Monthly Archives: September 2011

Irrelevant Relevance

The September Atlantic has an “economics” article, by Don Peck, Can the Middle Class Be Saved? As economics, it is a “scam” I see often, but want to complain about yet again. These articles combine two key features. First, they gain “relevance” via detailed discussions of problematic current trends. Such as:

The most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class. … Wide-ranging social consequences of male economic problems [include:] … Women tend not to marry (or stay married to) jobless or economically insecure men—though they do have children with them. And those children usually struggle when, as typically happens, their parents separate and their lives are unsettled. … These sorts of social problems … have been seeping into the nonprofessional middle class.

Second, these articles offer “relevant” policy solutions to such problems:

We can adapt, but we have to start now. … [by] … Bigger tax breaks for private R&D spending, and a much lower corporate tax rate (and a simpler corporate tax code) overall. … A National Innovation Bank that would invest in, or lend to, innovative start-ups. … [For] new and emerging industries … our bias should be toward light regulation. … Redoubling our commitment to improving U.S. schools, to letting in a much larger number of creative, highly skilled immigrants each year. … We must press China on currency realignment, putting sanctions on the table if necessary. … Development of “career academies”—schools of 100 to 150 students, within larger high schools, offering a curriculum that mixes academic coursework with hands-on technical courses. … It is hard to imagine an adequate answer to the problems we face that doesn’t involve greater redistribution of wealth.

The key scam is: standard economic theory, the main authority implicitly invoked by such “economics” articles, offers little reason to think these trends of concern have much relevance to these policy proposals. Whether such proposals are good or bad ideas can depend on many relevant factors, but the exact values of these trends are not among those factors! If R&D tax credits are a good idea (economically), they are a good idea regardless of trends in median wages or divorce rates. If raising taxes on the rich is a good idea because, hey, we gotta tax someone, that is a good idea regardless of how well or poorly the rich have been doing lately. As I said before:

Which institutions will most increase economic welfare rarely depends much on the exact values of the sorts of parameters social scientists and the media track with such enthusiasm and concern. (more)

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On Futurism

When the media reports on the future, reporters pretty much only ever quote these sort of futurists, who have hijacked the future to support their side of certain current disputes. Truth be told, folks who analyze the future but don’t frame their predictions or advice in terms of standard ideological categories are largely ignored, because few folks actually care much about the future except as a place to tell morality tales about who today is naughty vs. nice. (more)

That was me almost two years ago. Here are three more observations on futurists:

1) Most folks I know who self-describe as future-oriented seem obsessed with the latest tech press releases. They constantly circulate links on new tech gadget demos and analyses. Which might make sense if “the future” meant the next ten years. But if “the future” means the next century, this makes far less sense. Long term future oriented folk should focus on basic theory and long term trends, and pay little attention to daily tech fluctuations. Press-release-focused futurists seem more interested in affiliating with the idea that “tech is our future” than in actually understanding the future.

2) Few ever gain fame in futurism on the basis of what they say about the future. Almost everyone “known” for thoughts on the future first gained status and notoriety in some other area, and then started being heard on the future. Folks who talk about the future but don’t have another status base are almost completely ignored. It seems that while positioning ourselves regarding the future, we like to affiliate with high status folks, but don’t see such future positions as conferring status.

3) It is often said that futurists forecast big things to happen in twenty years because their careers will be done then, and they’ll suffer few consequences from mistaken forecasts. But human lifetimes are actually long enough to fit not one but three cycles of tested twenty year forecasts. People could make forecasts at age 20 that are checked at age 40, make another set of forecasts at 40 that are checked at age 60, and then make a third set of forecasts at age 60 that are checked at age 80. We could then pay special attention to the forecasts of eighty year olds who have had a good track record over three cycles of twenty year forecasts.

Yet I’d bet that even if some folks went to the all trouble to collect such a track record, we’d mostly ignore them, unless they had some other strong status base. If they disagreed with the current fashion on the future they’d be mostly dismissed as lucky old codgers who just didn’t “get” the new new thing.

