Tyler Cowen's Blog, page 168

The rise of the $8 ice cube, markets in everything

So how can an ice cube be worth eight dollars?  It is simple eough:

“Gläce Luxury Ice is a meticulously designed and differentiated ice brand specifically designed for use in premium drinks and cocktails. The Gläce Mariko Sphere is a perfectly spherical 2.5-inch piece with a melting rate of 20-30 minutes. The Gläce G-Cubed, a symmetrical 2.5-inch cube, has a dilution rate of 20-40 minutes. Gläce Ice pieces are individually carved from a 300-lb. block to ensure flawless quality and a zero-taste profile, never contaminating the essence of premium liquors and drinks.”

Better yet:

In addition to their cubes, Gläce also offers the “Mariko,” a sphere that the company claims “is the most mathematically efficient way to cool your drink” — though probably not so for your bank account: 50 “spheres” run $325 (same as their cube counterparts).

And how does the company describe the “Mariko”?

“The sphere is the most efficient shape in nature holding the greatest volume to surface area ratio of any other geometric shape. Purified of minerals, additives and other pollutants that may contaminate the taste of premium liquors and drinks, the Gläce Luxury Ice Mariko sphere is meticulously crafted to deliver and embody the finest accessory for top shelf drinks.  Each five pieces are elegantly contained in a re-sealable pouch equipped with a one-way air check valve to ensure freshness.”

There is more here, including photos.

Arrived in my cyberpile

Nick Bostrom, Superintelligence: Paths, Dangers, Strategies.

Due out September 3, 2014, self-recommending.

Assorted links

1. .

2. The high-tech world of old-world watches.

3. Tracking Detroit’s decay through Google Street View.

4. Knausgaard does Brooklyn.

5. Neurotic robots?

Average is Still Over

Unemployment fell from 3.3 to 3.2 percent for people with a bachelor’s degree or more, and from 5.7 to 5.5 percent for those with some college. But it actually rose from 6.3 to 6.5 percent for people with only a high school diploma, and from 8.9 to 9.1 percent for those without one.

In other words, our polarized labor market isn’t getting any less so. The Cleveland Fed points out that routine jobs disappeared during the Great Recession, and haven’t come back during the not-so-great-recovery — which partly explains why our economic upswing, such as it is, has been much less dramatic for the least educated.

That is Matt O’Brien, there is more here.

Chimps Rock at Game Theory

Economics assumes that people are rational, self-interested, lightning fast calculators. Obviously a bad assumption as we are constantly told. Chimps, on the other hand, are rational, self-interested, lightning fast calculators. That is the surprising conclusion to a great paper by Colin Camerer and co-authors. Camerer had chimps play versions of the matching pennies game also called the cat and mouse game. In the cat and mouse game each player can go left or go right. The cat wins when cat and mouse choose the same strategy. The mouse wins when they choose different strategies. In the simple version the best strategy is 50:50, toss a coin. When the payoffs change, however, the optimal strategies still involve randomization but they change in surprising and nonobvious ways.

Chimps play the cat and mouse game very well. First, the chimps converge on the Nash Equilibrium strategies. In one set of games the Nash equilibrium strategies had randomization frequencies of .5, .75 and .8 and the chimps played .5, .73 and .79. Second, when payoffs change the chimps adapt their strategies very quickly simply by observation of outcomes.

Camerer et al. also tested humans in similar games and they found that humans often deviate from NE play and they adjust their strategies more slowly when payoffs change, i.e. they learn more slowly! The only thing that Camerer didn’t do was to play humans against chimps in the same game. That would have been awesome!

If you want to understand how chimps are able to play these games so well check out this video. When you see what this chimp is doing you will be amazed!

Arrived in my pile

Ignacio Palacios-Huerta, Beautiful Game Theory: How Soccer Can Help Economics.

Pierre Michel-Menger, The Economics of Creativity: Art and Achievement Under Uncertainty.

Austin Frakt and Mike Piper, Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less.

Daniel W. Drezner, The System Worked: How the World Stopped Another Great Depression.

