Monthly Archives: October 2009

Costumes And Identity

When we put on costumes at Halloween, we dress up as unusual sorts of people; they are not at all randomly selected from real folks, or even from fictional characters.  Instead, we prefer to dress up as people whose style of dress says a lot about them, i.e., people with vivid and well-defined roles strongly indicated by the way they dress.  Knowing that someone is a princess, athlete, fireman, doc, pirate, or prostitute says a lot about more about their personality and lifestyle than knowing that someone is an insurance adjuster, sales clerk, or network administrator.

This is interestingly at odds with of our general tendency to avoid regimentation and structure, though we accept more at work than at home.  It seems that at some level we miss and/or admire folks whose lives are tightly structured and defined by a particular strong standard identity.   Or at least we admire them when their role has high status, like docs, athletes, etc.  How much have we lost by not having the better-defined social roles of our ancestors?

Added 1Nov: When I started Overcoming Bias, I also sketched out this other blog concept that I never used, using me in costume in the header:

Header 2

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Meetings As Flattery

The real reason leaders end up in too many meetings? Because it’s flattering: having your presence “required” at many meetings makes you feel important — it’s tangible proof of how much your people and your organization need you. But being in too many meetings every day wreaks havoc on your schedule and your ability to focus on bigger goals. I’ve seen too many corporate leaders sacrifice their own strategic vision — and ultimately, their own performance — because they’ve let themselves become hostage to Conference Room B.

More here.  Much of business process functions to signal who is important and who is allied with whom, rather than to actually get stuff done.  Huge efficiency gains await the organizations that can figure out how to expunge these parasites.

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Farmers War

Not only did farming increase our work hours, reduce our travel, impoverish our diet, and increase social hierarchy, it also greatly increased war.  From a Science book review:

There are four extant great ape species. Each has a different social system, with chimpanzees being the only species to regularly evidence multimale violent coalitions. …. In chimpanzees, each female … mates with every male in her group. Males join forces to defend their territory … and each male will have access to all those females… Marriage is a universal human behavior, and it is defined by cultural and legal rules proscribing sex outside of marriage, particularly by women. … All available evidence suggests that intergroup violence, practiced primarily by males, does have a long evolutionary history in our species. However, the intensity and nature of that violence is highly variable. …

The hunting and gathering adaptation, especially in its mobile form, does not appear to promote large-scale warfare, not only because groups are small, but because incentives are largely absent. Monogamy is the most common marital form (probably because women depend on men’s meat contribution and it is difficult to support two wives), so there is less incentive for bride-capture warfare. There can be territorial conflicts, but nothing in comparison to the conflicts that occur over precious lands when agricultural becomes the dominant way of life.

The scope for warfare has changed considerably as human economic systems have changed. Once people settle and the value of land varies from place to place, large-scale warfare becomes a persistent feature of human behavior, almost exclusively practiced among men. The riches to be had from control over productive river valleys (such as the Tigris, Euphrates, and Nile) not only led to large-scale warfare but also to extreme differences in power and status, harems, and rape of women during and after war.

If people had known the consequences farming would bring, should they have tried to resist it?  I say no, but mainly because farming allowed so many more people to exist with lives worth living, even if those were near subsistence level lives.

Added 31Oct: Kukan points us to an excellent summary.

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Take Both Econ, Techies Seriously

Martin Ford, software CEO and author of a new (bad) book on how automation may destroy our economy, is right about one thing:

Among people who work in the field of computer technology, it is fairly routine to speculate about the likelihood that computers will someday approach, or possibly even exceed, human beings in general capability and intelligence. … While technologists are actively thinking about, and writing books about, intelligent machines, the idea that technology will ever truly replace a large fraction of the human workforce and lead to permanent, structural unemployment is, for the majority of economists, almost unthinkable. For mainstream economists, at least in the long run, technological advancement always leads to more prosperity and more jobs.

Yes, techies agree on the long term plausibility of machines doing almost all jobs at a cost below human subsistence wages, thereby gaining almost all income, while economists ignore this scenario.  E.g., Tyler Cowen:

In the longer run … computers will free up lots of human labor — but in the meantime it will have drastic implications for income redistribution, across both individuals and across economic sectors. … Robin Hanson believes we are headed back toward a Malthusian equilibrium; in contrast I believe that machines will never outcompete humans across the board.

Arnold Kling agreed:

I agree that Singularians are far too optimistic about artificial intelligence. It is a variation of the “fatal conceit” problem. Most of human intelligence is tacit knowledge, consisting of elaborate metaphors that are originally acquired from sensory experience. Artificial intelligence is an attempt to arrive at the same point through top-down design. … Computers and robots will be economically significant but not paradigm-shifting.

Economists should listen more to techies on what techs will be feasible at what costs, but techies should also listen more to economists on the social implications of tech costs.  Alas, just as economists prefer to rely on their intuitive folk tech forecasts, techies prefer to rely instead on their intuitive folk economics.  E.g., Martin Ford’s misguided intuitions: Continue reading "Take Both Econ, Techies Seriously" »

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Beware Far Ethics

Philosophy triumphs easily over past evils and future evils; but present evils triumph over it. Francois De La Rochefoucauld.
Katja Grace’s translationWe nobly analyse distant things, and in the present do whatever the hell we want.

If you stopped an articulate person who had just passed a homeless bum, and asked why she did not help, she’d probably explain this isn’t a simple question.  She might mention ethics complexities, but she’d probably focus on the complex social context.  Is the bum mentally ill, sick, stupid, lazy, or faking?  Does the bum have family who should help first, did he arrive recently in this area, and who is best placed to know what he needs?

At my Georgetown lecture last night on our robot future, the smart econ students focused their questions almost entirely on ethics.  They seemed to assume they understood enough about the social situation, and were obsessed with the ethical ways for humans to treat robots, robots to treat humans, etc.  I’ll bet they’d also be quick to condemn Roman centurions’ ethics, also figuring they understood enough about their social situation.  But I think they’d need to learn lots more about either of these worlds before they could begin to offer useful ethics advice.

Some of my young idealistic friends like to talk about figuring out what they could do to most help the world, and might go to Burma to see how the really poor live.  I tell them one has to learn lots of details about a place to figure out how to improve it, and they’d do better to try this on a part of the world they understand better.  But that doesn’t sound nearly as fun as saving the whole world all at once.

Humans overwhelmed by the social complexities of helping a bum nearby think they know enough about societies far away, so that ethics becomes the main concern there.  I see the same thing in discussions of future biotech or nanotech – ethics becomes the main frame, even though we only have the faintest ideas of how future societies might integrate those techs.  Beware the easy confidence of advising worlds far from your knowledge or consequence.

Added 29Oct: The obvious way to help poor folk far away without relying on your poor understanding of their world is to rely on the one thing you know best about their world: it is poor.  Invite them to move to your rich world, to share in its riches.  If your neighbors hinder you, use what you know about them to change that.

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Why Insider Trade Bans

My colleague Don Boudreaux had an oped in Saturday’s WSJ, on “Learning to Love Insider Trading.”  The economic case against banning insider trading seems strong, yet the public overwhelmingly wants bans.  Why?

Well first ask: why do we speculate in financial markets, if on average we’d make more money in index funds?  Probably for the same reason we compete in sporting contests: because a chance at either the thrill of victory or the agony of defeat looks better than not even trying.  We use both financial markets and sporting contests to signal our ability, and not trying sends a bad signal.

Relative to sporting contests, speculative contests benefit society via side effects: prices get more accurate, letting us better allocate resources.  But alas another side effect is that we prefer to regulate speculation to make it “fairer,” even if this makes it less effective at allocating resources.  Insider trading bans are a good example.

Obviously individual firms need ways to limit the damage their employees and suppliers might do; they need to watch for theft, bribes, sabotage, self-dealing, and more.  Contractual limits on when such insiders can trade company stock can help this effort, and central registration of who trades what can help enforce such contracts.  But beyond this, firms have little use for our broad laws against insider trading; before our broad bans were enacted, few firms chose to contractually limit their employees’ trading.  Insider trading laws are mainly there to satisfy public sensibilities.

Without such laws, some amateur traders might get discouraged and instead compete via sports, music, or poker.  But there’d be about as much total investment, perhaps more concentrated in index funds.  Even if fewer amateurs hunted for price errors, since professional speculators could hunt more freely, my guess is that on net prices would be more accurate.

Furthermore, even with laws against insider trading, the speculation game is and must remain ridiculously uneven.  Today most inside info gets into prices before official announcements, and well-connected well-organized investment groups are vastly better equipped to find and exploit pricing errors than almost all amateurs.  It is just crazy to see financial speculation is any remotely like an even sporting contest.

