Results for “age of em” 17233 found
The economic gains from a better allocation of talent
Michael Clemens directs our attention to a February 2013 paper by Chang-Tai Hsieh, Erik Hurst, Charles I. Jones, and Peter J. Klenow, here is the abstract:
In 1960, 94 percent of doctors and lawyers were white men. By 2008, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given that innate talent for these professions is unlikely to differ across groups, the occupational distribution in 1960 suggests that a substantial pool of innately talented black men, black women, and white women were not pursuing their comparative advantage. This paper measures the macroeconomic consequences of the remarkable convergence in the occupational distribution between 1960 and 2008 through the prism of a Roy model. We find that 15 to 20 percent of growth in aggregate output per worker over this period may be explained by the improved allocation of talent.
The Betrayers Banquet
Here is something for you to try out tomorrow with the family, well some families. The Betrayers’ Banquet is a dinner party/event that ingeniously combines the iterated prisoner’s dilemma with good food, bad food and entertainment. Here is their description:
The event works as follows:
A banqueting table is set with 48 chairs, 24 on each side, at which players are seated at random. For a period of two hours, the food is served in small portions every fifteen minutes, and varies in quality; at the top end of the table, it is exquisite – food you could expect at a fancy restaurant. At the bottom end, the food is charitably described as unpalatable. In between, it is a spectrum between these two extremes.
At regular intervals, pairs of opposing diners are invited to play a round of the prisoner’s dilemma with each other; They are each provided with a small wooden coin with symbols on each side representing cooperation and betrayal, which they place on the table concealed under their palms, and then simultaneously reveal:
- If they both cooperate, then they are both moved up five seats towards the good food.
- If they both betray, they are both moved five seats down towards the worse food.
- If one betrays and one cooperates, the betrayer moves up ten seats, and other down ten seats.
The event is presented as an initiation ritual of a freemason–esque secret society; service is run by servers in hooded robes and the game is arbitrated by a dour, unsympathetic master of ceremony, who punctuate the courses with grave speeches describing the discovery of the game in the court of Charlemagne in the eighth century.
From the participant’s point of view, aside from getting to play a game and try a variety of different foods, the main attraction is that they get to move around the table and talk to a variety of people throughout dinner. The iterated prisoner’s dilemma is famous for creating very complex social dynamics, which keeps conversation lively and generates a high eagerness to continue playing.
Assorted links
1. Can you now taste the internet? And some odd photos from the year (you have to sit through a short ad).
2. Kenneth Arrow on malaria economics.
4. Did the swine flu pandemic of 2009 kill eleven times more people than we had thought?
Our DNA, Our Selves
At the same time that the NSA is secretly and illegally obtaining information about Americans the FDA is making it illegal for Americans to obtain information about themselves.
In a warning letter the FDA has told Anne Wojcicki, The Most Daring CEO In America, that she “must immediately discontinue” selling 23andMe’s Personal Genome Service, more affectionately known as the spit kit.
As I wrote when this issue first surfaced in 2010:
The ability of genetic tests to predict diseases is currently limited; if the FDA were simply to require firms to acknowledge this point, say with a clear statement of probabilities, that would be one thing (although this task is better met by the FTC under advertising regulation). But the FDA is brazenly overreaching in trying to regulate genetic tests as medical devices. First, there is no question that these tests are safe–safer than brushing your teeth!–and also effective in identifying genetic markers. Thus,
there is no medical reason whatsoever for regulation.
Moreover, genetic tests provide information, personal information about our bodies and our selves. The FDA has no standing to interfere with the provision of such information.
Consider, I swab the inside of my cheek and send the sample to a firm. The idea that the FDA can rule on what the firm can and cannot tell me about my own genes is absurd–it’s no different than the FDA trying to regulate what my doctor can tell me after a physical examination or what my optometrist can tell me after an eye examination (Please read the first line. “G T A C C A…”).
The idea that the FDA can regulate and control what individuals may learn about their own bodies is deeply offensive and, in my view, plainly unconstitutional.
