J. Bradford DeLong's Blog, page 238

An argument that all of behavioral economics is just a se...

An argument that all of behavioral economics is just a set of footnotes to Pierre Laplace: Joshua B. Miller and Andrew Gelman: Laplace���s Theories of Cognitive Illusions, Heuristics, and Biases: "Essai Philosophique sur les Probabilities anticipated many ideas developed within the past 50 years in cognitive psychology and behavioral economics, explaining human tendencies to deviate from norms of rationality in the presence of probability and uncertainty.... Laplace���s theories and reasoning... how modern they seem, how much progress he made without the benefit of systematic experimentation, and the novelty of a few of his unexplored conjectures. We argue that this work points to these theories being more fundamental and less contingent on recent experimental findings than we might have thought...

#noted #behavioral

Weekend Reading: Trust and the Benefit of the Doubt

Weekend Reading: Dietz Vollrath sends us to a classic story from the late Douglas Adams: Douglas Adams: Trust and the Benefit of the Doubt: "This actually did happen to a real person, and the real person was me. I had gone to catch a train. This was April 1976, in Cambridge, U.K. I was a bit early for the train. I���d gotten the time of the train wrong. I went to get myself a newspaper to do the crossword, and a cup of coffee and a packet of cookies. I went and sat at a table. I want you to picture the scene. It���s very important that you get this very clear in your mind. Here���s the table, newspaper, cup of coffee, packet of cookies. There���s a guy sitting opposite me, perfectly ordinary-looking guy wearing a business suit, carrying a briefcase. It didn���t look like he was going to do anything weird. What he did was this: he suddenly leaned across, picked up the packet of cookies, tore it open, took one out, and ate it...

...Now this, I have to say, is the sort of thing the British are very bad at dealing with. There���s nothing in our background, upbringing, or education that teaches you how to deal with someone who in broad daylight has just stolen your cookies. You know what would happen if this had been South Central Los Angeles. There would have very quickly been gunfire, helicopters coming in, CNN, you know.... But in the end, I did what any red-blooded Englishman would do: I ignored it. And I stared at the newspaper, took a sip of coffee, tried to do a clue in the newspaper, couldn���t do anything, and thought, what am I going to do? In the end I thought, Nothing for it, I���ll just have to go for it, and I tried very hard not to notice the fact that the packet was already mysteriously opened. I took out a cookie for myself. I thought, That settled him. But it hadn���t because a moment or two later he did it again. He took another cookie. Having not mentioned it the first time, it was somehow even harder to raise the subject the second time around. ���Excuse me, I couldn���t help but notice...��� I mean, it doesn���t really work.

We went through the whole packet like this. When I say the whole packet, I mean there were only about eight cookies, but it felt like a lifetime. He took one, I took one, he took one, I took one. Finally, when we got to the end, he stood up and walked away. Well, we exchanged meaningful looks, then he walked away, and I breathed a sigh of relief and sat back.

A moment or two later the train was coming in, so I tossed back the rest of my coffee, stood up, picked up the newspaper, and underneath the newspaper were my cookies.

The thing I like particularly about this story is the sensation that somewhere in England there has been wandering around for the last quarter-century a perfectly ordinary guy who���s had the same exact story, only he doesn���t have the punch line...

#weekendreading #sciencefiction

Bruce Bartlett (October 9, 2012): Partisan Bias and Econo...

Bruce Bartlett (October 9, 2012): Partisan Bias and Economic Forecasts: "On Sept. 27... James Pethokoukis, now employed by the conservative American Enterprise Institute, said that the United States economy was 'running out of steam' and that there was now a 50 percent chance of a recession within a year. 'It may be several years before we see unemployment below 8 percent'.... On Friday, the Bureau of Labor Statistics announced that the unemployment rate in September was 7.8 percent. On Sept. 29... David Malpass... took a similarly bearish view.... Current economic data, he said, ���point to a recession in 2013.��� On Oct. 1, Brian Wesbury... raised the risk of a recession to 25 percent in his weekly client letter.... In July, Mr. Malpass was predicting 2 percent real gross domestic product growth in 2012 and 3 percent in both 2013 and 2014.... [In] September survey, Mr. Wesbury was predicting 2.3 percent real growth in 2012.... The average forecast for all economists surveyed by The Journal in September was 1.9 percent real G.D.P. growth in 2012, 2.4 percent in 2013 and 2.9 percent in 2014.... None of the economists surveyed has predicted even a single quarter of negative real growth within the forecast window. Typically, a recession requires two back-to-back quarters of negative real growth...