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Aged Wisdom

At lunch recently, Bryan asked: what wisdom do we old folks have to pass on to young folk, if only they would listen? A few possibilities:

1) You might look inside yourself and think you know yourself, but over many decades you can change in ways you won’t see ahead of time. Don’t assume you know who you will become. This applies all the more to folks around you. You may know who they are now, but not who they will become.

2) You are more flexible than you realize. You may think now life that would not be worth living without your preferred city, career, partner, or hobby. But you really would adapt to most big changes, and have an ok life without most of what you now hold precious. Old folks with weak bodies and fading minds still love life.

3) Human lives are long. You might be unpopular when young, but with decades of work you could become popular when old. If you have something you are just dying to do, a lifetime can fit many failures before an eventual success. While it can be reasonable to take a few years of failure as a sign you might prefer something else, if this is really what you most want, you’ll have many more decades to keep trying.

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Do Liars Care More?

One of the biggest lies we tell is not having favorite kids:

It’s one of the worst-kept secrets of family life that all parents have a preferred son or daughter, and the rules for acknowledging it are the same everywhere: The favored kids recognize their status and keep quiet about it. … The unfavored kids howl about it like wounded cats. And on pain of death, the parents deny it all. …

384 sibling pairs … [were] questioned … and videotaped … as they worked through conflicts. Overall, … 65% of mothers and 70% of fathers exhibited a preference for one child, usually the older one. … “The most likely candidate for the mother’s favorite was the firstborn son, and for the father, it was the last-born daughter. ” …

Firstborns have a 3-point IQ advantage over later siblings. … Kids who felt less loved than other siblings were more likely to develop anxiety, low self-esteem and depression. (more)

Interestingly, lying here is seen by many to signal caring:

Not all experts agree on just what the impact of favoritism is, but as a rule, their advice to parents is simple: If you absolutely must have a favorite (and you must), keep it to yourself. Even if your kids see through the ruse, the mere act of trying to maintain it can help them preserve the emotional pretext too — a bit of denial that does little harm. What’s more, the effort it takes to tell a benign lie is in its own way an act of love toward the unfavored child.

Its not clear though how often disfavored kids see self-serving denials as showing care. Do parents who care more about disfavored kids actually lie more than others?

Also, we less resent favoritism to lower status siblings:

Even the most blatant favoritism is easier to take when there’s a defensible reason for it. Perhaps the most extreme example is when one child in the home has special needs. Children with Down syndrome or autism … Kids with physical disabilities … require more time and attention from parents … Talking about the situation openly is the best and most direct way to limit resentment. … “Research suggests that differential treatment may have no negative effects when children understand why.”

Oh kids understand favoritism toward smarter, prettier, stronger siblings – they just hate it more.

I suspect that many commonly told lies are accepted and even encouraged because they are seen by many as showing that liars care. Cynics who tell the truth are, in contrast, described as cold and hostile. A problem, of course, is that we often believe our lies, leading to mistaken inferences and decisions. Which may be why humans often seem so oblivious to “obvious” implications of their “beliefs.”

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Moneyball Slavery

Moneyball is a good movie – it is fun to see an underdog economist start a revolution somewhere. (Though I’d be more inspired if I could see more clearly how the world is better because of this revolution. Are fans happier now? Players? Who?)

Along the way, the movie vividly depicts profit-driven buying and selling of people, over which the people involved have little say. If traded, players must immediately move across the country, with little compensation. On the screen, it sure looks a lot like slavery. But I can’t find a single mention of slavery in any of the Moneyball commentary. It seems viewers don’t even notice the issue — even viewers who don’t know or care much for baseball, and doubt baseball makes the world a better place.

