Innovation and the F/X cycle

 

WSJ:  Why is the US Dollar so Strong?  Innovation.

...the U.S.’s leading position in academic research, and the close links of universities and business, gave the country a head start in computerization in the 1970s and early 1980s, in the internet in the 1990s and in newer internet applications and artificial intelligence more recently.  

Each innovation sparked a wave of investment to take advantage of it. This improved profitability and attracted foreign capital—pushing up the dollar. <Note, USD is the price of a dollar measured in foreign currencies>

Then... 

Inventions don’t stay in one country for long. But in each case America’s head start gave it a few years’ lead before investments elsewhere looked as profitable. 

Which lead to capital outflows and more consumption (imports), pushing down the USD, causing the cycle.  

WARNING:  This kind of after-the-fact theorizing is good for developing theories, but is not a substitute for testing them, i.e., correlation does not imply causality. 

Stuck in Lodi (Appellation)

My winemaker brother grows and sells his cabernet grapes (Napa Appellation) for $7000/ton, but buys Zinfandel grapes (Lodi Appellation) for $900 to make his own wine.    

When I asked him why he didn't make wine from his own grapes, he said "I cannot afford them."  In other words, the extra value of drinking Napa Cabernet over Lodi Zinfandel is less than the opportunity cost ($7000-$900=$6100) of doing so.

Stuck in Lodi, by CCR

Should we trust behavioral scientists?

Not if we believe in science (cite) :

...psychologists significantly overestimated the replicability of published psychology research in the reproducibility study. In general, behavioral scientists overestimate not only the effect of nudges, but also the impact of psychological phenomena and the replicability of published behavioral science research.

HT MarginalRevolution.com

Is ESG investing illegal?

FROM WSJ: 

 ...BlackRock’s environmental, social and governance investment policies appear to involve “rampant violations” of the sole interest rule, [...which] requires investment fiduciaries to act to maximize financial returns, not to promote social or political objectives. 

 See related posts:

• The paradox of ESG investing
• Can ESG investing stop climate change without sacrificing returns?

Those with high discount rates are more likely to commit crime

From Effective Altruism Forum The paper shows that criminals discount the future much more than non criminals which combined with the delayed and uncertain future punishment, makes them more likely to commit crime

The existence of significant procedural delays in trials and sentencing may [reduce the perceived costs of crime], pushing the eventual punishment further into the discounting window.

Instead it suggests that:

• Reduce short sentences in brutalising prisons in favour of greater use of suspended sentence or punishments akin to UK community orders,
• Longer jail terms for repeat offenders to remove them from circulation "incapacitation," and place an emphasis on humane treatment within prison environments.
• Visible policing and and contact with communities as a central point of practice.
• Street lamps

HT:  MarginalRevolution.com 

Does crime cause people to move to the suburbs?

 From Effective Altruism Forum:

...back of the envelope calculation based on prior research has one murder in New York equalling 600 people moving to the suburbs

HT:  MarginalRevolution.com 

Data-driven DEI

 From Fortune:

• Understand disparities by controlling for differences in training and education.

• Find the root causes of bias

Preference bias is good old-fashioned bigotry (animus-based discrimination).  

 

Information bias (statistical discrimination) arises when employers have imperfect information about workers’ potential productivity and use observable proxies, like gender or race, to make inferences (gender stereotypes are a classic example).  

 

Structural bias occurs when companies institute practices, formally or informally, that have a disparate impact on particular groups, even when the underlying practices are themselves group blind. Employee referral programs can fall into this category.

• Follow-up to find what works and what doesn't

Solutions that yield measurable results can be substantiated into company policy, while those that don't should be discarded. In the case of the hospital network, once a small change was made to the structure of their scheduling, gender differences were reduced. Despite countless hours spent in training and seminars, their results were unchanged for years. The solution was hidden in plain data.

Related:  Do Workplace Diversity Programs Work?

Selected price elasticities

From Wikipedia:

·        Cigarettes (US)[41] o   −0.3 to −0.6 (General) o   −0.6 to −0.7 (Youth) ·        Alcoholic beverages (US)[42] o   −0.3 or −0.7 to −0.9 as of 1972 (Beer) o   −1.0 (Wine) o   −1.5 (Spirits) ·        Airline travel (US)[43] o   −0.3 (First Class) o   −0.9 (Discount) o   −1.5 (for Pleasure Travelers) ·        Livestock o   −0.5 to −0.6 (Broiler Chickens)[44] ·        Oil (World) o   −0.4 ·        Car fuel[45] o   −0.25 (Short run) o   −0.64 (Long run) ·        Medicine (US) o   −0.31 (Medical insurance)[46] o   −.03 to −.06 (Pediatric Visits) [47]

·        Rice[48] o   −0.47 (Austria) o   −0.80 (Bangladesh) o   −0.80 (China) o   −0.25 (Japan) o   −0.55 (US) ·        Cinema visits (US) o   −0.87 (General)[46] ·        Live Performing Arts (Theater, etc.) o   −0.4 to −0.9 [49] ·        Transport o   −0.20 (Bus travel US)[46] o   −2.80 (Ford compact automobile)[50] ·        Soft drinks o   −0.8 to −1.0 (general)[51] o   −3.8 (Coca-Cola)[52] o   −4.4 (Mountain Dew)[52] ·        Steel o   −0.2 to −0.3[53] ·        Eggs o   −0.1 (US: Household only),[54] −0.35 (Canada),[55] −0.55 (South Africa)[56]

We traded two years of lockdown for two weeks of added life

Conclusions 

• Vaccines worked to prevent death. Really well, and as advertised. They held western death rates down despite elderly and obese populations. 
• Lockdowns and restrictions were very effective only when combined with near-total travel bans, and when kept in place until full vaccination. 
• It’s not clear that even the most effective anti-Covid restrictions pass a cost-benefit test, when it comes to freedom versus safety (10-15 days added to every life.) 

From Maximum Truth: Join me on a data-driven search for the truth!

Exporting air pollution and birth defects to Mexico

A tightening of the US air quality standard for lead in 2009 caused an increase exports of used batteries to Mexico. 

•  In the United States, air-borne lead dropped sharply near affected plants, most of which were battery-recycling plants. 

•  In Mexico, production increased at battery-recycling plants ... and birth outcomes deteriorated within two miles of those plants 

Cite: North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling