Category Archives: Tyler Cowen is my Favorite Blogger

Why we stink at longevity

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Ben Southwood writes,

In fact in the US case it’s not even obesity, or indeed their greater pre-existing disease burden, that is doing most of the work in dragging their life expectancy down; it’s accidental and violent deaths. It is tragic that the US is so dangerous, but it’s not the fault of the healthcare system; indeed, it’s an extra burden that US healthcare spending must bear. Just simply normalising for violent and accidental death puts the USA right to the top of the life expectancy rankings.

Pointer from Tyler Cowen. That is what I have in mind when I claim that one of our cultural problems is that we spend too much on health care and not enough on public health. I would rather put money to work on efforts to reduce violent and accidental death than on futile care in the last year of life.

Some Pro-Trump Intellectuals

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Joshua Mitchell writes,

What binds globalism and identity politics together is the judgment that national sovereignty is not the final word on how to order collective life. This judgment against national sovereignty—let us state the matter boldly—was the animating principle of the post-1989 world order, an order that is now collapsing before our eyes. Citizens who came of age after 1989 scarcely know how daring this project has been and, thanks to the American university, can scarcely conceive of any alternative to it. The post-1989 world order, however, is not fixed and immutable. It is, moreover, a rather bold historical experiment.

These are from a new journal called American Affairs. Pointer from Tyler Cowen. I will put some more quotes, from this and other articles, below the fold.

A few random thoughts from me:

1. What is Michael Lind doing on the masthead? I do not think of him as a natural Trump supporter. Of course, the mission statement for the journal does not say anything about Mr. Trump. It says, for example

We seek to provide a forum for the discussion of new policies that are outside of the conventional dogmas, and a platform for new voices distinguished by originality, experience, and achievement rather than the compromised credentials of careerist institutions.

2. We have National Affairs (Yuval Levin’s journal) and now American Affairs. What’s next? Playoffs? A college draft?

3. I find it easier to be anti-anti-Trump than to be pro-Trump. Left-wing campus activism repels me. The Democratic Party’s identity politics repels me. The outrage-manufacturing machine that is the Washington Post front page repels me. The arrogance of those in power regarding ordinary citizens repels me, although I do not think that American’s citizenry is blameless when it comes to the health care mess, for example.

4. I think that most of the policy ideas to help working-class Americans that are floating around these days are beside the point. I feel that way about trade restriction, immigration restriction, minimum wage increases, support for unions, education–pretty much every hobby horse, left and right.

I think that deregulation could make a positive difference, although the difference might be small. That is an area where there is some alignment between President Trump’s agenda and the needs of working-class Americans.

However, if it were up to me, I would focus on reducing the implicit taxes on labor demand and labor supply.

a. Get rid of “employer-provided” health insurance, which is an employment tax on healthy workers to pay for health care costs of workers with chronic illnesses, and instead provide support for the chronically ill with government funds. On health care policy in general, I continue to prefer the approaches that I suggested a decade ago in Crisis of Abundance to the Obamacare and ObamacareLite choices currently in play.

b. Reduce or eliminate the payroll tax.

c. Substitute a basic income grant for means-tested programs, including food stamps and Medicaid. However, reduce overall spending on poverty programs. That probably means setting the BIG below the level required to sustain a household. Leave it to charities and local governments to find the households that need and deserve more assistance than a low BIG can provide.

d. Fund (a) and (b) with a tax on consumer spending.

5. On foreign policy, if Trumpism means nothing more and nothing less than treating governments that work with us better than governments that work against us, then I am on board.

Continue reading →

Narrower, Deeper, Older

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Phil Moss writes,

But the plethora of new dances comes at a cost. It increases our fragmentation. It creates a barrier to entry for both veterans (who come and go at various points in their lives) and for newbies who have to “drink from a firehydrant” in order to become regulars. For veteran non-regulars it becomes daunting to come back and see so many dances they haven’t learned. Unless one attends regularly, one becomes a stranger in a strange land instead of feeling comfortable when “coming home.”

The article is about Israeli folk dancing, which I know interests me a lot more than my readers, so I won’t say “read the whole thing.” Instead, I want to talk about the general trends I see in the way people engage with their interests. You can become engaged with any number of interests, including your religion, a sport, a hobby, your profession, a charitable cause, etc.