But if we must have laws giving the appearance of competition among equals on insider trading, let me suggest a much milder rule that should achieve the same end: just require insiders to announce their trades say twenty four hours in advance.  If such trades are informative, the price will have moved before their trade, and such trades won’t on net make a profit.

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Georgetown Talk Today

This evening I speak at Georgetown University on “The Long History of Economic Growth and its Implications for the Future.”  The talk is 6:30-8:00pm at ICC 107, sponsored by the Georgetown Economics Honors Society, and open to the public.

Added:  See slides, audio (sorry about poor quality).

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Missing Analogies

Alex:

I cannot think of a simpler change that would improve health care to as great an extent as freeing the data.

He was riffing off Newsweek:

In trying to find the oncologist or cancer center with the best track record on, say, stage IV bladder cancer, even the savviest patient quickly hits a wall: with a few exceptions, cancer centers treat these “outcomes” data like state secrets. … For these cancers there are indeed significant outcome differences depending where you are treated. … The Cleveland Clinic is the only one that makes its detailed outcomes data available to the public. … Although the National Comprehensive Cancer Network … collects data on how well its members adhere to treatment guidelines, it will not release the information on specific centers.

Years ago as a health policy postdoc at UC Berkeley, I was stunned to hear a famous health economist explain it was good that the government did not disclose the med outcome data it made hospitals collect – the public might “misinterpret” outcomes, you see, not correcting right for differing patient mixes.  He didn’t think it relevant that the same argument suggests Consumer Reports not publish car reliability stats, since they do not correct for driver differences.

Eric Crampton notices a similar mistake:

I’ve about a half dozen times heard … spokespersons … arguing that allowing private competitors into …. the New Zealand Accident Compensation Commission, is bad because private firms have to earn profits and so they’ll have to have higher cost structures than the public insurer.  But no National Radio interviewer provided the obvious retort:  If the argument were true, we’d want the government to be running everything!

The core problem seems to be that folks who intuitively feel that area A deserves special treatment T look for a justification, and then stop when they find a feature F of area A that suggests treatment T might be a good idea.  But by stopping there, they do not consider why this argument does not also justify the same special treatment T of areas B, C, D, etc. that also have feature F.   This is an extremely common error, even among folks very skilled at analyzing math models of feature F.

To justify their intuitions that medicine should be treated specially, people often refer to features like sometime large decision consequences, sometimes large prices, suppliers knowing more than customers about product quality, customer behavior influencing customer outcomes, etc.  But such folks usually do not favor giving other areas that share these same features the same special treatments.

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Flu Shot Doubts

Years ago my wife and I and our two young kids were visiting our families.  The others came down with the flu, and lay about in misery in the hotel room for days.  But I had had a flu shot, and stayed well, which convinced me to get a flu shot every year since.  While I’m generally a med skeptic, I’ve figured we can see at least a few identifiable areas where med seems most worth the cost, including infant care, trauma care, and vaccines.   So even I’m surprised to see just how weak is the case for flu shots.  Brownlee in the Atlantic:

Some top flu researchers are deeply skeptical of both flu vaccines and antivirals. Like the engineers who warned for years about the levees of New Orleans, these experts caution that our defenses may be flawed, and quite possibly useless against a truly lethal flu. …

We think we have the flu anytime we fall ill with an ailment that brings on headache, malaise, fever, coughing, sneezing, and that achy feeling …  but researchers have found that at most half, and perhaps as few as 7 or 8 percent, of such cases are actually caused by an influenza virus in any given year. …

Jackson’s findings showed that outside of flu season, the baseline risk of death among people who did not get vaccinated was approximately 60 percent higher than among those who did. .. [Thus] the healthy-user effect explained the entire benefit that other researchers were attributing to flu vaccine, suggesting that the vaccine itself might not reduce mortality at all. Continue reading "Flu Shot Doubts" »

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Hide The Blood Money

Blood donations are a famous oft-cited case of where we might get less of something of we pay more for it.  Now it seems the problem is just with cash, not with payment; apparently we dislike an appearance of being paid, not payment itself:

We set up … a survey administered to 467 blood donors in an Italian town, and find that donors are not reluctant to receive compensation in general: A substantial share of respondents declared they would stop being donors if paid a small amount of cash, but we do not find such effects when a voucher of the same nominal value is offered instead. The aversion to direct cash payments is particularly marked among women and older respondents, while there are neither gender nor age differences in the response to the voucher.

More here.

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