US and Singapore know how to grow

 From Jon Hartley's tribute to Bob Lucas in NATIONAL REVIEW:

In the 1980s, Lucas stopped doing work on business cycles (the subject that had originally made him famous in his work on rational expectations) once he realized that the concerns of broad-based economic growth and long-term economic trends far outweighed the importance of business-cycle fluctuations. In other words, a recession that may cause the U.S. — per capita — to lose 5 percent of GDP (like during the Great Recession) pales in comparison to the fact that U.S. GDP per capita has grown 300 percent in real terms from the end of World War II to 2023, or the fact that the GDP per capita of the U.S. remains 550 percent greater than the GDP per capita of China or 3,100 percent greater than the GDP per capita of India.

 

Lucas famously wrote, in what would become his most cited paper, “On The Mechanics of Economic Development,” that “the consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.”

How will AI change Education and Computer Science?

Bryan Caplan as an answer:

• What will change for students is workload and evaluation. Professors are used to assigning homework, papers, and projects. Using AI to cheat on such work will soon be child’s play. Sufficiently harsh punishments for cheating might preserve the status quo, but modern schools give cheaters a slap on the wrist, and that won’t change. Unmonitored schoolwork will become optional, or a farce. The only thing that will really matter will be exams. And unless the exams are in-person, they’ll be a farce, too. I’m known for giving tough tests of deep understanding - yet GPT-4 already gets A’s on them. 
• AI could drastically reduce employment in CS over the next two decades. Humans will specialize in whatever AI does worst.
• What about we humble professors? ... Except for cutting-edge empiricists, however, AI will make research even more of a scam than it already is. If Sokal or Boghossian-Lindsey-Pluckrose can successfully “punk” humanities journals, AI will be able to do the same on an industrial scale. If you want a picture of the future, imagine a bot writing a thousand turgid pages a second about “neoliberalism,” “patriarchy,” and “anti-racism” — forever. Outside of the most empirical subjects, the only rationing tools left to determine academic status will be uniquely human: networking and sheer charisma. My fellow scholars, now is a great time to reread Dale Carnegie’s How to Win Friends and Influence People.

Is vasectomy a substitute for abortion?

 

When the "price" (difficulty) of getting an abortion rose, demand for vasectomies increased.  The Economist

Fix the incentives and everything else will follow

John Cochrane's 12 minute talk

Pillow Price Discrimination

 

Hone your BS antennae to detect confirmation bias

ChatGPT makes what Steven Pinker calls "motivated reasoning" (e.g., confirmation bias) really easy.  In what follows, pay attention to the general nature of argument.  That is one indicator of BS.  If you want to make this letter more persuasive, use examples specific to your experience.

====DAILY SUGGESTION FROM CHATGPT===== 

Write a message to my boss justifying the purchase of [URL of product or service] for [department or company]. 

 

====WHAT I ASKED CHATGPT===== 

Write a message to my Dean justifying the purchase of a new laptop for a professor at the Business school at Vanderbilt University. 

 

====WHAT IT REPLIED===== 

Dear Dean [Name], 

I am writing to request your approval for the purchase of a new laptop for one of our esteemed professors at the Business School here at Vanderbilt University. As you know, technology is a vital component of modern-day education, and laptops are an essential tool for professors to effectively deliver their lectures and engage with students. Unfortunately, the current laptop of our professor has begun to show signs of wear and tear, and its performance has become suboptimal. 

Furthermore, given the nature of our business school curriculum, our professor needs a laptop that can handle the demands of data analysis and statistical modeling software, which are essential for effective teaching and research. It is imperative that our professors have access to the latest technology and software to ensure that we continue to provide the highest quality education to our students. 

I understand that purchasing a new laptop is a significant expense, but I assure you that it is a worthwhile investment that will benefit both the professor and the students. It will ensure that the professor can continue to deliver exceptional lectures and research work, and it will also enhance the student's learning experience. 

Thank you for considering my request. We appreciate your continued support in providing the necessary resources to maintain the highest standards of education at the Vanderbilt Business School. 

Best regards, [Your Name]

Why intellectual diversity is declining in universities

 NY Times: Why Journalists Have More Freedom Than Professors

But if you told an academic who feared cancellation — a young sociologist, let’s say, with views one tick to Yglesias’s right — that if she were to lose her chance at tenure or dramatically shrink the range of colleagues eager to work with her or lose various research and publication opportunities, “Well, you could always start a Substack,” you would be telling her that she could continue expressing her opinions while ceasing to be an academic. And while I am all for demanding courage and intellectual honesty and related virtues, people calling for those things need to recognize that they’re asking for bigger professional sacrifices and risks from some groups than from others.

