Monthly Archives: November 2017

Tim Harford and Russ Roberts

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An econtalk podcast, of course. At one point, Harford says,

one thing I learned is not to undervalue innovations that are important simply because they have become very, very cheap, so they’ve become ubiquitous. The other thing I learned was not to forget the way that inventions reshape organizations, reshape the way we live, reshape societies. Often in order to use an invention, take advantage of an invention, you need an awful lot of adjustment. The classic example, which will be well known, I think, to some EconTalk listeners, is Paul David’s essay on “The Dynamo of the Computer”, reflecting on how long it took electric motors to be adopted in manufacturing in the late 19th-early 20th century, because people had to completely readjust, reconfigure the factories, retrain the workers. I mean, just everything had to change in order to take advantage of this new technology. And initially when it was used, they tried to direct replacement to the steam engine–just rip out a big steam engine, replace it with a big electric motor, and that should be fine. And of course that doesn’t realize the gains. Because to really take advantage of these technology, we often have to change, and adjust the way we do things–the way we work, the way we live. Otherwise we don’t enjoy the benefits. And sometimes those changes can be–well, they are very hard to predict, but they are occasionally quite hard, quite wrenching.

Jordan Peterson and Jonathan Haidt

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A long, wide-ranging conversation. At the end, Haidt predicts that there will be a split in the academic world. There will be a “University of Chicago model,” which underlines a commitment to truth and spurns indoctrination, and a “Brown University model” that does the opposite. He predicts that the market will reward Chicago and punish Brown.

I am not nearly so optimistic that the Chicago model will win out decisively.

1. I think that many high school students will prefer the Brown model.

2. I think that parents, who are the real consumers here, do not feel strongly about which model is used. What they care about is the school’s prestige and their ability to tell their friends that their child got into a top school. I do not think that Brown’s brand will decline much, if at all, in that regard.

I guess what I am saying is that I do not think that high school students or parents care all that much about the issue of truth-seeking vs. social-justice-seeking institutions of higher education. But suppose that they do care. Then some possible outcomes:

a. Brown attracts students oriented its way, and Chicago attracts students oriented its way. Over time, Chicago becomes predominantly conservative, and Brown becomes even more leftist.

b. Earlier in the dialogue, Peterson tosses out the data point that illiberal leftist students score relatively low on verbal intelligence. So perhaps the quality of the student body rises at Chicago and falls at Brown.

Reading in my youth

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Tyler Cowen writes,

Way back when, I considered the ten books that influenced me most, a list I still stand by. In response, someone asked me to name the books that influenced me, but whose influence I probably was not aware of. Let’s ignore the semi-contradiction in that request and plow straight ahead! Here goes, noting that if memory serves I read most of these between the ages of 10 to 12

Let me play the same game, focusing on what I read around that age. Should I include Baseball Digest and Mad Magazine? I am sure that they had influence. The former led me to Strat-O-Matic baseball, which incented me to work out the probabilities of two dice. Mad was big into exposing hypocrisy–Dave Berg even had a regular feature “When they say ___ what they really mean is _____.”

My chess reading was limited to Fine’s Ideas Behind the Chess Openings. It did not turn me into a chess player. I did not know enough about the midgame to appreciate the opening theory. For the purpose of learning chess, my guess is that it would have been better to start reading about the endgame and work backwards.

Neither did Common Sense at Poker turn me into a poker player. But it was a great book, very well written, with memorable characters: Mouse, the guy who was afraid to bet big. Brill, the sharpster. Guffy, the bluffer who bid up pots. Years later, when I had my Internet business, I thought of VC-backed competitors as Guffy types. They made the pots a lot bigger, and it was expensive to stay in, but our hand was as good as theirs, so it was worth it to call their bluff.

Of the books that Tyler mentions, I read Instant Replay and Guadalcanal Diary. The former was extremely well written, and about ten years ago I ordered a used copy to re-read. The latter I have forgotten, apart from the title. Speaking of sports books, I read Jim Brosnan’s The Long Season, among many others. Percentage Baseball, by Earnshaw Cook, was sabermetrics before Bill James, although Cook could not write anywhere near as well as Bill James. I doubt that I was able to follow Cook’s math, although perhaps the attempt was good for me.

When I was ten, my father was asked to be on a panel judging the best political science books of the year, so we were sent a lot of books by publishers. Two that I remember are The Agony of the GOP, 1964 and a book whose title eludes me that chronicled the run-up to the first world war. We were sub-letting a professor’s house in Princeton, and the professor had really fancy rare edition of The Three Musketeers, which my parents read to me/with me, probably because they were afraid that if I read it myself I would destroy it. I did wreck a lot of other things in the house. Boys do that, you know. They also read with me The Wind in the Willows, which I did not appreciate as much at the time as I have come to appreciate later.