#noted

Rick Perlstein: How Doris Kearns Goodwin Came to Resemble...

Rick Perlstein: How Doris Kearns Goodwin Came to Resemble Lyndon Johnson: "Doris Kearns Goodwin... in 1993 she made a wounded remark that Joe McGinnis, the author of a new Kennedy book, had plagiarized her. McGinnis contends that he cited Goodwin appropriately in his book. Whatever the case, for Goodwin to call out McGinnis was a debased act, an alienated act, in itself. For when she did it, Goodwin acted as if she had not already privately acknowledged a few years earlier stealing from an author's work herself���Lynne McTaggart's Kathleen Kennedy (1993)���then bribing her to keep quiet about it. We don't call such things bribes, of course; they are 'settlements'. Either way they are one of the more corrupt prerogatives of power in our time...

#noted

There is no merit-based case for David Malpass to run the...

There is no merit-based case for David Malpass to run the World Bank. Ivanka would be a massively superior candidate: Dylan Matthews: David Malpass���s World Bank Nomination, Explained: "Malpass is... an infamously bad... forecaster.... Chief economist to Bear Stearns in 2007 and 2008 as the firm collapsed due to the subprime crisis. In August 2007... wrote a Wall Street Journal op-ed titled, 'Don���t Panic About the Credit Market'.... Undeterred, Malpass spent the Obama years calling for the Fed to adopt higher interest rates, and in 2012 even argued that maintaining low rates would lead to a recession. The Fed kept rates low, a recession didn���t ensue, and most economists credit the steady recovery to the Fed���s willingness to maintain rates near zero. If anything, it erred in not trying hard enough to push long-term interest rates down...

#noted

I Want to Take a Virtual Course on the Public Sphere in the Age of Costless Electronic Reproduction. What Should I Read?

Five things to start off the reading list:

James T. Hamilton: All the News That's Fit to Sell: How the Market Transforms: " Whether a story appears in print, on television, or on the Internet depends on who is interested, its value to advertisers, the costs of assembling the details, and competitors' products.... James Hamilton shows just how this happens. Furthermore, many complaints about journalism... arise from the impact of this economic logic on news judgments.... Hamilton concludes by calling for lower costs of access to government information, a greater role for nonprofits in funding journalism, the development of norms that stress hard news reporting, and the defining of digital and Internet property rights to encourage the flow of news. Ultimately, this book shows that by more fully understanding the economics behind the news, we will be better positioned to ensure that the news serves the public good...

Daniel Drezner The Ideas Industry: How Pessimists, Partisans, and Plutocrats Are Transforming the Marketplace of Ideas: "a new kind of thinker... the thought leader. Equipped with one big idea, thought leaders focus their energies on TED talks.... Three equally important factors that have reshaped the world of ideas have been waning trust in expertise, increasing political polarization and plutocracy. The erosion of trust has lowered the barriers to entry in the marketplace of ideas.... Today's intellectuals are more likely to enjoy the support of ideologically friendly private funders and be housed in ideologically-driven think tanks. Increasing inequality as a key driver... more than ever before, contemporary plutocrats fund intellectuals and idea factories that generate arguments that align with their own...
Sergei M. Guriev and Daniel Treisman: Informational Autocrats: "In recent decades, dictatorships based on mass repression have largely given way to a new model based on the manipulation of information. Instead of terrorizing citizens into submission, "informational autocrats" artificially boost their popularity by convincing the public they are competent. To do so, they use propaganda and silence informed members of the elite by co-optation or censorship. Using several sources - including a newly created dataset of authoritarian control techniques - we document a range of trends in recent autocracies that fit the theory: a decline in violence, efforts to conceal state repression, rejection of official ideologies, imitation of democracy, a perceptions gap between masses and elite, and the adoption by leaders of a rhetoric of performance rather than one aimed at inspiring fear...