This supports the theory that we see “slavery” as low status by definition – so by definition anyone high status can’t be a slave. You may recall that in May I wrote:

Bryan is probably right – we don’t call conscripts slaves, but do call comfort women slaves, because the first is high status and the second low. … On reflection, the main effect here is probably that many people take “slavery is bad” to be part of the definition of slavery. So therefore by definition anything good cannot be slavery. (more)

Here is some detail on trading of baseball players:

Players eligible for neither free agency nor salary arbitration are very seldom offered contracts for much more than the league minimum salary, as the player has no recourse to try to obtain a better salary elsewhere. For this reason, in the first three major league years of their careers (except for the “Super Two” exception above), it is standard practice for players to accept comparatively low salaries even when their performance is stellar. (more)

Added 10a: It is possible to be sold into slavery, or to sell oneself into slavery, so up front compensation is consistent with slavery. The key is that while you are a slave you have little control over what you do. The “degree” of slavery is set by the size of the penalty if you don’t follow orders. A death penalty makes for a strong slave, while merely being fired from your current job with many similar jobs available makes for a rather weak “slave.” In baseball, the penalty is pretty big — never again working in your chosen profession and life-calling, and having almost no prospect for anything remotely as fun or profitable. For an analogy, imagine that if you don’t do what your boss says, you must to move permanently to a poor country where you don’t know anyone and have no unusually valuable skills.  That is a strong enough commitment that I’d be tempted to call it “slavery.” Even though you still have a choice.

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Fertility Fall Myths

In the latest JEL, Tim Guinnane does a nice job debunking misconceptions about the great fertility fall associated with the industrial revolution. For example, “The decline in French fertility began in the late eighteenth century,” and fertility declines were not uniform across Europe:

Mortality decline doesn’t work as an explanation for fertility declines:

Fertility in the United States declined for decades before any noticeable decline in mortality.

Nor does new contraception tech:

Throughout the nineteenth and early twentieth century, withdrawal and abstinence remained the primary approaches used by married couples. Since these technologies had been available, essentially, throughout human history, it is unlikely that the condom and similar new methods played a strong role in the fertility transition. … Methods available even prior to the fertility transition were sufficient to produce voluntary reductions of the magnitude we observe in the nineteenth and early twentieth centuries.

Nor do child labor laws:

Most [child-labor] measures either did not apply to agricultural work, or did so in a more relaxed way. … German restrictions did not successfully limit the role of children in production at home, which remained important throughout the nineteenth century. And in every case, the restrictions’ impact would depend both on enforcement measures and parents’ desire to evade them. Finally, if child-labor restrictions were introduced when they were mostly irrelevant, …

Nor do new social insurance programs:

Economic ties between parents and children varied dramatically across the societies in question before the fertility transition. … At the other extreme, rural laborers’ children in England would, from at least the early-modern period, leave home for good in their early to mid teens. … social-insurance systems introduced at the end of the nineteenth and early twentieth century were usually replacing earlier schemes. Thus there is no clear “before.” … The broad patterns also do not make it likely that social insurance alone is central to the story. The two forerunners, France and the United States, were laggards in developing social insurance.

Still in the running, he thinks, are increases in urbanization, female employment, and gains to schooling:

Several studies document the existence of fertility control among small groups as early as the seventeenth century. These “forerunners” were usually urban elites or members of minority groups such as Jews. More generally, research based on either sub-national aggregates or micro data often find earlier fertility declines than in national data. The Princeton studies report earlier fertility declines in cities, for example. … Most studies find that urban fertility was lower than rural fertility in the nineteenth century, … Once the fertility transition began, fertility usually fell first in urban areas, with rural areas then catching up. …

Cross-sectional regressions for U.S. states in 1840 show that fertility is negatively correlated with measures of nonfarm labor-market opportunities. Once such proxies are introduced, land prices have no influence on fertility. … Crafts … finds a consistent, negative correlation between women’s [1911] local labor-force opportunities and marital fertility. …

Goldin and … Katz … find that the return to an additional year of [1915 Iowa] high school or college then was, for males, on the order of 11–12 percent. Mitch estimates the present value of acquiring literacy in Victorian Britain for a representative child. The present value of the cost of acquiring literacy would be about £4. At a wage premium of 5 shillings per week for literacy, the present value of the higher wages for a 35-year work life would be over £200.