Let me be clear, I am not offended by all regulation of genetic tests. Indeed, genetic tests are already regulated. To be precise, the labs that perform genetic tests are regulated by the Clinical Laboratory Improvement Amendments (CLIA) as overseen by the CMS (here is an excellent primer). The CLIA requires all labs, including the labs used by 23andMe, to be inspected for quality control, record keeping and the qualifications of their personnel. The goal is to ensure that the tests are accurate, reliable, timely, confidential and not risky to patients. I am not offended when the goal of regulation is to help consumers buy the product that they have contracted to buy.
What the FDA wants to do is categorically different. The FDA wants to regulate genetic tests as a high-risk medical device that cannot be sold until and unless the FDA permits it be sold.
Moreover, the FDA wants to judge not the analytic validity of the tests, whether the tests accurately read the genetic code as the firms promise (already regulated under the CLIA) but the clinical validity, whether particular identified alleles are causal for conditions or disease. The latter requirement is the death-knell for the products because of the expense and time it takes to prove specific genes are causal for diseases. Moreover, it means that firms like 23andMe will not be able to tell consumers about their own DNA but instead will only be allowed to offer a peek at the sections of code that the FDA has deemed it ok for consumers to see.
Alternatively, firms may be allowed to sequence a consumer’s genetic code and even report it to them but they will not be allowed to tell consumers what the letters mean. Here is why I think the FDA’s actions are unconstitutional. Reading an individual’s code is safe and effective. Interpreting the code and communicating opinions about it may or may not be safe–just like all communication–but it falls squarely under the First Amendment.
The FDA also has the relationship between testing and clinical validity ass-backward. The FDA wants to say no to testing until clinical validity is established but we are never going to discover clinical validity until we have mass testing. 23andMe is attempting to leverage individuals thirst for knowledge about themselves into a big data project that will discover entirely new connections between genotype and phenotype. But personalized medicine, just like personalized movie recommendations, only works with databases of millions. In the 20th century we took on many of our common diseases but it is now time to take on the uncommon diseases. There are some 7,000 known diseases and only about 500 have a treatment. Individual and disease heterogeneity is so large that even the diseases that we can treat are often not treated well. New approaches are necessary for progress. The collection of large amounts of DNA data is not the last step of personalized medicine but the first and by pushing back against the first steps the FDA is delaying the promise and progress of personalized medicine.
Full Disclosure: The FDA’s threat to regulate genetic tests in 2010 made me spitting mad so I put that spit to good use and became a 23andMe customer. Well worth it, if only to point out to my wife that contrary to all evidence I am in fact only 2.2% Neanderthal.
Further assorted links
Assorted links
1. The Three (Four?) Christs experiment.
2. The price of oil didn’t much react to the Iran deal. By the way: “…this right is clearly stated in the text of the agreement that Iran can continue its enrichment, and I announce to our people that our enrichment activities will continue as before,” Rouhani said in a statement broadcast live on television in Iran on Sunday morning.”
3. Magnus Carlsen and the Flynn Effect.
4. Ed Luce on the promise and limits of on-line education. MIT seems to be making on-line education work. And there is declining tuition revenue at 4 out of 10 U.S. schools.
5. Has the future already arrived in Silicon Valley?
6. Aghion on Krugman and France (in French).
Beware the top search results (the new Ricardian rents?)
Anyone in the US doing their holiday shopping from the product showcases that appear at the top of Google’s search results is almost certain to pay substantially more than if they delved deeper in the search engine.
Five out of every six items in the panels shown on a Google search made in America are more expensive than the same items from other merchants hidden deeper in the index, with an average premium of 34 per cent, according to a Financial Times analysis.
That is from Richard Waters at the FT. Do note, of course, that these higher listed products may also be of higher quality or offer better service in some way.
Automation, inequality and geopolitics
Joss Delage wrote me with a question, here is part of it:
Here’s what I’m curious about: assuming things turn out as described in your book, what do you think are the geopolitical ramifications? More specifically, do you envision some countries specializing to attract the top earners, and if so which and how?
