According to Jason Collins, Oded Galor and Quamrul Ashraf will soon write,
there is little evidence to support the claim that the variation in institutions across societies is driven by differences in their endowment of specific genetic traits that might govern key social behaviors.
I believe that in Hive Mind Garett Jones endorses the view that higher average IQ can lead to better institutions. So I will want to read the Galor-Ashraf paper when it appears.
Jason makes it sound like Kay’s book is worth reading.
One of the most interesting threads in the books is that many of the regulatory mantras are about the financial intermediaries, not the end users. The drives for transparency and liquidity in particular come in for criticism by Kay. First, the demand for transparency is a sign of the problem
The quoted passage that follows strikes me as very good. I also have argued that non-transparency is in some sense the point of financial intermediation. If I know everything about a bank’s portfolio, then I do not need the bank. I can just buy the portfolio myself.
he had very clever ideas—but he was extremely bigoted, he was racist. There is a wonderful interview with him that you can find on You Tube, where he says (imitating Hayek’s accent) “I am not a racist! People accuse me of being a racist. Now it’s true that some of the Indian students at the London School of Economics behave in a very nasty way, typical of Indian people…” and he carries on like this. So that’s one reason he is horrid. A second thing is that if you don’t believe he is horrid, David, I will send you his book The Road to Serfdom, which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation. When he produced that book it had a big success, particularly in the United States, and what is more, he authorized a comic book version of it, which is absolutely dreadful. One Nobel Prize winner, [Ronald] Coase, said “you are carrying on so much against central planning, you forget that a large part of our economy is actually governed by centrally planned institutions, i.e., big firms, and these big firms are doing exactly what you say they can’t do.
From a new web site called Evonomics, to which Jason Collins contributes. It seems like an eclectic grab-bag of not-necessarily-original content. Worth a visit. For example, in a different piece, Rory Sutherland writes,
The market mechanism is loosely efficient. But the idea that efficiency is the main virtue of free markets is wrong. Competition itself is highly inefficient. In my home town, I can buy food from about eight different places; I’m sure this system could be much more ‘efficient’ if Waitrose, M&S and Lidl were forcibly merged into one huge ‘Great Grocery Hall of The People No. 1306’. I am equally confident that after a few initial years of success, the shop would be terrible.
The missing metric here is semi-random variation. Truly free markets trade efficiency for a costly process of market-tested innovation heavily reliant on dumb luck. The reason this inefficient process is necessary is that, though we pretend otherwise, no one knows anything about anything: most of the achievements of consumer capitalism were never planned; they are explicable only in retrospect, if at all.
Back to Kirman, I found this interesting:
in France when I arrived here it used to take about a day and a half to make my tax return. Now it takes around about 20 minutes, because some sensible guy realized that you could simplify this whole thing and you could put a lot of stuff already into the form which they have received. They have a lot of information from your employer and so forth. They’ve simplified it to a point where it takes me about 20 minutes a year to do my tax return.
Advantage France, apparently.
Overall, you will find the interview annoying. Lots of use of “neoliberalism” and “laissez-faire” as boo-words. Just once, I would like to see someone on the left walk through the Federal Register’s list of regulations and justify the claim that we are living in a laissez-faire economy. And I would like more people to have Sutherland’s understanding of the virtues of markets rather than the neoclassical understanding.
In an interesting post on self-delusion and leadership, he writes,
if leaders are so often self-deluded, how come so many organizations succeed, or at least don’t collapse?
Pointer from Jason Collins. Some thoughts:
1. Perhaps we are looking at survivorship bias. There may have been hundreds of CEO’s, each with “reality distortion fields,” playing the tournament that Steve Jobs wound up winning.
2. Bureaucracy may provide a check against self-deluded leaders. Bureaucracy tends to err on the opposite side of overconfidence. Anyone who has ever tried to sell something to a big company has found that one “no” vote can cancel out many “yes” votes. Every CEO faces what Lewis Gerstner of IBM called a “culture of ‘no’.”
So when significant numbers of fertile women begin using IVF, we will know that market-based eugenics has left the launch pad. This could easily expand into positive eugenics where parents choose the best among healthy embryos in an attempt to give their children a better start in life. Most parents want their children to be not only healthy, but happy and successful. The surmise by James D. Watson, co-discoverer of the structure of DNA, is plausible: “Once you have a way in which you can improve our children, no one can stop it.” Watson wants parents to have access to genetic screening. That would aid negative eugenics but it would make the slope to positive eugenics more slippery.
