Monthly Archives: June 2009

War Is Brotherly

From a new NBER working paper:

We examine the empirical relationship between the occurrence of interstate conflicts and the degree of relatedness between countries, showing that populations that are genetically closer are more prone to go to war with each other, even after controlling for a wide set of measures of geographic distance and other factors that affect conflict, including measures of trade and democracy.

So instead of war being conflict between natural genetic alliances, war is sibling rivalry writ large?  Perhaps this won’t hold up to further scrutiny, but it sure is provocative.

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Why Not Home College?

After a few decades of advocacy, US home-schoolers now get respect.  Kids who learned high school material at home, under learning plans managed by their parents, can now apply to college on a nearly level playing field with kids who went to ordinary schools.  But imagine a home-schooled college student applying for a job or grad school – he’d be treated almost as if he had spent those years on a job or goofing off.   What is the difference?

The difference I think is parental control.  Because high school kids are legally under the control of their parents, their home schooling is thought to mostly signal parent features, not kid features.  In contrast, since college kids control their own lives more, their home schooling would mostly signal their personal features.  A kid who taught himself college topics at home would be expected to lack discipline and consciousness enough to follow someone else’s plans.  (I avoided this by staying in college while I home-schooled myself.)

Interestingly, this suggests that parental control over kids lives can give kids a signaling advantage.  Kids who do weird things maybe be ostracized less because we assume it was probably their parents who made them do such things.  Being in control of your own life comes at the cost of being more penalized for your weird choices.   What does this say about the best age to let kids run their own lives?

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Redistribution Isn’t About Sympathy

Many people say they favor redistribution from the rich to the poor because they feel sorry for the poor.  The poor suffer from having too little money, and it doesn’t take much money to help them a lot.  In contrast, the rich won’t miss that money much.

These redistribution advocates usually aren’t very interested in redistributing across the world to poor nations, or across time to poor eras.  So they usually explain that they just don’t feel much sympathy for such distant poor.

Such advocates also usually aren’t very interested in giving money to people who suffer because they are short, ugly, boring, clumsy, unpopular, etc.  Yet a bit of money might go a long way to brighten these lives as well.  Explanations offered for why folks sympathize with the poor but not the short etc. have long left me puzzled.

Garrett Jones has just convinced me that a pretty simple explanation is available: the redistributive urge just doesn’t have much to do with sympathy.   Our ancestors would sometimes notice that some folks in the tribe had a lot more tangible portable stuff than the rest, and those with less would then be tempted to find an excuse to grab a bunch of that stuff.

Would-be-grabbers would look for the most believable excuse they could find.  Sometimes the excuse would be that stuff-holders had violated some tribal norm and needed to be punished.  (Hence our hyper-willingness to believe the rich freely violate treasured norms.)  But lacking a better excuse, they’d fall back on the old favorite, that those with less stuff would sure appreciate each thing more than those with lots.

Our ancestors weren’t in the habit of making up similar excuses to grab stuff from the tall, pretty, witty, coordinated, or popular, for the obvious reason that those people didn’t usually have much stuff to grab.  So our ancestors focused on finding excuses to grab stuff from people with lots of stuff for the same reason folks have given for robbing banks, “Because that’s where the money is.”

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8.3 Mortality Risk Ratio!

Julian Cristia in the Journal of Health Economics:

Using a unique data set matching administrative and survey data, this study explores trends in [U.S. mortality] differentials by lifetime earnings for the 1983 to 2003 period. … There are large differentials … in different quintiles … Controlling for race, Hispanic origin, marital status, and education only slightly reduces these differentials. … Differentials decrease markedly with age. … In the period 1983 to 1997, men ages 35 to 49 in the bottom lifetime earnings quintile had mortality 5.9 (1.8 for women) times higher than those in the top quintile; in the period 1998 to 2003 this ratio increased to 8.3 (4.8 for women).

8.3!! For a mortality risk ratio, 8.3 is HUGE. For ages 50-64, that number drops to 4.8, which is still huge. Wow. Income, or something correlated, sure is important for health.

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What Conjunction Fallacy?

Edi Karni:

This paper reports the results of a series of experiments designed to test whether and to what extent individuals succumb to the conjunction fallacy. Using an experimental design of Kahneman and Tversky (1983), it finds that given mild incentives, the proportion of individuals who violate the conjunction principle is significantly lower than that reported by Kahneman and Tversky. Moreover, when subjects are allowed to consult with other subjects, these proportions fall dramatically, particularly when the size of the group rises from two to three. These findings cast serious doubts about the importance and robustness of such violations for the understanding of real-life economic decisions.

Hat tip to Dan Houser.

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How Fix Boards?

In his book The Wisdom of Crowds, James Surowiecki held out hope that prediction markets could reform corporate information flows, and he was kind enough to mention me as an early innovator.  In his New Yorker column recently, he discussed fixing corporate boards:

Over the past couple of decades, a tremendous amount of attention has been devoted to improving corporate boards. New regulations, along with pressure from big investors, have forced companies to appoint more independent directors—people who have no direct connection to the company—and have tightened the definition of independence.  … All these changes, though, have had a much smaller impact than expected. …

There are ways to make boards proactive and more than nominally independent. Investors need to be able to play a much bigger role in determining who ends up on boards, nominating candidates themselves, instead of choosing among the C.E.O.’s picks. … On top of that, … big institutional investors [should] create a cadre of full-time directors, people whose only job would be to sit on corporate boards and look after shareholder value.

