Tyler Cowen's Blog, page 177

Dystopian science fiction is cheaper

So says Neal Stephenson:

In both games and movies the production of visuals is very expensive, and the people responsible for creating those visuals hold sway in proportion to their share of the budget.

I hope I won’t come off as unduly cynical if I say that such people (or, barring that, their paymasters) are looking for the biggest possible bang for the buck. And it is much easier and cheaper to take the existing visual environment and degrade it than it is to create a new vision of the future from whole cloth. That’s why New York keeps getting destroyed in movies: it’s relatively easy to take an iconic structure like the Empire State Building or the Statue of Liberty and knock it over than it is to design a future environment from scratch. A few weeks ago I think I actually groaned out loud when I was watching OBLIVION and saw the wrecked Statue of Liberty sticking out of the ground. The same movie makes repeated use of a degraded version of the Empire State Building’s observation deck. If you view that in strictly economic terms–which is how studio executives think–this is an example of leveraging a set of expensive and carefully thought-out design decisions that were made in 1930 by the ESB’s architects and using them to create a compelling visual environment, for minimal budget, of a future world.

As a counter-example, you might look at AVATAR, in which they actually did go to the trouble of creating a new planet from whole cloth. This was far more creative and visually interesting than putting dirt on the Empire State Building, but it was also quite expensive, and it was a project that very few people are capable of attempting.

…That [dystopian] environment also works well with movie stars, who make a fine impression in those surroundings and the inevitable plot complications that arise from them. Again, the AVATAR counter-example is instructive. The world was so fascinating and vivid that it tended to draw attention away from the stars.

There is more here, via Morgan Warstler.

We can now charge devices deep within living bodies, by wireless

A Stanford researcher has discovered a way to charge devices deep within living bodies, potentially opening the gates to embedded sensors and “microimplants” that weren’t possible before.

More immediately, the development, published Monday in the Proceedings of the National Academy of Sciences, promises pacemakers, nerve stimulators and other existing medical devices that can be smaller, longer-lasting and implanted more deeply within the brain and body.

Currently, many of these devices run on big, long-lasting batteries that still eventually die, generally requiring another round of surgery. Others are equipped with rechargeable batteries that require large receiving coils on the implant (at least a centimeter in diameter) that strictly limit where and how they can be used.

The new approach, dubbed “mid-field wireless transfer,” could allow doctors to rely more on electronics and less on drugs to treat various diseases, according to the researchers.

There is more here, via Samir Varma.

Assorted links

1. Man comes out 89 cents richer after a year of penny-rounding, a Canadian tale.

2. What if you could read the notes of your therapist?

3. The Cambridge economics fellow who wants to show “women as they truly are.”

4. Claims about who really runs North Korea (speculative).  And David Brooks on democracy and The Fourth Revolution.

5. A Touch of Sin is an excellent Chinese movie, big screen required of course.

6. The Growth Economics blog.

7. Cass Sunstein on Richard Epstein.

MIT’s rise to prominence in economics

There is a new paper (pdf) by Andrej Svorenčík on this topic:

The core question of MIT Economics Department’s history – why has MIT economics risen to prominence so quickly – requires an approach to history of economics that focuses on the role of the networks within which economists operate, their ideas diffuse, and gain scientific credit. By reconstructing the network of MIT economics Ph.Ds. and their advisors, this paper furnishes not just evidence of how MIT rose to prominence as documented by the numerous ties of Nobel Laureates, Clark Medalists, elected officials of the AEA or the Council of Economic Advisors to the MIT network. The MIT Economics Department is also revealed as a community of self-replicating economists who are to a large extent trained by a few key advisers who were mostly trained at MIT as well. MIT exhibits a large share of graduates who remain in American academia that is disproportionate to the number of graduates it has produced. It is hypothesized that this has been an important factor in MIT’s rise to prominence. On a methodological level this paper introduces prosopography or collective biography, a well-established historiographic method, to the field of history of economics.

When I was at Harvard in the 1980s, we typically thought of the MIT students as:

1. Smarter and harder working than we were

2. Better focused and better trained, and benefiting from a more collegial environment

3. More narrow

4. Somewhat less…um…modest, and thus you might prefer to have a Harvard student setting your economic policy.

Fortunately we all have moved on to broader and less prejudicial judgments.