I don’t cover geopolitical questions in Average is Over, but here are a few observations:
1. I see elites, working in a coalition with elderly voters, as able to control the political agenda enough to prevent most developed economies from flipping into purely destructive economic policies. So I expect the leading wealthy nations to maintain relatively strong positions in the world. (The book by the way does explicitly predict that U.S. government will get bigger and that social welfare spending will rise, contrary to what some reviewers have suggested.) This will be hardest, however, for the relatively pure democracies, such as the Westminster systems.
2. Some small nations, most notably Monaco and Luxembourg and Singapore, have the option of “specializing” in the higher earners and keeping in only a minimum of stagnant wage earners. A mix of immigration policies and land prices will enforce this choice. Commuting will rise in importance, where possible. But such outcomes will not describe a very large share of the world.
3. One class of vulnerable nations will be current exporters who rely on low wages to be competitive. Automation in the wealthy nations will disrupt their business models. The current Indian model of “doing most things internally” — which is by no means ideal — will be relied on increasingly. Export-led surpluses will not be available to drive growth, as the wealthier nations become the export leaders by increasingly wide margins. Given the rise of smart software and robots too, labor costs will not hold them back.
4. African nations and other poor nations, such as those in southeast Asia, also will not have the option of “last generation” export-led growth, pockets of resource wealth aside. Many of these nations will specialize in lower middle class earners. Free-riding upon global technologies will be important, as with cell phones today. Many more technologies will spread in this fashion, with the aid of price discrimination. We might see billionaires adopting particular regions or groups and transferring technologies to them at relatively low cost. “Wealth without wealth generation” will describe many locales.
5. One key question is whether software-led growth will lower or raise the relative price of most natural resources. There will be much more production! One possible scenario is that manufacturing growth will rise more rapidly than natural resource production will be eased. Countries with the higher-priced natural resources will then be geopolitical winners. And in that case high energy prices become quite a burden on lower middle income earners, who switch out of cars and into bicycles, mass transit, and the like. Yet it remains possible that smart software will do more for energy production, or for copper production, than it will for manufacturing production.
6. In talks (but not in the book) I have suggested that food production is the best candidate for “what will be most difficult to augment” in an age of smart software. Food production seems harder to “wall off” and it seems more embedded in local culture (for better or worse, usually for worse) than factory production. See our MRU video on conditional convergence, which considers the work of Dani Rodrik in this regard. It would mean that the price run-up for Midwestern farm land in the United States may not be a bubble.
Let’s say smart software, robots, and artificial intelligence really do pay off. What other geopolitical predictions would this imply?
The culture that was Singapore (Haw Par Villa)
It has its gruesome side, as illustrated by this look at a traditional site for visits, Haw Par Villa:
Thousands used to throng the park, and it once stood shoulder-to-shoulder with attractions like Singapore Zoo and Jurong Bird Park. “Every Singaporean over the age of 35 probably has a picture of themselves at Haw Par,” said Desmond Sim, a local playwright. Those pictures would probably include the following statues, each made from plastered cement paste and wire mesh: a human head on the body of a crab, a frog in a baseball cap riding an ostrich, and a grandmother suckling at the breast of another woman.
But the highlight of this bizarre park are the Ten Courts. A tableau of severe disciplines are shown in painstaking detail, along with a placard stating the sin that warranted it. Tax dodgers are pounded by a stone mallet, spikes driven into a skeletal chest cavity like a bloodthirsty pestle in mortar. Spot the tiny tongue as it is pulled out of a screaming man, watch the demon flinging a young girl into a hill of knives. Ungratefulness results in a blunt metal rod cutting a very large, fleshly heart out of a woman. Perhaps the most gruesome depiction is an executioner pulling tiny intestines out from a man tied to a pole. The colons were visible and brown. The crime? Cheating during exams.
The park may be closing down, with few remaining attendees, though from the article it seems you still can go. Hurry up.