Somewhere around that time I read Churchill’s six-volume history of the Second World War. I probably absorbed the fact that Churchill felt much more relaxed being in charge than trying vainly to convince others in charge of what to do about Hitler before the war started. I also noted his obsession with capital equipment (as I would put it now), such as the rate at which merchant ship tonnage was being sunk by U-boats compared to the rate at which new ships were being built.

I was very loyal to Alexandre Dumas, primarily because I had seen on television the 1939 movie version of The Count of Monte Cristo and been enthralled by the tale of hard-earned revenge. The book, it turns out, ends on a more ambivalent note than the movie, so at that age I did not enjoy the book as much. I wrote a book report on The Scarlet Pimpernel, saying that although I did not like it very much I intended to read other works by Dumas. My English teacher wrote on my book report something to the effect of, “You don’t have to do that, you know.” And so I didn’t. I think that might have been a revelation, that not every book by a given author is equally worth reading.

Thoughts on profits

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I put this essay up on Medium. I like the concept of Medium. I would like to be able to reach some people who are on the left. Everyone seems to love the juvenile, anti-capitalist rants that people put up. I thought I would put up some different ideas. Based on statistics, hardly anyone who goes to the site seems to want to read what I write. If that continues to be the case, then I will just stick to this blog.

Disaggregating the economy/New Commanding Heights watch

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A chart from Jeff Desjardins shows the largest employer in each state. The results: Wal-mart is the largest in 22 states. A health care network is the largest in 12 states. A university system is the largest in 11 states. That leaves 5 states with “other,” only one of which is a manufacturing firm (Boeing in the state of Washington).

I think that this reflects a Great Consolidation in retail and in health care. Mom-and-pop stores and small medical practices have been wiped out. That means you want to be really careful about interpreting statistics that seem to say that Americans aren’t starting new businesses the way that they used to. The opportunities are not what they used to be.

Disaggregating the polity: frontier culture

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[UPDATE: clarifying definitions. In the paper below, the frontier is by definition very sparsely settled. Also, “Greater Appalachia” as Woodard uses the term describes the Scots-Irish who gradually spread westward, not simply people born in what we now call Appalachia]

Samuel Bazziy, Martin Fiszbeinz, and Mesay Gebresilasse write,

In our simple conceptual framework, the significance of the frontier can be explained by three factors. First, frontier locations attracted individualists able to thrive in harsh conditions. Second, the frontier experience, characterized by isolation and low population density, further promoted the development of self-reliance. At the same time, favorable prospects for upward mobility through effort nurtured hostility to redistribution. Finally, frontier populations affected local culture at a critical juncture, thus leaving a lasting imprint.

Pointer from Tyler Cowen.

My immediate reaction is to interpret this using Colin Woodard’s 11-nations model, in which he divides the U.S. into cultural sub-nations. The nation most likely to seek out the frontier would be Greater Appalachia. The other migratory nations that settled the west were Yankeedom, which was very community-oriented and would have avoided the frontier, and Midlands, which also preferred to live in towns or farming communities, rather than in isolated frontier settlements. The political and cultural description that Bazziy and co-authors give to frontier-influenced populations does seem to fit the Greater Appalachia Jacksonian model.

John Ioannidis on Economics

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Self-recommending. But here is an excerpt.

Most empirical data do not come from experiments but from non-experimental sources such as surveys and routinely collected information. Along with Chris Doucouliagos and Tom Stanley, my research center examined 6,700 empirical studies encompassing 159 topics. We found that there is probably substantial bias in much of this literature. For example, the value of a statistical life, which measures how much people are willing to pay to reduce their risk of death, appears to have been exaggerated by a factor of eight. On average, the strength of the results may have been exaggerated by a factor of two. In a third of the studies, by a factor of four.

But overall, he is more upbeat than I am on economics as a science.

Pointer from Mark Thoma.

Work becomes optional

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John Coglianese writes,

participation has changed along an understudied margin of labor supply. I find that “in-and-outs”—men who temporarily leave the labor force—represent a growing fraction of prime age men across multiple data sources and are responsible for roughly one third of the decline in the participation rate since 1977. In-and-outs take short, infrequent breaks out of the labor force in between jobs, but they are otherwise continuously attached to the labor force. Leading explanations for the growing share of permanent labor force dropouts, such as disability, do not apply to in-and-outs. Instead, reduced-form evidence and a structural model of household labor supply both indicate that the rise of in-and-outs reflects a shift in labor supply, largely due to the increasing earnings of men’s partners and the growth of men living with their parents.