The pointer is from @UdadisiSuperior.

Which are the greatest dissertations?

Robert Saunders writes to me:

Thanks for posting the Joseph Stiglitz dissertation. It’s always great to see the dissertations of Nobel winners.

For a future post, I thought a good topic might be “best dissertations ever” across fields. Obviously, you’ll know most about economics (assume Nash and Arrow are contenders here?), but I wonder about physics, biology, chemistry, history, etc. Not sure what an English dissertation looks like except in writing (a novel? collection of short stories?), but them, too.  Would make for an interesting comments section.

And thanks for the never ending stream of great posts across the years,

In economics Michael Spence on job market signaling comes to mind, as does Frank Knight’s Risk, Uncertainty, and Profit.  (Paul Samuelson’s renowned dissertation was mostly a wrong turn for mathematical economics, even though it got the ball rolling.)  In English there is Harold Bloom’s doctoral dissertation on Shelley and surely much more.  Elsewhere, Marie Curie did something on “radio-active substances” and Jane Goodall covered the chimpanzee.  There is Claude Shannon on information, Max Weber on the Protestant Ethic, and Wittgenstein’s Tractatus.  How about Gauss and Turing?  Might de Broglie come in first overall?

I’ll say no to Marx’s “The Difference Between the Democritean and Epicurean Philosophy of Nature.”  But how about some of those Russian mathematicians in the mid to late 20th century?  They came up with their key contributions quite early in life and I suspect some of those were in their doctoral dissertations.

Markets in everything

Danieal Cormier of Quispamsis, N.B., is hoping to revolutionize the men’s underwear industry with a new design that provides pockets for cellphones and other gadgets.

Cormier, 20, came up with idea while sitting around alone at home in his boxers one day.

“I had my cellphone and I kept doing the hand motion to put my cellphone in my pocket, but my underwear didn’t have any pocket,” he said.

“So that’s when it kind of sparked in my head — ‘Why don’t underwear come with pockets?’”

The story is here, via Michelle Dawson.

The other new French book on inequality

It is The Society of Equals, by Pierre Rosanvallon, and it is a transatlantic look at how the notion of inequality has changed over the last three centuries.  It strikes me as the sort of book Crooked Timber would have a symposium on.  Here is one good bit:

Thus there is a global rejection of society as it presently exists together with acceptance of the mechanisms that produce that society.  De facto inequalities are rejected, but the mechanisms that generate inequality in general are implicitly recognized.  I propose to call this situation, in which people deplore in general what they consent to in particular, the Bossuet paradox.  This paradox is the source of our contemporary schizophrenia.  It is not simply the result of a guilty error but has an epistemological dimension.  When we condemn global situations, we look at objective social facts, but we tend to relate particular situations to individual behaviors and choices.  The paradox is also related to the fact that moral and social judgments are based on the most visible and extreme situation (such as the gap between rich and poor), into which individuals project themselves abstract, whereas their personal behavior is concretely determined by narrower forms of justification.

Roger Berkowitz has a very good review here, excerpt:

As does Piketty, Rosanvallon employs philosophy and history to characterize the return of inequality in the late 20th and now 21st centuries. And Rosanvallon, again like Piketty, worries about the return of inequality. But Rosanvallon, unlike Piketty, argues that we need to understand how inequality and equality now are different than they used to be. As a result, Rosanvallon is much more sanguine about economic inequality and optimistic about the possibilities for meaningful equality in the future.

And:

…inequality absent misery may not be the real problem of political justice. The reason so much inequality is greeted with resentment but acceptance, is that our current imagination of justice concerns visibility and singularity more than it does equality of income.

Recommended.

