might visit it.

5. A user has created a very useful guide to Marginal Revolution University videos.

6. Cowen’s Second Law.

7. Nvidia is now worth more than Saudi Aramco.

8. The Elon vs. OpenAI legal case.  Worth a read.

The Continuing Influence of Fast Grants

Fast Grants, the rapid COVID funding mechanism created by Tyler, Patrick Collison and Patrick Hsu continues to inspire change around the world. Jano Costard, the Head of Challenges at SPRIND, the German Federal Agency for Disruptive Innovation writes:

Lots to learn from Fast Grants! Can we implement it in a public institutions that face a different set of rules (and legacy)? We tried with the Challenge program at the German Federal Agency for Disruptive Innovation, SPRIND, and succeeded, mostly.

While Fast Grants gave out grants in the first round in 48h, we haven’t been that speedy. Our last Challenge had 2 weeks and 2 days from deadline until final decision in a two stage evaluation procedure. Those last two days were spent doing pitches and the teams were informed of the decision the following night. So, it rather compares to the 2 weeks decision time Fast Grants has for later rounds.

During Covid, speed was of the utmost importance. But speed remains crucial now. Teams we fund have applications with other public funders undecided after more than 2 years. These delays accumulate and matter even for pressing but slowly advancing threats like climate change. No cleantech solution that is still in the lab today will have a meaningful impact on achieving our climate goals for 2030! It’s not only the R&D that takes time, getting to meaningful scale quickly will be much harder. That’s why there is no time to waste at the start of the process.

Fast grants has two important advantages when it comes to implementation: private funds and limited legacy. Public institutions often face additional rules and procedures that slow down processes. But this is not inevitable.

For SPRIND Challenges, we implemented a funding mechanism that left room for unbureaucratic processes and provided solutions for challenges that public funders or procurers typically face. This mechanism, called pre-commercial procurement, has been established by the European Commission in 2007 but was used in Germany only 1 time until we started to use it in 2021. This is also due to legacy in processes. Institutions execute their work in part based on an implicit understanding of how things need to be, about what is allowed and what is not. This might lead them to ignore new and beneficial instruments just because “this can’t be true”. Even worse, if new mechanisms are adopted by an institution with strong inherent understand of what can and cannot work, they run the risk of overburdening new and beneficial mechanisms with previous processes and requirements. In the end, a funding mechanism is just a tool. It needs to be used right.

SPRIND had the benefit of being a newly established public institution with important liberties in doing things differently and it’s lead by a Director @rafbuff who, at the time, had no experience in the public sector. So, did we find the ultimate way to research and innovation funding with SPRIND Challenges? Certainly not! Improvements are necessary but sometimes hard to achieve (looking at you, state-aid-law!).

Impressive! And check out SPRIND, they are funding have some interesting projects!

The Gender Gap in Confidence: Expected but Not Accounted For

We investigate how the gender gap in confidence affects the views that evaluators (e.g., employers) hold about men and women. We find the confidence gap is contagious, causing evaluators to form overly pessimistic beliefs about women. This result arises even though the confidence gap is expected and even though the confidence gap shouldn’t be contagious if evaluators are Bayesian. Only an intervention that facilitates Bayesian updating proves (somewhat) effective. Additional results highlight how similar findings follow even when there is no room for discriminatory motives or differences in priors because evaluators are asked about arbitrary, rather than gender-specific, groups.

That is a new piece by Christine L. Exley and Kirby Nielsen in the new March 2024 AER.

*Dune 2*

From the get go it is far too self-consciously portentous, with nary a bit of humor to lighten it up.  It feels more like an adaptation of memes from gaming than a cinematic version of a novel, much less a living, breathing movie.  And exactly what is the moral stance we are supposed to hold on the war anyway?  I love Hans Zimmer but his score is not in the emotional service of anything meaningful.

By objective standards the visuals are quite good, but in The Age of Sora they no longer seem so creatively cutting-edge either.

The crowd mostly seemed bored, and I saw a lot of people looking at the time on their phones.  Was there any line from the movie that anyone is going to repeat?

Battery technology seems especially advanced in this world.

In terms of expressing the power of cinema, or captivating the viewer with a sense of magic, I’ll take that Robert Bresson film about the donkey any day of the week.

If you read the major reviews carefully, a lot of them feel the same way, though understandably they don’t want to crush Hollywood’s future economic prospects in the bud.

Are Economists’ Preferences Psychologists’ Personality Traits?

I propose a method for mapping psychological personality traits to economic preferences. I use factor analysis to extract information on individuals’ cognitive ability and personality and embed it within a random preference model to estimate distributions of risk and time preferences and parameters related to choice inconsistency. I explain up to 60% of variation in average risk and time preferences and individuals’ capacity to make consistent choices using factors related to cognitive ability and three of the Big Five personality traits. Differences in preferred outcomes are related to personality, whereas mistakes in decisions are related to cognitive skill.

That is from a new JPE article by Tomáš Jagelka.  Here are earlier, less gated versions of the piece.

Is a $600 a night hotel room better?

Lucy Huber and Alex T. debate that question, and they both seem pretty skeptical.  (I am surprised to see Alex’s view, I might add.)  I would not pay that much for a room, but sometimes when I am invited to events I end up staying in places that I suspect are in that price range, or higher.  I think they have a few big advantages:

1. Location, location, location.  What is a good beach hotel in Miami or Miami Beach these days?  I’m not sure, I don’t even love the beach.  But many people do — the Four Seasons room down there is going for over $1300 a night.  (It is odd to me to pick on $600 a night — in some places that is cheap!)  The best locations in London and Paris are expensive too.  If you have some business appointments, and only two days in Paris, is it so crazy to shell out such money to stay right where you want, so you can sneak into the Louvre during a break?