The long article is interesting throughout. Pointer from Jason Collins. I should note that a recent issue of Technology Review carried the cover story “We Can Now Engineer the Human Race.”
Recently something brand new has emerged about Steve that is astonishing. In his own empirical work attacking others for biased data analysis in the service of political ideology—it is he who is guilty of the same bias in service of political ideology. What is worse—and more shocking—is that Steve’s errors are very extensive and the bias very serious. A careful reanalysis of one case shows that his target is unblemished while his own attack is biased in all the ways Gould attributes to his victim.
Pointer from Jason Collins.
what you should really look for, in a world that keeps throwing nasty surprises at us, is intellectual integrity: the willingness to face facts even if they’re at odds with one’s preconceptions, the willingness to admit mistakes and change course.
Pointer from Mark Thoma.
Is it a rule of thumb that if you accuse other people of committing an intellectual sin, then you yourself are committing it?
From The Independent
Richard Smith, who edited the British Medical Journal for more than a decade, said there was no evidence that peer review was a good method of detecting errors and claimed that “most of what is published in journals is just plain wrong or nonsense”.
…Speaking at a Royal Society event earlier this week, he said an experiment conducted during his time at the BMJ, in which eight deliberate errors were included in a short paper sent to 300 reviewers, had exposed how easily the peer review process could fail.
Pointer from Jason Collins.
What might be better? Off the top of my head, I propose that:
1. No individual study should receive more than a page or two in a journal. Just explain the findings, interpret them, and put all of the methodological details and literature review on the author’s web page. Results from all such papers should be treated as “preliminary and unconfirmed.” Accept any study for publication, including studies with findings of “no significant effect.”
2. Longer articles should be survey articles that focus on studies that have been replicated and confirmed. The survey articles should also report on studies where attempted replication failed or the method was otherwise shown to be invalid.
3. Do not assign high status to researchers just because they get studies published. Instead, assign high status to researchers who attempt to replicate or otherwise confirm other studies and also to researchers whose work is cited favorably in survey articles.
Jason Collins passes along this not-surprising result from a study by Michael Daly and others.
Analyzing unemployment data from two nationally representative British cohorts (N = 16,780), we found that low self-control in childhood was associated with the emergence and persistence of unemployment across four decades. On average, a 1-SD increase in self-control was associated with a reduction in the probability of unemployment of 1.4 percentage points after adjustment for intelligence, social class, and gender. From labor-market entry to middle age, individuals with low self-control experienced 1.6 times as many months of unemployment as those with high self-control.
This is one reason that it will be difficult to disentangle the effect of single parenting on economic outcomes. If parents of out-of-wedlock children have less self-control than married parents, and if self-control is somewhat heritable, then one could observe poor outcomes for children of single-parent families even if the family environments are not a problem.
in the environment in which the mind evolved we often needed to accurately throw things but rarely needed to accurately drop things from moving objects. As a result, we developed excellent heuristics for throwing but not for dropping.
Yesterday, as I was taking a long bike ride, I thought to myself, my physique is much better suited to riding a bicycle than to running. Doesn’t that suggest that my prehistoric ancestors rode bicycles?
Anyway, I wonder if there is too much confirmation bias at work when we tell stories in which evolution explains what we are suited to doing and what we are not suited to doing.
[Update: Commenter Handle’s remarks, picking up on the bicycle example, are wise and worth reading.]
Commenting on a book about behavioral considerations in public policy, Jason Collins writes,
The opening substantive chapter by Curtis Hardin and Mahzarin Banaji is on bias – and particularly implicit bias. Implicit biases are unconscious negative (or positive) attitudes towards a person or group. Most people who claim (and believe) they are not biased because they don’t show explicit bias will nevertheless have implicit bias that affects their actions.
I think that thinking in terms of the oppressor-oppressed axis is an example of implicit bias. For example, labor policies, such as the minimum wage, are based on an implicit bias that workers are oppressed. I was reminded of this by a recent Tyler Cowen post.
I am often struck by the conflict between one supposition and one fact. First, employers are supposed to be reaping some big surplus from hiring unskilled labor. Second, when a downturn comes, it is unskilled labor who are laid off.
The three-axes model would explain the supposition as a form of implicit bias.