Assorted links

1. The new trend of restaurants that don’t take reservations (model this).

2. The age of the jellyfish.

3. Facial recognition is booming.

4. Should we put warning labels on the classic books?

5. The U.S. paid tribute to pirates to help establish its credibility and credit rating.

6. Ashok Rao responds to the Summers critique of Piketty.

A Critique of Tabarrok on Bundling

In my MRUniversity video on the economics of bundling I argue that bundling raises total surplus and that requiring the Cable TV companies to price by the channel is unlikely to reduce most people’s cable bill (see also Does Cable TV Ripoff People Who Don’t Like Sports?). Pragmatarianism offers an excellent critique. Here is one bit from a longer post worth reading in full:

The flaw in Tabarrok’s logic is that it completely ignores the necessity of determining what the actual demand is for the individual components in the bundle.  For example, when I subscribed to cable…Charter had no idea how much I valued the Discovery Channel.  Neither did the Discovery Channel.  But is my valuation relevant?  According to Tabarrok…it really isn’t.  Uh, what? 

How could the Discovery Channel and Charter and Tabarrok not care what the actual demand is for the Discovery Channel?  In the absence of consumer valuation…how could society’s limited resources be put to their most valuable uses? 

Tabarrok is basically arguing that we don’t need accurate information in order to efficiently allocate resources.  Except, does he really believe that?  Let me consult my magic database…

The most valuable public goods are constantly changing, just as the most valuable private goods are constantly changing.  The signal provided by prices and mobility is therefore of great importance. - Alexander Tabarrok, in The Voluntary City

Huh.  Hmmm.  Is the Discovery Channel a private good?  Yes.  Is its value constantly changing?  Yes.  So…according to Tabarrok…it’s of great importance that the Discovery Channel should have its own price.  But this sure wasn’t what he said in his video. 

An excellent point that was made most forcefully by Ronald Coase in The Marginal Cost Controversy. Coase argued that pricing goods with high fixed cost at marginal cost would generate static efficiency but at the price of dynamic efficiency because we would not be able to say with assurance that the total value of the product exceeded total cost. Similarly we lose some information with bundling, perhaps especially so because marginal cost in this case is zero. With bundling, we know that the total value of the bundle exceeds the total cost but we are less certain that the total value of each bundle component (channel) exceeds the total cost of each component.

But this cannot be the whole story because in another paper, The Nature of the Firm, Coase pointed out that sometimes we choose not to use prices. Firms, for example, are islands of central planning in a market ocean (see Yglesias for a good discussion).

A channel such as HBO is itself a bundle of dramas, comedies and documentaries. Should Girls and Game of Thrones always be priced and sold separately and not through the HBO bundle? HBO certainly learns something from individually priced downloads on iTunes and that information helps HBO to improve its service. But how much is this information worth?

In 2002 should HBO have individually priced episodes of the Sopranos and sold them through AOL?  Individual pricing generates value but it also has costs. Tradeoffs are everywhere. And, to the crux of the issue, if a law had been passed in 2002 requiring HBO to sell The Sopranos on an episode by episode basis would that have resulted in better and more programming at lower prices? I think not. Similarly, I see few reasons to think that welfare would be improved by a law requiring cable TV companies to price by channel.

More generally, the price system is embedded in the larger field of the market economy which includes non-price institutions such as firms; and the market economy is embedded in the larger field of civil society which includes non-profits and non-market institutions such as the family. Economists often focus on the virtues of the price system but that should not blind us to the many virtues and many margins on which a free society operates.

Tim Geithner’s *Stress Test*

I quite am enjoying this book, which I find to be readable and also one of the best introductions to the history of America’s financial crisis.  The argumentation is conceptual throughout, though it should be recognized this is indeed an apologia.  Gretchen Morgenson offers some critical remarks on book in this regard.  Here is one good bit from that review:

…he fails to answer one of the most crucial questions about the crisis: How did he and his regulatory colleagues at the Fed, with their army of researchers and high-powered economists, miss the immense and obvious buildup of risk in the financial system that led to the crisis?

See Felix Salmon’s remarks too.

I also found Stress Test to be a good story of an American public servant, but perhaps a kind of career which is becoming increasingly rare.  Geithner writes:

Larry once said he could envision me as the managing partner of a law firm, or running some big institution, if only my credentials weren’t so thin.

There is also this:

When I left Treasury at the end of the Clinton administration, my colleagues put together tongue-in-cheek recommendations for my next job; for instance, Rubin suggested I could be Larry’s biographer.  Greenspan proposed “first assistant to the deputy to the managing director of the Asian Monetary Fund,” his wry way of celebrating its nonexistence.

You can buy the book here.