I want to offer some observations that apply to the entire class of interests, and I will suggest that “matching technology” (Tyler Cowen’s term) plays a role in these trends. Then I will come back to Israeli Dancing.

My central claim here is that the nature of engagement has changed over the past fifty years, in these three ways:

1. Narrower. There are fewer people casually engaged.

2. Deeper. Those who are engaged are more committed and have deeper knowledge.

3. Older. For any interest that has been around for a long time, the demographics of those interested now skews older.

For example, consider the game of bridge. A social bridge game is four friends getting together in someone’s house to play. A bridge tournament is many strangers competing against one another in a large room. In high school and college, I played a lot of social bridge. In college, I also played some tournament bridge. I then stopped playing for decades.

Fifty years ago, I believe that there were more social bridge players than tournament players. Today, it is closer to the reverse.

When I tried to get back into tournament bridge a few years ago, I found that the “barrier to entry” had gotten much higher. Players expect you to know a plethora of new tactics, which in bridge are known as “conventions.”

The other point to notice was that the median age of players at the tournament seemed to be about 70. Not many young people are willing to get past the barrier to entry.

As another example, consider people with an interest in baseball. Fifty years ago, many casual fans knew the batting averages and home run totals of well-known players. Today, there are fewer fans with that knowledge. Instead, there is a relatively small group of fans whose knowledge includes arcane statistics that did not exist when I was growing up.

Also, I think that interest in baseball skews older, in spite of marketing efforts aimed at the young. My sense is that in the ballpark it is mostly people over age 50 who are paying close attention to the action on the field. The younger people are on their cell phones and/or watching the JumboTron.

I believe that religion is becoming narrower, deeper, and older. A smaller fraction of the population is affiliated with a place of worship, but there may be an uptick among those deeply committed, such as Orthodox Jews. Otherwise, many congregations are thinning out as their populations age and die off.

I suspect that what Tyler Cowen calls “matching technology” (the Internet) plays a big role. Instead of settling for a lowest-common-denominator activity, like a game of social bridge, you can find something that really excites you and connect with people who share your excitement. With better matching technology, the total number of viable interests goes up, and the share of people who settle for activities in which they are only moderately interested goes down.

“Matching” means that any given interest draws a narrower set of people. Those people are more committed, so that the interest becomes deeper, with a higher barrier to entry in terms of study and practice. Finally, as new interests emerge, the population engaged in traditional interests gets older.
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The Cato Institute on the Future of the Free Society

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They write,

We have reached out to leading thinkers and challenged them to answer the following questions: What are the most pressing challenges that free societies face in the coming years? What is the most important reason for optimism about the free society? What is the most important but still unappreciated idea that lies just ahead? What’s the most important thing that you have learned about free societies that you wish you knew all along?

By “leading thinkers,” they mean only Tyler Cowen. Evidently not me. But here is how I would answer.

I would start with the last question. I think that the most unappreciated idea is that ideas are underappreciated. As I have said before, the social sciences disciplines that study human society are too materialistic. They try to base their explanations and interpretations on material conditions. In economics, it is the rare Joel Mokyr or Deirdre McCloskey who will recognize the significance of the mental-cultural world. Recall also my essay on cultural intelligence.

The most pressing challenges that free societies face are the David Brin challenge and Fear Of Others’ Liberty.

The David Brin challenge is that we live in a world where surveillance is increasingly feasible and arguably necessary. The challenge is to avoid a dystopia of asymmetric power, in which the state has surveillance capability but the ordinary citizen does not. Brin’s distinctive recommendation is to increase the surveillance power of the citizen, rather than make what he predicts will be a futile attempt to reduce the surveillance power of the state.

FOOL makes it possible for politicians to sell the public on policies that take away freedom. People are afraid of what will happen if other people have economic liberty, such as the liberty to decide on a mutually acceptable wage or the liberty to decide what they want in terms of health insurance or the liberty to purchase products from other countries. etc.

Historically, sometimes we overcome FOOL (as in the American founding), and sometimes FOOL overcomes us (as in American slavery and Jim Crow laws). The present day strikes me as a time when FOOL is ascending, both on the right and on the left. Roughly from 1960 through 2000, on the left there was a trend toward increased support for freedom of expression and market economies. That trend has reversed. Today, we have the leading edge of the left openly advocating for suppression of others’ speech and for socialism. To me, this means that the mental-cultural sky is darkening. That bodes ill for the future, especially for when the left returns to power. Which is bound to occur, probably sooner than most people currently expect.