Assorted links

1. How are capital controls actually used?

2. English eggs vs. American eggs.

3. Urban frogs use drains as mating megaphones.

4. Tickets for restaurants, what have we learned?

5. The opportunity cost of Gangnam style?

6. A new route for funding and publishing academic work?

Very good Larry Summers FT review of Mian and Sufi

It is here, he mostly really likes the book but thinks they are not sophisticated enough in their policy prescriptions.  Here is one good excerpt on whether the federal government should have worked harder to institute mortgage cramdowns:

First, there was the risk of bringing down the system in an effort to save it. Banks had substantial mortgage holdings and especially large quantities of subordinated second mortgages and home equity lines of credit, which would have been wiped out if mortgage principal had been reduced in a way that respected the seniority of first mortgages. We recognised that large-scale principal reduction would draw in a large number of mortgages that were not delinquent and would otherwise be paid in full. As a consequence, there was the risk of sucking hundreds of billions of dollars out of the banking system. Given that government funds for capital infusions were scarce and that each dollar of bank capital supports $12 of lending, we worried that the spending gains from reducing mortgage debt might well be exceeded by the spending losses from reducing the flow of capital. This fear may have been exaggerated. If they think so, Mian and Sufi owe an explanation as to why.

Second, there was the issue of chilling future lending… This was not a small concern, as the automobile industry was in freefall and consumer confidence was deteriorating very rapidly.

Third, there was the danger of prolonging the housing market’s problems. Even the relatively limited programmes in place have spent as much as a third of their money delaying, rather than avoiding, foreclosures. All that we heard at the time suggested that a significant part of the reason why the housing market was dead was that no one wanted to buy because of a fear that it had further to fall. Delaying inevitable foreclosures with relief risked exacerbating this problem and risked larger foreclosure discounts when houses were ultimately sold.

What I’ve been Reading

1. Gendun Chopel, Grains of Gold: Tales of a Cosmopolitan Traveler, introduction by Thupte Jimpa and Donald S. Lopez Jr.  A very learned Tibetan scholar travels to India and records his hyper-structured impressions of what is obviously a more modern and economically developed land.  Yet India is also the original homeland of Buddhism and as such a source of obsession about the distant past.  Brilliantly rendered, the manuscript reads like a source that would have inspired Borges.  Every now and then the narrative comes to a full stop and we get a chapter like “How the Lands Were Given Their Names.”  Later the manuscript was shipped back by yak, and Chopel was sent to jail in Tibet for having written it.  This volume has one of the best introductions of any book I have read.  A fantastic look at the culture that was Tibet, or for that matter India or Sri Lanka.  Chopel is trying to incorporate modernity into the traditional Tibetan worldview, and yet throughout cannot avoid a sense of the tragic and of decay, which only the book itself is contradicting.

2. Amity Shlaes, The Forgotten Man: A New History of the Great Depression, graphic edition, the illustrations work very well.  I have only paged through it.

3. John Sutherland, How to be Well Read: A Guide to 500 Great Novels and a Handful of Literary Curiosities.  It is great fun to browse through this work.  It is out only in the UK, I found it in Daunt Books, there is always reason to travel to London.

4. Ralph Nader, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.  I am supposed to interview Nader soon, and so I am reading up on his history, he has become an oddly undervalued figure, remembered mainly for his spoiler role in Gore vs. Bush.  Here is a piece on Nader’s ostensible “turn to the right,” that is not how I would describe it, as with Krugman I see continuity from a person who is basically a moralizing conservative with a crusading zeal.  And who would have thought Nader is a fan of Wilhem Roepke?

5. Alex Wright, Cataloging the World: Paul Otlet and the Birth of the Information Age.  An excellent study of a Belgian, Paul Otlet, who in the late nineteenth century began “a vast intellectual enterprise that attempted to organize and code everything ever published.”  He started by expanding the potential of the card catalog and then wished to build a mechanical collective brain known as the Mundaneum, a “Steampunk version of hypertext.”  Relevant of course to the origins of the web, Wikipedia, and current sites such as Vox.com.  You can read more about Otlet and his infovore tendencies here.

The Georgia Tech online program is going pretty well

Administrators at the Georgia Institute of Technology are optimistic but “not declaring victory” after one semester of its affordable online master’s degree program in computer science. While the program has been well-received by students, administrators are still striving to solve an equation that balances cost, academic quality and support services.

“We’re not all the way there yet, but I couldn’t ask for a much better start,” Zvi Galil, dean of the College of Computing, wrote last month in an email to Georgia Tech faculty on the one-year anniversary of the program’s announcement.

…The buzz around the online degree program appears to have benefited the residential program as well. This year, applications were up by 30 percent, the university reported.

There is more here.