2. Concierge tickets.  At a very good hotel, the concierge can get you all sorts of reservations and tickets that otherwise would not be available.

3. Swimming pool.  It might be heated, or much better.  The on-site shops can be much better too, which matters for people with less flexible time budgets than mine.  Gyms I find do not vary so much in actual practical quality, though they vary a great deal in attractiveness and general mood.

4. They might have much better business and conference facilities, noting that some very expensive hotels don’t have those at all.

4. The hotel restaurants will be much better (and more expensive of course).  Much better breakfast too, and that is the meal you are least likely to eat out.

5. Some hotels are marvelous architectural landmarks.  I was very impressed by the Burj Al Arab Jumeirah when I visited.  I had only a meal and a tea there, both expensive but worth it.  Google claims “prices from $1,330,” for a room that is, but I suspect the variance of actual price is pretty high.  In any case it ain’t cheap.

6. The beds are more comfortable and the rooms are bigger.

7. The WiFi is less likely to go out, or if there is a problem you will get help more quickly.

8. In Malta only a few hotels have wonderful views.  I wonder what they cost.

So it’s not just status, you genuinely get a lot more for your money.  If you can afford it and have those priorities, that is.

I do, however, have two gripes about very expensive hotels.  First, the staff can be overly solicitous.  The worst version of this is when they want to knock on your door or call you too many times to see how things are going.  I also don’t like how they sometimes reorganize your things, in addition to cleaning up the room.  Do I really need my shoes to be put into the closet?  Second, sometimes the tech-laden shower and room lighting systems are so complicated I find them difficult to operate.  Boo hoo!  Not even a first world problem.  But in those cases perhaps the $400 a night hotel would have been better.

Approaching Human-Level Forecasting with Language Models

Forecasting future events is important for policy and decision making. In this work, we study whether language models (LMs) can forecast at the level of competitive human forecasters. Towards this goal, we develop a retrieval-augmented LM system designed to automatically search for relevant information, generate forecasts, and aggregate predictions. To facilitate our study, we collect a large dataset of questions from competitive forecasting platforms. Under a test set published after the knowledge cut-offs of our LMs, we evaluate the end-to-end performance of our system against the aggregates of human forecasts. On average, the system nears the crowd aggregate of competitive forecasters, and in some settings surpasses it. Our work suggests that using LMs to forecast the future could provide accurate predictions at scale and help to inform institutional decision making.

That is from a new paper by Danny Halawi, Fred Zhang, Chen Yueh-Han, and Jacob Steinhardt.  I hope you are all investing in that chrisma…

GPT as ethical advisor

This study investigates the efficacy of an AI-based ethical advisor using the GPT-4 model. Drawing from a pool of ethical dilemmas published in the New York Times column “The Ethicist”, we compared the ethical advice given by the human expert and author of the column, Dr. Kwame Anthony Appiah, with AI-generated advice. The comparison is done by evaluating the perceived usefulness of the ethical advice across three distinct groups: random subjects recruited from an online platform, Wharton MBA students, and a panel of ethical decision-making experts comprising academics and clergy. Our findings revealed no significant difference in the perceived value of the advice between human generated ethical advice and AI-generated ethical advice. When forced to choose between the two sources of advice, the random subjects recruited online displayed a slight but significant preference for the AI-generated advice, selecting it 60% of the time, while MBA students and the expert panel showed no significant preference.

That is a 2023 piece by Christian Terwiesch and Lennart Meincke, via the excellent Kevin Lewis.  And here is my earlier 2019 CWT with Dr. Kwame Anthony Appiah.

Daniel Gross on the printing press and GPT

In a way, everyone’s been wondering, trying to analogize ChatGPT with the printing press, but in reality it’s almost the opposite.

The entire thing is happening in the inverse of that, where the printing press was a technology to disseminate information through a book basically and convince people to do things, and the kind of anti-book is the LLM agent, which summarizes things very succinctly. If anything, it awakens people to the fact that they have been complicit in a religion for a very long time, because it very neatly summarizes these things for you and puts everything in latent space and suddenly you realize, “Wait a minute, this veganism concept is very connected to this other concept.” It’s a kind of Reformation in reverse, in a way, where everyone has suddenly woken up to the fact that there’s a lot of things that are wrong…

So yeah, it takes away all the subtlety from any kind of ideology and just puts it right on your face and yeah, people are having a reaction to it.

That is from the Ben Thompson (gated) interview with Daniel and Nat Friedman, self-recommending.

Thursday assorted links

1. Why South Koreans don’t have more children.  And a Twitter thread on the same topic.

2. Pete Boettke on why we should still read Adam Smith.

3. When cars hit pedestrians, who is blamed more?

4. Ghost donors.  Important.  But will this become a big story somewhere?

5. Interview with Orley Ashenfelter, who is retiring after fifty years of teaching.

6. Nabeel on synthetic data.

7. “Disney adults” are a thing.

8. “Biden Calls Chinese Electric Vehicles a Security Threat.” (NYT)

This kind of macro theory is underrated

Demand shocks as technology shocks:

We provide a macroeconomic theory where demand for goods has a productive role. A search friction prevents perfect matching between producers and potential customers. Larger demand induces more search, which in turn increases GDP and measured TFP. We embed the product-market friction in a standard neoclassical model and estimate it using Bayesian techniques. Business cycles are driven by preference shocks, true technology shocks, and investment-specific shocks. Preference shocks have qualitatively similar effects as true productivity shocks. These shocks account for a large share of the fluctuations in consumption, GDP, and measured TFP and can be identified using shopping time data.

That is from a new NBER working paper by Yan Bai, José-Víctor Ríos-Rull, and Kjetil Storesletten.  Aggregate demand matters, but in a context-specific way.  And demand and productivity shocks are part of one general integrated theory.