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We Ban Lies, To Officials

When I posted before on not seeing why lies should be legal, many complained that laws against lies are impractical. But in fact, it has long been illegal to lie to government officials:

Did you know that it is a crime to tell a lie to the federal government? Even if your lie is oral and not under oath? Even if you have received no warnings of any kind? Even if you are not trying to cheat the government out of money? Even if the government is not actually misled by your falsehood? Well it is.

Title 18, United States Code, Section 1001 makes it a crime to: 1) knowingly and willfully; 2) make any materially false, fictitious or fraudulent statement or representation; 3) in any matter within the jurisdiction of the executive, legislative or judicial branch of the United States. Your lie does not even have to be made directly to an employee of the national government as long as it is “within the jurisdiction” of the ever expanding federal bureaucracy. Though the falsehood must be “material” this requirement is met if the statement has the “natural tendency to influence or [is] capable of influencing, the decision of the decisionmaking body to which it is addressed.” United States v. Gaudin , 515 U.S. 506, 510 (1995). (In other words, it is not necessary to show that your particular lie ever really influenced anyone.) Although you must know that your statement is false at the time you make it in order to be guilty of this crime, you do not have to know that lying to the government is a crime or even that the matter you are lying about is “within the jurisdiction” of a government agency. United States v. Yermian , 468 U.S. 63, 69 (1984). …

Some [Assistant United States Attorneys] specifically send agents out to conduct interviews knowing that a witness will either tell the truth and help build a case against someone else or lie and subject himself to a Section 1001 charge . … You will probably not be shown any of the pertinent documents before the interview begins. You could easily make factual mistakes during your interview. … Your mistakes can easily be interpreted as intentional falsehoods under Section 1001. …

Tell the agent that you have an attorney and that “my attorney will be in contact with you.” … If you are not in custody, your total silence, especially in the face of an accusation, can very possibly be used against you as an adoptive admission under the Federal Rules of Evidence. Your invocation of counsel, however, cannot be used against you at trial. (more)

This law may or may not be a good idea, but surely it is feasible.

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More Inequality, Merited

Consider two plausible assumptions:

  1. Within a few centuries, “immortality” goes on sale. That is, if you pay enough, and your body is of a convenient type (e.g., android), then you can buy backups and replacement parts, and keep functioning indefinitely. (At least until correlated failures hit all your backups at once). Most folks, however, may be unable to afford the price.
  2. At this time, there will still be a capitalist world economy with not-overwhelming taxes on the rich. So individuals can still accumulate wealth over a lifetime, as they have done for millennia.

Today, as in the past, wealth levels tend to diverge over individual lifetimes, and then converge over many generations. People born with similar initial wealth often have quite different wealth at life’s end. They also tend to give different amounts to their children. Yet over many generations, distant descendants tend to have similar wealth. (At least if they live in the same nation; see Greg Clark.) Children often lack their parents’ drive or abilities, and prefer to spend their inherited wealth. “Rags to rags in three generations,” the saying goes.

But given the above assumptions, in the future able driven folks can continue to accumulate wealth indefinitely, allowing the usual within-lifetime wealth divergence to last far longer. Maybe eventually these old dogs couldn’t learn new tricks, but we should still expect to see far more wealth divergence in this future. Quick: does this sound like a good or a bad thing?

Now consider: in this future, wealth should depend less on parental luck, and more on personal merit, such as drive and ability. (Other kinds of luck matter too of course, but not obviously more than before.) Isn’t it good if personal wealth depends more on personal merit?

If you still find this scenario horrifying, that suggests your dislike of wealth inequality isn’t based so much on it being undeserved, but is more against the very idea of inequality. Perhaps you are horrified by such huge inequality because it shows raw luck imposing unnecessary harmful risk, which you want to cure via redistribution. But if so, it should be enough to offer folks wealth insurance. If you are horrified by a future where enough able driven folks knowingly reject wealth insurance, allowing some to become fantastically rich, then again your objection seems to be to inequality itself.

Btw, Tyler says:

When will the world have its first trillionaire? In real terms I say never, marginal tax rates will rise to capture the rents, one way or another.