A reason for optimism? In 2017??? Twenty years ago, I was optimistic that the Internet would empower individuals relative to big corporations, government, and the education establishment. I guess that the most optimistic thing I could say is that maybe it will still turn out that I was right then and that I am wrong now.

Household Services: I have a different take

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Timothy Taylor reports,

The value of household services was equal to about 37% of GDP in 1965, but is currently equal to about 23% of GDP.

Tyler Cowen implies that this is a bad thing.

I think of it this way.

“Household production” is inefficient. In the limit, if you produced everything you consume and consume nothing that you do not produce, then you will be at subsistence level–if you are lucky. Our standard of living depends entirely on specialization and trade.

If a surgeon mows her own lawn, it means either one of two things.

a) she likes to mow lawns, so this represents consumption; or

b) this is a market failure, and she would much rather get paid for doing another surgery and use that money to pay for lawn mowing and other things, but for some reason she cannot.

What the Commerce Department is doing is imputing a value to the time that people waste doing housework. All that tells us is the value is lost by not enabling those people to engage in specialization and trade instead of doing housework. It is a measure of market failure.

And of course this imputed (i.e., artificially made-up) value has gone down relative to GDP, because people (women, mostly) are spending less time on housework and more time engaged in specialization and trade. This means that there is less market failure nowadays than there was back then. We should be happy that the number is going down, and we should hope that it heads toward zero.

Malcolm Gladwell on Race

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He says,

So, if your problem is that you’re facing a series of stereotypes about how you are intellectually inferior, how you have a broken culture, how you have . . . I could go on and on and on with all of the stereotypes that exist. Then how does playing brutally violent sports help you? How is an association, almost an overrepresentation in these various kinds of public entertainments advance your cause? I’m for those things when they’re transitional, and I’m against them when they seem like dead ends.

His point is that while other minorities were over-represented in sports and entertainment for short periods of time, African-Americans have been over-represented for a long time, which is a sign of an inability to penetrate into other fields. This thought had never occurred to me.

From a conversation with Tyler Cowen. There is much more that is worth either listening to or reading (I prefer the latter), including an amusing analogy between Harvard and Luis Vuitton.

Economists, Empiricism, Humility, etc.

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Peter Dorman writes,

what passes for empiricism in economics at present is often deficient in an empiricist, self-critical spirit and methodology. At the same time, the debates over topics like the minimum wage, the effects of charter schools on educational outcomes and the like are on a vastly higher plane when they are about data sets and analytical assumptions than the certitude of my unquestioned beliefs against the certitude of yours. It’s also a cheap and not altogether forthcoming dodge to respond to econometric disputes with a flip “There is never a clean empirical test that ultimately settles these issues.” (Roberts) That’s a epistemology.

Pointer from Mark Thoma.

Adam Ozimek writes,

Calls for skepticism of empirical economists also need to be matched with “compared to what?” Often those arguing for more humility about empiricism aren’t actually embracing humility, but instead are making space for their own narratives that are no less humble. For example, Russ says he doesn’t know how many jobs NAFTA has created or destroyed because “thousands and thousands of jobs are created every month and it is very difficult, perhaps impossible to know which ones are related to NAFTA.” Certainly, humility with regard to this question is useful. But then at the end of that paragraph Russ tells us he believes “trade neither destroyed nor created jobs on net.” Zero is not the same as “I don’t know,” nor is it necessarily any more humble than some specific estimate with wide confidence intervals.

…Economists do disagree on whether the direct effect of immigrants on native wages is a small positive or small negative. But they agree it is small. It’s easy to take this conclusion for granted as somehow common sense. But the truth is that, in the absence of the empiricism, the claim that immigration has held back wages by 20% for everyone would be much harder to argue against.

Noah Smith adds,

Theories can be wrong, stylized facts can be illusions, and empirical studies can lack external validity. But where does casual intuition even come from? It comes from a mix of half-remembered theory, half-remembered stylized facts, received wisdom, personal anecdotal experience, and political ideology. In other words, it’s a combination of A) low-quality, adulterated versions of the other approaches, and B) motivated reasoning.

If we care about accurate predictions, motivated reasoning is our enemy. And why use low-quality, adulterated versions of theory and empirics when you can use the real things?