Henry Farrell and Bruce Schneier: Common-Knowledge Attacks on Democracy: "New 'soft cyber' attacks... involve the manipulation of expectations and common understandings. We argue that scaling up computer security arguments to the level of the state, so that the entire polity is treated as an information system with associated attack surfaces and threat models, provides the best immediate way to understand these attacks and how to mitigate them.... Systematic differences between how autocracies and democracies work as information systems... Stable autocracies will have common knowledge over who is in charge and their associated ideological or policy goals, but will generate contested knowledge over who the various political actors in society are, and how they might form coalitions... so as to make it more difficult for coalitions to displace the regime. Stable democracies will have contested knowledge over who is in charge, but common knowledge over who the political actors are, and how they may form coalitions and gain public support.... Democracies are vulnerable to measures that 'flood' public debate and disrupt shared decentralized understandings of actors and coalitions, in ways that autocracies are not...

Oscar Barrera Rodriguez, Sergei M. Guriev, Emeric Henry, and Ekaterina Zhuravskaya: Facts, Alternative Facts, and Fact Checking in Times of Post-Truth Politics: "How effective is fact checking in countervailing "alternative facts," i.e., misleading statements by politicians? In a randomized online experiment during the 2017 French presidential election campaign, we subjected subgroups of 2480 French voters to alternative facts by the extreme-right candidate, Marine Le Pen, and/or corresponding facts about the European refugee crisis from official sources. We find that: (i) alternative facts are highly persuasive; (ii) fact checking improves factual knowledge of voters (iii) but it does not affect policy conclusions or support for the candidate; (iv) exposure to facts alone does not decrease support for the candidate, even though voters update their knowledge. We argue that the main channel is that fact checking increases the salience of the immigration issue...

#publicsphere #riseoftherobots #orangehairedbaboons #joutrnamalism

Comment of the Day: Kansas Jack: A Very Nice Twitter Rant...

Comment of the Day: Kansas Jack: A Very Nice Twitter Rant from Tom Nichols: "Let me rant. I agree with Nichols, it isn't about anything of substance it is about being pissed off. Period. About what? Doesn't matter. In Kansas you could explain to dimwits all you want that tax cuts will not raise revenues. It wasn't that it fell on deaf ears because they couldn't understand, they simply didn't care. And the more it mattered to you, the happier they were. Taxes go to "those people" so screw em. In Iowa there is now legislation in the senate to take away tenure. Why? Because the sponsor is "philosophically opposed to a job for life." But, you nicely explain, tenure doesn't give anyone a job for life. So what? That's not really the reason he wants to take it away. He's just pissed off that taxes again are going to the undeserving, which he can't codify in any real way. I'm like Nichols, I really don't care why these people want to do things to hurt other people and I'm tired of reading editorials about how we need to understand their views...

#commentoftheday

2018 was only the fourth hottest year in our records! Tim...

2018 was only the fourth hottest year in our records! Time for some more contrarianism from Steve Dubner and Steve Levitt, about how since 2016 "over the past several years the average global temperature has in fact decreased"?: Oliver Millman: 2018 Was World's Fourth Hottest Year on Record, Scientists Confirm: "World 1.5F hotter than average set between 1951 and 1980. Current five-year stretch the warmest since records began...

#noted

Austin Carr: Inside Wisconsin���s Disastrous 4.5 Billion ...

Austin Carr: Inside Wisconsin���s Disastrous 4.5 Billion Deal With Foxconn - Bloomberg: "A huge tax break was supposed to create a manufacturing paradise, but interviews with 49 people familiar with the project depict a chaotic operation unlikely to ever employ 13,000 workers.... 'This is the Eighth Wonder of the World.' So declared President Donald Trump.... For some Foxconn workers watching, the president���s rhetoric didn���t match reality. The LCD components weren���t made in the USA, according to sources familiar with the operation. They were shipped from a Foxconn factory in Tijuana...

#noted

Trolly McTrollface: The #XRPArmy, Explained: "Together, t...

Trolly McTrollface: The #XRPArmy, Explained: "Together, the members of the XRP Army identified by my clustering algorithm, had produced 32 tweets, 1998 retweets, 2264 likes, and 1986 replies, from a dataset of 100,000 data points. Yes, you���ve read that right: less than 1.5% of the content the XRP Army produces are original tweets. They are very rarely initiators of a thread, electing instead to jump in on existing discussions...

#noted