This seems remarkably pessimistic about future world wealth or world-wide tax rates. Today’s richest man has $74B, which is probably ~$50B after correcting for “marginal tax rates.” So proportional growth of the world and the richest by a factor of twenty, roughly what we achieved in the twentieth century, would create a trillionaire.

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Adapt Or Start Over?

Sean Carroll has doubts on nanotech:

Living organisms … can, in a wide variety of circumstances, repair themselves. … Which brings up something that has always worried me about nanotechnology … tiny machines that have been heroically constructed … just seem so darn fragile. … surely one has to worry about the little buggers breaking down. … So what you really want is microscopic machinery that is robust enough to repair itself. Fortunately, this problem has already been solved at least once: it’s called “life.” … This is why my utterly underinformed opinion is that the biggest advances will come not from nanotechnology, but from synthetic biology. (more)

There are four ways to deal with system damage: 1) reliability, 2) redundancy, 3) repair, and 4) replacement. Some designs are less prone to damage; with redundant parts all must fail for a system to fail; sometimes damage can be undone; and the faster a system is replaced the less robust it needs to be. Both artificial and natural systems use all four approaches. Artificial systems often have especially reliable parts, and so rely less on repair. And since they can coordinate better with outside systems, when they do repair they rely more on outside assistance – they have less need for self-repair. So I don’t see artificial systems as failing especially at self-repair.

Nevertheless, Carroll’s basic concern has merit. It can be hard for new approaches to compete with complex tightly integrated approaches that have been adapted over a long time. We humans have succeeded in displacing natural systems with artificial systems in many situations, but in other cases we do better to inherit and adapt natural systems than to try to redesign from scratch. For example, if you hear a song you like, it usually makes more sense to just copy it, and perhaps adapt it to your preferred instruments or style, than to design a whole new song like it.  I’ve argued that we are not up to the task of designing cities from scratch, and that the first human-level artificial intelligences will use better parts but mostly copy structure from biological brains.

So what determines when we can successfully redesign from scratch, and when we are better off copying and adapting existing systems? Redesign makes more sense when we have access to far better parts, and when system designs are relatively simple, making system architecture especially important, especially if we can design better architecture. In contrast, it makes more sense to inherit and adapt existing systems when a few key architectural choices matter less, compared to system “content” (i.e., all the rest). As with songs, cities, and minds. I don’t have a strong opinion about which case applies best for nanotech.

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Nature Ignores Econ

A recent Nature article got lots of press:

We present an evolutionary model showing that, counterintuitively, overconfidence maximizes individual fitness and populations tend to become overconfident, as long as benefits from contested resources are sufficiently large compared with the cost of competition. In contrast, unbiased strategies are only stable under limited conditions. The fact that overconfident populations are evolutionarily stable in a wide range of environments may help to explain why overconfidence remains prevalent today.

They model pairwise contests over a discrete prize, won by the most able side. Each agent chooses if to fight, after seeing the other agent’s ability with error. If both agents fight, they pay a conflict cost. Agents can win by committing to overestimate their own ability, as this makes them fight more, which induces opponents to fight less.

I found that strategic commitment effect in ’06, in a paper that seemed too simple to publish in econ theory journals:

In a simple model of conflict, two agents fight over a fixed prize, and how hard they fight depends on what they believe about their abilities. To this model I add “preagents,” representing parents, leaders, or natural selection, who choose each agent’s confidence in his ability. Depending on the reason for such confidence, I find five different patterns in how confidence varies with ability. Agents who estimate their ability with error have under-confidence when ability is high and over-confidence when ability is low, while strategic commitment incentives induce the opposite pattern. Agents who misjudge their value for the prize, relative to their cost of effort, induce an over or under-confidence that is independent of ability, while cooperating pre-agents choose extreme under-confidence. Agents who use confidence to signal ability have a relatively uniform over-confidence.

I doubt Nature would have published my paper either. My paper used a few lines of math of simple game theory, while the paper Nature published used lots of evolutionary simulations, which don’t seem to add much beyond simple game theory. Based on this and other cases I’ve seen, I conclude Nature doesn’t care what econ theorists think about the social science papers they publish.

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