Problem is, investors need to own non-trivial fractions of companies to make this worth their while, and so this proposal needs a lot more concentration among investors than we have now, and probably more than most folks are comfortable with.   In contrast, my proposal to use prediction markets to advise key board decisions like firing a CEO requires no investor concentration.

I don’t really know if Surowiecki likes my proposal, or even knows of it.  He’s never returned my emails, though maybe he’ll see this post.  I suspect that he sees my proposal is too “out there” to befit a respected New Yorker columnist, and so wouldn’t endorse it even if he knew of and privately liked it.

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Signals Are Forever

Regarding signaling issues in relationships, couples often say “Yes that was tough, but thankfully we are past that now.”  They think that yes they had to do lots of signaling as they were getting to know each other, but now that they know each other well there is no need for such things.  In Spent, Geoffrey Miller also didn’t think it made sense to signal to your close friends and associates via what you wear or the music you like, etc.; your friends already know you well, after all.

A man sometimes thinks that after all he has done for a woman surely she must know he loves her and he doesn’t need to keep showing it by saying so, giving gifts, holding doors, etc.  Usually such men are in for a rude awakening.  Signals are forever, because we can always change.  Yes, she might have been very sure that he loved her last year, but today there is a small nagging doubt about whether he still loves her.  So he must continue to signal to reassure her.

He might think that since the chance is very small that his love has changed since yesterday, the signal needed to reassure her is also very small.  But in the simplest standard signaling models, the amount that each type must signal is independent of the distribution of types; it only depends on what types have a non-zero probability.  As long as there is any chance that your love has changed, if you don’t signal your continued love she may well conclude that your love has in fact changed.  And you have to work hard enough with your signal to distinguish yourself from someone who doesn’t care as much as you.

Even if you’ve come to work in a suit and tie for twenty years, the day you come in a bathing suit, your coworkers may well suspect that your work ethic has changed.  So you have to wear that suit one more day.

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Space Storm Insurance

Within 90 seconds, the entire eastern half of the US is without power.  … A year later and millions of Americans are dead and the nation’s infrastructure lies in tatters. …. An extraordinary report funded by NASA and issued by the US National Academy of Sciences (NAS) in January this year claims [the Sun] could do just that.  … A severe space weather event in the US could induce ground currents that would knock out 300 key transformers within about 90 seconds, cutting off the power for more than 130 million people. … this whole situation would not improve for months, maybe years: melted transformer hubs cannot be repaired, only replaced. …  Within a month, then, the handful of spare transformers would be used up. The rest will have to be built to order, something that can take up to 12 months. … According to the NAS report, the impact of what it terms a “severe geomagnetic storm scenario” could be as high as $2 trillion. And that’s just the first year after the storm. The NAS puts the recovery time at four to 10 years.

That is from a recent New Scientist.  Here is that NAS report, and here is a 2000 article in IEEE Spectrum.  This sort of disaster could come from a solar storm about as strong as one we saw in 1859.   I just consulted for a prestigious government consulting firm, who told me they are trying but have yet to convince US government agencies to take this problem seriously.  Apparently it would just take about ten million dollars to protect the US power industry from a huge solar flare, and this would also help protect against a nuke EMP.  But apparently too many crazies support the idea for US bureaucrats to want to take the idea seriously.  Hat tip to Robert Koslover.

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The Best Big Lies?

Sometimes I slip into hyperbole and say things like:

Many folks figure that if evolution planned for them to believe a lie, they might as well believe a lie; that probably helps them achieve their goals.  But I want, first and foremost, to believe the truth.

Now I won’t accept any possible harm no matter how large to believe any truth no matter how small.  But I do have a very strong presumption toward telling and especially believing truth.

Many folks, however, say there are important cases where we are better off believing lies.  So I now ask you all: what are some big truths where we are overall better off to have most folks be mistaken?

I’m not looking for extreme rare examples like lying to keep Nazis from finding Jews in WWII; nor do secret passwords or launch codes count.  I’m looking for real and important examples today, where it is the lie, not just the uncertainty, that gives the advantage.

Yes, by mentioning such truths here you will risk more people believing them, but you might also convince many of us to join your cause to suppress important truths.  So you don’t need to tell us about our most important lies, but you do need to tell us about lies big enough to convince us that there are many big lies worth keeping.

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Obama’s Opportunity Cost

The US public has long felt guilty about historical racism, and so they felt great about electing a black president, and giving him some space to do what he wants. That and Bush-hatred seemed to give progressives a rare opportunity to achieve many things they’ve always wanted.

This opportunity now seems substantially squandered.  Obama has spent much of his political capital on changes far from professed progressive priorities.  He spent lots on fiscal stimulus and nationalizing the auto industry, and seems to have too little left for big medical and financial reform.  Tyler and I have long said Obama can’t do near as much as supporters seemed to think, and we’ve been puzzled to hear this prospect dismissed out of hand .

For Obama and his new-to-power advisers, this failure may come from overconfidence, but his old-hand-operative advisers should have known better.  So either their stern warnings were ignored, or they betrayed him by not making stern warnings.  Since much of Obama’s political capital was spent by longtime congressional Democrats choosing the detailed pork of stimulus and related bills, they might be blamed.  If they said “Support us to pick this pork now, and we’ll help you get health care reform later,” they were basically taking him to the cleaners.

For progressives, the lost opportunity here is not just bills not passed, or the public checking off “elect a minority president” from their to-do-list.  Another cost is a more conservative public opinion. Psychology experiments explain: Continue reading "Obama’s Opportunity Cost" »

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