Pointer from Tyler Cowen. My thoughts:

1. When we think of labor force participation declining, we think of, say, John Smith, deciding to never work again. What this paper is saying is that the statistics reflect something different. One month Smith takes a break, then next month he gets a job and Tom Jones takes a break.

2. I think we have always had a large number of workers who are not fully employed year round. That is, there have always been a lot of workers who take breaks between jobs. This is common in construction work, for example.

3. I don’t know if this matters for the phenomenon at hand, but we used to have inventory recessions. In those cases, workers would be out of a job for a while, but they would still be in the labor force, because they were waiting to be recalled by the firm that had laid them off.

4. It seems to me that this is an important paper. Re-read the last sentence in the quoted excerpt.

Disaggregating the economy using big data

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When do you suppose that the following sentences were written:

Should we worry about a computerized creation that plays to our unconscious? How vulnerable are we to these increasingly refined sales pitches?

They come from Michael J. Weiss, on p.25 of his book The Clustering of America. It is a mostly-favorable treatment of the use of big data to sort American zip codes into socioeconomic clusters, to help businesses make better use of direct-mail marketing and local advertising. The data also were used by political organizations to target efforts to get out the vote, solicit donations, and tailor messages.

The book appeared almost thirty years ago, in 1988. I read it when it first came out, and I recently ordered it so that I could read it again. I also ordered a follow-up book that Weiss wrote in 2000, called Our Clustered World. I will have more to say about the two books when I have finished. I am interested in what they contribute to the project of disaggregating the economy, meaning treating the U.S. as a collection of diverse economies that trade with one another.

One side note: In the late 1990s, when I was running my commercial web site providing information to people who were relocating, we contacted a company that had a similar cluster analysis, in order to enable users to search for particular types of towns. For example, you could select a place where you lived (or wish you lived) near Baltimore and then look for the three most similar towns near, say, Los Angeles. The application would take the socioeconomic cluster that you started with and match you with a part of Los Angeles that had a similar socioeconomic cluster.

The company provided us with their data on a couple of CD’s, and for us, loading it and putting up a front-end that could do the searches the way we wanted was a technical project. Probably the biggest challenge was creating a way to search by town name as well as by zip code.

Shortly after the application went live on the web, I received a very angry note from a Civil Rights organization. The data for each socioeconomic cluster included the two or three consumer items that were purchased much more in that cluster than in other clusters. Our application spat out that information, along with the other data about location. It turned out that one cluster’s unusually strong consumer propensities included fast food fried chicken. Someone evidently had done a search that caused this cluster description to appear and contacted the The Civil Rights group about it. The note that they sent us accused us of stereotyping the location as African-American, so that we were promoting segregation and redlining.

Of course, the company was not using racial stereotyping to speculate on consumer propensities. All of the consumer propensities that the company identified were data driven. If this was a stereotype, it evidently had a basis in reality.

We decided that it was appropriate to edit out that particular example, and just leave in the consumer propensities that did not have any racial connotations. As I recall, we looked in the cluster descriptions for other examples of consumer propensities that might have ethnic connotations, but we did not see any.

David Brooks on the siege mentality

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He writes,

The siege mentality starts with a sense of collective victimhood. It’s not just that our group has opponents. The whole “culture” or the whole world is irredeemably hostile.

As Handle points out, Brooks seems to be siding with Yuval Levin in what I call his debate with Victor Davis Hanson. My thoughts:

1. It is possible for both sides to believe that they under siege. Palestinians can believe that the Israelis want all their land. Israelis can believe that the Palestinians want to drive Jews out of Israel. Each side can point to evidence that seems convincing.

2. But that does not preclude the possibility that one side really is under siege and the other side really does wish for the other side to either adopt the “correct” religion or be annihilated. My father, whose family escaped Cossack pogroms in Russia and who had relatives murdered in the Holocaust, used to say that it is not always wrong to believe that there are people out to get you.

3. I am still reading Colin Woodard, who describes the Puritan mindset as a belief that they are the chosen people and everyone else should be like them. If you suppose, as does Woodard, that progressives are the descendants of the Puritans, then they are quite capable of being intolerant. Woodard says that the Puritans saw it as their mission to reform the sinners who were all around them. Puritanism has a propensity both to feel under siege (by the sinners) and to make others feel as though they are under siege.