Tyler Cowen's Blog, page 202
April 3, 2014
When was the great age of migration?
Jürgen Osterhammel writes:
Between 1815 and 1914 at least 82 million people moved voluntarily from one country to another, at a yearly rate of 660 migrants per million of the world population. The comparable rate between 1945 and 1980, for example, was only 215 per million.
That is from The Transformation of the World: A Global History of the Nineteenth Century. Here is my first post on the book.
Assorted links
1. A good post on Michael Lewis and HFT.
2. MBA for scions of Chinese billionaires?
3. .
4. A language in its infancy? Is that even a meaningful concept?
5. Interesting review of *Cubed*, a new book on the history of the office.
6. How artists work. And profile of Eugene Volokh.
How has introductory economics changed as it’s been taught in American universities?
That is a new Quora forum, via Justin Wolfers, and the question is referring to the last several decades. There are interesting answers by Summers, Jeremy Bulow, Preston McAfee, and others. My answer was this:
I see greater changes than some of these answers are suggesting.
Textbooks are much clearer, better written, and the quality of problem sets and auxiliary materials is much higher. Instructors can assign video supplements or other web materials, in a way that was not possible in earlier times.
Interactive homework sites help students discover what they know, or not. Aplia led a huge revolution, which is not over.
In terms of content, in current texts there is much more on economic growth and institutions and incentives. The macro models are much clearer, even if they are still not always intuitive. Every part of the book is expected to cover and explain its material very well, a quality which was not the case in most of the earlier texts, perhaps all of them.
Overall I don’t see the difference between “content” and “presentation” as being so clear at that level of learning. So improvements in presentation are also improvements in content. I might have added that the use of “clickers” allows students to be tested in real time, as a professor is lecturing (the professor asks a question and each student has to click on the right answer, with immediate feedback), and this technique seems to be an effective one.
Questions that are rarely asked
But they are asked by Roland Stephen:
What signals are food trucks sending by pricing only in round numbers ($6, $8 etc.) unlike brick and mortar competitors (whose prices are often very similar, but expressed with lots of .95s )?
My best guess is this. You buy something from a food truck and then you eat it. You don’t keep running up a tab. (The same is true for food stalls by the way, though you may run up a tab in the hawker centre as a whole.) In a sit-down restaurant, there is a sequence of salad, main course, drinks, dessert, and so on. People might estimate their total running bill using first digits, and thus there is reason to “trick” them into thinking they have spent somewhat less than they have. The food truck doesn’t have that same incentive.
Addendum: Many of you say “to economize on change,” and maybe so. But why is this motive especially strong at food trucks? The truck clearly has the room to carry the change, and the typically urban clientele is the same group of people who are paying $6.99 plus tax somewhere else. In this context maybe speed matters more, or the percentage of cash transactions is higher to the extent many trucks do not take credit cards or wish to discourage the use of such cards.
What kind of doctor should I become?
Hi Professor Cowen,
I am a loyal MR reader and I wondered if you could comment on the following situation:
I am a 3rd year medical student, and for the purposes of this question, let’s assume I have equal interest and ability in the various medical specialties. In order to create the greatest good for the greatest number of people through my work in medicine (i.e., the highest return to society), what specialty should I pursue? I should add that, although I intend to practice in the U.S., I am open to devoting as much of my free time/vacation as possible to pro bono medical activities, and further, that I wish to do the interventions myself (instead, for example, or just making lots of money and then donating the proceeds to some other charitable activity). In attempting to answer this question, I’ve been looking at DALYs and QALYs associated with various medical interventions (e.g., cataract surgery). Am I going about answering this question the right way? Any thoughts?
An interesting corollary would be asking what job, in any field, has the highest return to society. Is there any literature on this?
The fundamental institutional failure to overcome is that many lives “out there” are pretty happy, and very much worth living, but those individuals do not have enough money to afford reasonable doctors. If you are seeking to maximize social welfare, look to step into some of these gaps.
But which gap in particular?
