Monthly Archives: August 2015

Cities and Marriage

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Brink Lindsey speaks for many economists when he suggests that getting rid of excessive building regulations in cities would raise productivity by allowing more people to move to those cities. I want to push back a bit.

I want to apply the Stevenson-Wolfers theory of modern marriage to modern cities. Their story is that back in the 1950s, marriage was about production complementarity. The man worked in the market, and the woman did housework. However, as women moved out of housework and into market work, marriage became about consumption complementarity. You wanted a partner who shared similar interests and cultural inclinations.

Perhaps the same holds true of cities. There was once a lot of production complementarity from having people in a similar industry close by. Perhaps now, that is not so much the case, and what cities attract are people who like the lifestyle of those cities. Maybe Silicon Valley is an exception where production complementarity still matters, but even there, one hears that San Francisco has become more chic among the techie hipsters.

Why this matters:

1. Moving people from small-town Ohio to New York City might do little or nothing for productivity. Yes, productivity is higher in New York, but the causality could run from consumption externalities + restrictive building codes => high rents and high salaries => high productivity to cover the high salaries. It’s not that New York generates high productivity. It selects for high productivity, because people who are not highly skilled find it difficult to afford to live there.

2. Getting rid of building restrictions would allow highly productive people to live in New York less expensively, increasing their wealth (and perhaps driving up inequality). But it would allow less productive people to live in New York, thereby bringing down average productivity in New York.

Some random comments:

One of my daughters moved from Tucson to New York a few years ago. From a career standpoint, the move was a slight step backwards. From a social standpoint, it was a big step forward. She exemplifies the consumption complementarity story. The sorts of people she wanted to hang out with were much more prevalent in New York.

I was stimulated to think about this when I came across Dean Baker the other day. He was jogging and I was biking, and when I recognized him I doubled back and went with him a few hundred yards. We had a conversation that included this topic. That illustrates that there is still some production complementarity going on. It is not a conversation I would have had living in a different area.

The Eurozone: a PSST Story

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He does not call it that, of course, but in the new Journal of Economic Perspectives, Christian Thimann writes,

widespread structural barriers make job creation in these countries far more arduous than in many other advanced economies, and even more arduous than in some key emerging economies and formerly planned economies. Structural barriers to private sector development are particularly widespread in the areas of labor market functioning, goods market functioning, and government regulation. Evidence from the World Economic Forum’s Global Competitiveness Index and the World Bank’s “Doing Business” dataset confirms the immense size and persistence of these barriers, despite improvements in some countries in recent years.

Playing the Status Game

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Tyler Cowen writes,

So much of debate, including political and economic debate, is about which groups and individuals deserve higher or lower status. . .

I hypothesize that an MR blog post attracts more comments when it a) has implications for who should be raised and lowered in status, and b) has some framework in place which allows you to make analytical points, but points which ultimately translate into a conclusion about a).

My comments:

1. Lowering another group’s social status is the most powerful message of all. It is more powerful than raising the status of those who one likes.

2. It would be an interesting exercise in honesty for everyone who uses social media for political discussions to say, “My main purpose is to lower the status of the following three groups. . .” What would my answers be? MIT economists would be high on the list. Also progressives. And people who align entirely on one of the three axes.

3. How much of writing in the social sciences and the humanities (can you broaden this to other academic disciplines?), including research papers and journal articles, is motivated and made popular by the way that it affects relative group status?

You can take man out of tribal society, but you cannot take tribal society out of man.

Statisticiness

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‘Scott Alexander’ writes,

But r = 0.23 means the percent of variance explained is 0.23^2 = ~5%. If some Social Darwinist organization were to announce that they had evidence that who your parents were only determined 5% of the variance in wealth, it would sound like such overblown strong evidence for their position that everyone would assume they were making it up.

His point is that some pundits have used a recent study to claim that inherited wealth is really, really important, even though numerically the study fails to show that.

Suppose we define mathiness as people making misleading, ideologically loaded claims about what their theorems prove. It seems fair to suggest that statisticiness is a similar problem.

A Robot Cambrian Explosion?

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The Journal of Economic Perspectives, which Timothy Taylor has been editing since its inception, has a symposium on robotics. One of the articles is by Gill A. Pratt.

The exponential growth in computing and storage performance has led researchers to explore memory-based methods of solving the perception, planning, and control problems relevant to the development of additional degrees of robot autonomy. Instead of decomposing these tasks into a set of hand-coded algorithms customized for particular circumstances, large numbers of memories of prior experiences can be searched, and a solution based on matching prior experience is used to guide response.

… human beings communicate externally with one another relatively slowly, at rates on the order of 10 bits per second. Robots, and computers in general, can communicate at rates over one gigabit per second—or roughly 100 million times faster. Based on this tremendous difference in external communication speeds, a combination of wireless and Internet communication can be exploited to share what is learned by every robot with all robots. Human beings take decades to learn enough to add meaningfully to the compendium of common knowledge. However, robots not only stand on the shoulders of each other’s learning, but can start adding to the compendium of robot knowledge almost immediately after their creation.

He does not predict when it will occur, but he thinks that at some point these sorts of capabilities will result in a rapid increase in robot intelligence.

I Think He Wants Betting Markets in Non-profits

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Neerav Kingsland writes,

it is important for there to be a public, meaningful signal against efforts that are likely to fail.

He laments that there is no way to short a non-profit. But you can think of a short sale as a side bet. As Robin Hanson has repeatedly emphasized, betting markets in opinions can be used to extract information of the sort that Kingsland discusses. You could set up a betting market in which participants wager on the likely success of non-profit initiatives. Of course, whether managers of an initiative would heed the opinion of the betting market is another matter.