You can read TripAdvisor reviews of the park here. Here is Wikipedia on the park. Here are Flickr images. There are further sources here.
Are these the cultural preconditions of capitalism and good governance? I know which of my colleagues will be most happy to read about this.
The literature on Iranian negotiation techniques
I found this 2004 piece (pdf) by Shmuel Bar. It has numerous interesting and detailed points, though I do not think it can be considered objective. Here is one excerpt:
Iranian negotiators are methodical and have demonstrated a high level of preparations and a detailed and legalistic attitude. On the other hand, their communication tends to be extremely high-context; ambiguous, allusive and indirect not only in the choice of words utilized, but in the dependence of the interpretation of the message on the context in which it is transmitted: non-verbal clues, staging and setting of the act of communication, and the choice of the bearer of the message. Procrastination is another key characteristic of Iranian negotiation techniques. This stands in sharp contrast to American style communication (Get to the point/Where’s the beef?/ time is money!) which places a high value on using lowest common denominator language in order to ensure maximum and effective mutual understanding of the respective intents of both sides. This tendency has been explained by an aversion to an assumption that the longer the negotiations last, the greater a chance that things can change in his favor and an intrinsic Shiite belief in the virtue of patience.
Dissimulation, high-level disinformation and manipulation are widely acceptable.
…one may paraphrase Marshall McLuhan in saying that in Iran frequently “the messenger is the message.”
…One of the characteristic traits of Iranian negotiation techniques is that the haggling goes on even after an agreement is struck.
I suppose we’ll see how it goes.
What are the political effects of increasing inequality?
Kevin Lewis reports some new research to us:
Economic Inequality and Democratic Support
Jonathan Krieckhaus et al.
Journal of Politics, forthcomingAbstract:
Does economic inequality influence citizens’ support for democracy? Political economy theory suggests that in a country with high inequality, the majority of the population will support democracy as a potential mechanism for redistribution. Much of the survey and area-studies literature, by contrast, suggests that inequality generates political disillusion and regime dissatisfaction. To clarify this disagreement, we distinguish between prospective versus retrospective evaluations as well as between egocentric versus sociotropic evaluations. We test the resulting hypotheses in a multilevel analysis conducted in 40 democracies. We find that citizens are retrospective and sociotropic, meaning that higher levels of economic inequality reduce support for democracy amongst all social classes. We also find a small prospective egocentric effect, in that the reduction in democratic support in highly unequal countries is slightly less severe amongst the poor, suggesting they believe that democracy might increase future redistribution.
I do not see an ungated copy, but the data for the paper are available here.
Best movies of 2013
This has been an excellent year for movies, in fact I can’t remember a period so good. Here is what I liked, noting that foreign films are classified by “what year did I have a chance to see them?” and not by their initial years of release, which are usually pre-2013. Here goes, more or less in the order I saw them:
Amour, by Michael Haneke.
The Chilean movie NO, which is an account of how, even in the strangest of circumstances, democracies filter policy outcomes, as indeed autocracies do too (in different ways).
The Gatekeepers, I taught that one in Law and Literature class last year.
Room 237, an excellent mock on Straussians, through the medium of the fandom cult for Kubrick’s The Shining.
Before Midnight, completes the trilogy realistically, with charm and bite.
In a World…, “a subtle and entertaining movie with much economics in it, most of all the economics of superstars in the “voiceover” sector.”
The Autobiography of Nicolae Ceacescu, “is mesmerizing, like watching one of the great silent films of the past, and the scenes where the Chinese communists praise the Romanian communists are some of the best ever filmed.”
Pieta, brutal Korean brutal tale involving money lenders and non-price compensation schemes.
In Another Country, Korean and French juxtaposed.
The Attack, possibly my favorite of the year, if I had to pick. Lebanese and Israeli in its sources.
The Act of Killing, mostly set in Sumatra, brutal, has lots of social science.
Happy People: A Year in the Taiga, don’t tell Stevenson and Wolfers. Directed by Werner Herzog.