This also suggests that university leaders who want to encourage those virtues need to do more than just refuse the formal modes of progressive ideological enforcement (trigger warnings, D.E.I. loyalty oaths) and try to discourage student mobs. They would need to offer some sort of reward structure for intellectual heterodoxy (centrist heterodoxy at least if not, God forbid, conservative), so that young academics especially feel like there are some obvious compensations to go along with the social and professional risks.

…

But in the near term, for the universities most protected by wealth and stature from outside influences, the incentives seem lined up to make academia more stifled-feeling, less intellectually diverse and more ideologically conformist than the world of professional journalism is likely to become.

Economist Magazine's Crony index

 

Rent-seeking is common in sectors close to the state, including banking, construction, property and natural resources. It can sometimes be possible for rent-seekers to inflate their earnings by gaining favourable access to land, licences and resources. They may form cartels to limit competition or lobby the government for cosy regulations. They may bend rules, but do not typically break them.

Russia is, once again, the most crony-capitalist country in our index (see chart 2). Billionaire wealth from crony sectors amounts to 19% of gdp. The effects of the Ukrainian war are clear, however. Crony wealth declined from $456bn in 2021 to $387bn this year. Only one-fifth of Russian billionaires’ wealth is derived from non-crony sectors, which shows just how distorted the economy is.

Quote of the day

... a free market society is a giant game in which you win by making other people better off.

by libertarian philosopher, David Schmidtz, quoted by Jon Haidt in an interview,  Why Liberals and Conservatives Cannot get Along.  This is right out of Chapter Two.  

Where has US housing supply grown?

Housing supply increased in low density suburbs ("Sub low"), like Nashville, but not much in in high-density suburbs ("Sub high) or in central cities (CC high or CC low).  Supply is limited in these other three areas by zoning, so price has increased instead.

From Journal of Economic Perspectives:

Low-density suburbs have grown much faster than all other types of neighborhoods, accounting for 78 percent of the growth in housing units in the set of neighborhoods observed in 1980. However, home price growth has been fastest in high-density suburbs and the most prosperous and high-density areas of central cities. Moreover, the rate of new housing construction has been low or falling in all types of locations since 2000, but particularly so in the low-density suburbs and rural areas where most of the recent quantity growth has occurred. Altogether, the US housing stock has been getting older, more crowded, and less affordable in recent years.

Managerial Econ: Randomized trial to measure Facebook ad effectiveness

In general, selection bias results in over-estimating the effectiveness of ads because ads are shown to those most likely to buy, e.g., as advertisers employ techniques like machine learning to maximize the effectiveness of ad campaigns. 

However, a new study from facebook finds a way to cleverly construct a control group that is not subject selection bias.  By comparing "conversion" rates for the winner of an ad auction, e.g., page viewing, registering, or buying, to what would have happened had the second-best bidder won the ad auction, facebook estimates the causal effect of ads (free from selection bias).  

Because facebook has "single user login" they can:

• make sure that no one in the control group has seen the ad; and 
• track conversions across different devices and for several weeks after ad exposure by embedding a "conversion pixel" on the checkout confirmation page.  

The study concludes that targeted ads a 73% increased likelihood of conversion.  

UPDATE FROM READER:  I think that this is the same idea as "ghost ads".   See simple exposition or the paper.(Ungated: https://courses.cit.cornell.edu/jl2545/adpapers/Randall%20Lewis.pdf)

Does a higher minimum wage reduce poverty?

Marginal Revolution reports on a new NBER paper that concludes "NO." 

The economics of price controls are clear and spelled out in Chapter 2: voluntary transactions create wealth by moving assets to higher valued uses, and anything that prevents these transactions reduces wealth, like taxes, subsidies, price controls, and regulation. 

And in Chapter 8, we see that a price ceiling below the equilibrium price or a price floor above the equilibrium price, like a minimum wage, deters some wealth-creating transactions which makes some people worse off.  They would have transacted at a wage less than the minimum, but for the minimum wage.  Specifically, low-skilled workers, who would have found jobs at less than the minimum wage, cannot find work.  

For this reason, I have not paid much attention to evidence claiming to show the opposite. And my bias is evident that I would blog on a paper that shows what I know to be true, that price controls like a minimum wage do not help the poor.  

In other words, I am guilty of what psychologists call "confirmation bias."  See my earlier blog post Beware the Experts.