Pointers from Tyler Cowen, who adds

A lot of the bias in empirical methods comes simply from which questions are asked/answered.

I say “amen” to that. For example, in the health care policy debate, the empiricists at CBO are telling us how many people would “lose” their health insurance under the GOP proposal. If you want to, you can question the CBO’s empirical estimates (their forecasts for Obamacare were, in the words of Avik Roy, “way off”). But that is not where I think the debate should go.

Instead, I think we ought to be talking about the real meaning of “insurance” in the context of health care. I think we ought to talk about the pros and cons of individuals having less “coverage” and making their own decisions about medical procedures with high costs and low benefits vs. having more “coverage” but subject to restrictions placed on them by bureaucrats. I think we ought to be talking about the issue that Timothy Taylor raised the other day, namely, should we be spending less on medical services and more on other things that are conducive to better health. (Note that Taylor’s post is grounded in formal empiricism.)

Perhaps we ought to be listening to Dierdre McCloskey’s view that economics is a discipline that uses rhetoric. I think that Russ Roberts and I would complain about the pseudo-scientific rhetoric that gets used.

Noah Smith’s use of the rhetorical phrase “the real things” is an example of the sort of language that lacks humility. It implies that there is a great distance between casual observation combined with theoretical introspection on the one hand and formal empirical work on the other, with the implication that the latter dominates the former. I would say that in some cases it is the former that is unreliable and in other cases it is the latter.

I hope that we can all agree that a lack of humility consists of pretending to know something for certain when it is in fact doubtful. We can then argue about what sort of approaches to economics are conducive to humility or a lack thereof.

Again, I have a longer essay on this topic, but it will not appear until this summer.

Tyler Cowen’s Complacency Quiz

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It sorts you into four categories:

Trailblazer

Striver

Comfortable

Complacent

I was rated as a striver. I don’t think of myself that way. I might feel better if there were a category called “contrarian.” It would describe me, and I think it also would describe Tyler.

In terms of the categories as given, I would self-identify as comfortable now and a trailblazer when I was younger. I was very entrepreneurial in my 30s and 40s. Now, I just blog. My wife and I have visited many countries, but lately we would rather travel to visit relatives than to see new places. I would much rather go folk dancing than go to a party or have a new experience.

It could be that my score was affected by questions that were impossible to answer, forcing me to almost randomize. For example, dancing is the source of suggestions for music to which I like to listen. That was not one of the choices in the quiz.

Other comments:

1. The introduction to the quiz says that

Complacency is defined as self-satisfaction accompanied by unawareness of possible deficiencies or dangers

This differs from the definition that is offered in The Complacent Class, but I think it gets much closer to what Tyler means.

2. Making up a quiz is fun, but I wonder if it was made up with complacency (as defined above). In theory you ought to test your quiz to see how well it works. You would ask a bunch of beta testers to both self-identify in terms of categories and to take the quiz. If the quiz puts them in their self-identified categories, then it works. Otherwise, it needs to be tweaked.

In the first edition of The Three Languages of Politics, I used a made-up quiz. I only tested it out on a few friends beforehand. They said that it worked ok. I imagine that it was easier for people to self-identify as libertarians progressives, or conservatives than to self-identify into Tyler’s idiosyncratic categories. But in the new edition that is about to come out, I dropped the pretense of a quiz, and instead I just used the examples as illustrations of the three-axes model.

Russ Roberts on Economic Methods

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He writes,

fundamentals like income or even changes in income over time are somewhat measurable with some precision, [but] we are notoriously unreliable at the things the world really cares about and asks of our profession: why did income for this or that group go up by this or that amount? What will happen if this or that policy changes? Should the subsidy to college education be increased or decreased and if so, by how much? These much-demanded answers for precision and an understanding of the complex forces that shape the world around us are precisely the questions we are not very good at answering.

It is a long essay, difficult to excerpt. Pointer from Tyler Cowen.

I am writing an even longer essay along similar lines. Currently, the hope is to have it come out this summer.

In physics, you have what is known as “effective theory.” That is, you have a theory, like Newton’s laws, which works very well for certain problems. Moreover, physicists can tell you where it works and where it does not work.

The problem in economics is that we have speculative interpretations which we try to pretend are effective theories. For reasons that Russ Roberts goes into, we cannot get rid of conflicting speculative interpretations.