Captain Phillips — treat the two embedded stories as implicit commentary on each other.
12 Years a Slave
Hollywood redeemed itself with those last three, after what was otherwise a dismal year for mainstream releases.
I loved the documentary In Search of Blind Joe Death: The Saga of John Fahey, although perhaps it is for fans only.
The crop of Christmas movies isn’t even out yet.
Claims about France
From Henry Samuel, reporting some claims by Jean-Philippe Delsol:
More than half of the active French population is living off the state, according to figures in a new book by a tax lawyer seeking to explain why so many of his clients in private enterprise are leaving France.
With the country on the brink of nationwide tax revolt, Why I’m Going to Leave France, published this week, has thrown more fuel on the fire by suggesting that 14.5 million people out of the country’s 28 million-strong workforce are — one way or another— making a living off taxpayers’ money. To reach the figure, the author begins with France’s or civil servants, of which there are 5.2 million and whose number has increased by 36% since 1983. These represent 22% of the workforce compared with a European average of 15%, leading him to conclude that France has 1.5 million too many “fonctionnaires”.
He then adds the 3.2 million unemployed people in France relying on state benefits, another 1.3 million taking low-income handouts, a further two million in the “parapublic” sector — majority state-owned companies — and more than a million people in state-funded associations such as charities. Under the current Socialist government, there are 750,000 state-subsidized jobs and the author includes a million people in the agricultural sector who rely largely on contributions from European Common Agricultural Policy subsidies.
He said that the figures in his book were only logical. “When you consider that public spending in France now accounts for 57% of gross domestic product, it’s only natural that more than half of the active workforce are paid with public money,” Mr Delsol told The Daily Telegraph.
A simple theoretical first cut at these numbers suggests they bring greater cyclical stability in the short run, inferior growth over time.
For the pointer I thank the excellent MacroDigest.
Assorted links to close the day
1. On the partial end of the filibuster, Ezra Klein has a rundown on nine different ways it will matter. Here is political scientist Gregory Koger on what it means. Here are past posts from Monkey Cage.
2. Joe Weisenthal calls Magnus Carlsen the “first post-modern” world chess champion. Yet I think Carlsen’s style is less boring than Weisenthal lets on — finding complexity in apparently dull positions is a skill of its own. If Carlsen is so boring and one-dimensional as a player, why does he induce his opponents to make so many mistakes? And how is it that Carlsen has ended up having better opening prep than Anand?
3. Larry Summers has a website.
4. Daniel Davies on demand-driven secular stagnation. This is the version of the hypothesis which makes the most sense.
Cosmos and Taxis
Cosmos and Taxis: Studies in Emergent Order and Organization is a new journal that looks to be of interest. The editor, David Emanuel Andersson, writes in the introduction:
It is our belief that Hayek and Polanyi’s contributions constitute the foundation for a new research program in the social sciences. Spontaneous-order theory has the potential for clearing up a great deal of confusion about the workings of market, democracies and the global scientific community….But spontaneous orders are only a subset of a wider class of emergent orders. As diZerega explains, emergent orders are unplanned and exhibit orderly development trajectories, but only some of them are spontaneous orders in the sense of providing easily interpreted feedback to order participants. Examples of emergent orders that are not spontaneous in the sense of Hayek or Polanyi are civil society, the ecosystem, and human cultures. Thus emergent orders in this more general sense are relevant not only to [economics, political science and the philosophy of science] but also to sociology and biology. It is our intent that Cosmos+Taxis will become an arena for multidisciplinary conversations that engage scholars across all five disciplines.
The first issue can be found here (pdf) and it contains the following pieces:
- Introduction – David Emanuel Andersson
- Outlining a New Paradigm – Gus diZerega
- Spontaneous Orders and the Emergence of Economically Powerful Cities – Johanna Palmberg
- Rules of Spontaneous Order – Jason Potts
- Computable Cosmos – Eric M. Scheffel
- Comments on Palmberg, Potts, and Scheffel – Gus diZerega