The second binding constraint, in my view, is that most people won’t in fact go through with their plan to do a lot of social good. That means you too. So you wish to seek out a form of do-gooding which is incentive-compatible over the long run, or in other words which is fun for you or rewarding in some other way. This second consideration is likely to prove decisive.
For instance you might decide the fight against dengue (just an example to make a point, not an actual net assessment) is the way to go, based on a narrow cost-benefit analysis. But it is hard as a field worker to really, fully protect yourself against dengue. And getting dengue can be very bad indeed. As you age, the pressures not to go into the field will mount. You might do more good by pledging your efforts to fight a malady which you can help fix without so much direct risk or exposure to yourself, let’s say infant mortality.
You will note a difference here between pledges of individual effort and pledges of money. A money pledger, thinking in game-theoretic Nash terms, will realize that effort pledgers will resist the fight against dengue. That is all the more reason why throwing money at the fight against dengue may bring high returns, namely that at the margin not enough is being done from the side of volunteer and quasi-volunteer labor. (In general this distinction creates a problem with talking up one kind of cause over another, namely that labor and money face differing incentives and should hear different messages of encouragement.)
You will note also that in a second best optimum, field workers will appear to be “consuming too many perks.” At the same time, donated funds should be trying to push field workers out of their comfort zones, at least on the margin.
I would add two final points. First, if you have a reasonable chance of being a research superstar, that may be the path to follow.
Second, if you are not already attached, spent time cultivating social circles (aid work, World Bank, vegetarians, etc.) where you are likely to meet a partner or spouse who will support a similar vision to help the world.
Addendum: David Henderson adds comment.
April 2, 2014
The costs of measuring value too precisely (model this)
…the editors at The Verge have a policy that seems a little bit odd and anachronistic: They don’t let writers see how much traffic their stories generate. Ever.
As the American Journalism Review reported, in a piece called “No Analytics for You: Why The Verge Declines To Share Detailed Metrics With Reporters,” the editors at The Verge simply don’t want their writers thinking about traffic.
What’s more, The Verge is not alone in this practice. Re/code, a tech site run by Kara Swisherand Walt Mossberg, the longtime Wall Street Journal tech columnist, also won’t share traffic stats with writers. MIT Technology Review holds numbers back too.
“We used to show the writers and editors traffic, and told them to grow it; but it had the wrong effect. So we stopped,“ says Jason Pontin, CEO, editor in chief and publisher of MIT Technology Review. ”The unintended consequence of showing them traffic, and encouraging them to work to grow total audience, is that they became traffic whores. Whereas I really wanted them to focus on insight, storytelling, and scoops: quality.”
That phrase – “traffic whore” – tells you everything you need to know about why some journalists have an aversion to chasing traffic. They fear it creates an incentive to do the wrong things.
Of course these policies hold only at some margins I believe…nor are they used at Gawker.
The full article, by Dan Lyons, is here.
Assorted links
High-frequency trading and the retail investor
Matthew Philips explains it clearly:
The idea that retail investors are losing out to sophisticated speed traders is an old claim in the debate over HFT, and it’s pretty much been discredited. Speed traders aren’t competing against the ETrade guy, they’re competing with each other to fill the ETrade guy’s order. While Lewis does an admirable job in the book of burrowing into the ridiculously complicated system of how orders get routed, he misses badly by making this assumption.
The majority of retail orders never see the light of a public exchange. Instead, they’re mostly filled internally by large wholesalers; among the biggest are UBS (UBS), Citadel, KCG (KCG) (formerly Knight Capital Group), and Citigroup (C). These firms’ algorithms compete with each other to capture those orders and match them internally. That way, they don’t have to pay fees for sending them to one of the public exchanges, which in turn saves money for the retail investor.
There is also this:
…according to estimates from Rosenblatt Securities, the entire speed-trading industry made about $1 billion, down from its peak of around $5 billion in 2009. That’s nothing to sneeze at, but it isn’t impressive once you put it into context: JPMorgan Chase (JPM) made more than $5 billion in profit in just the last quarter.
If that doesn’t convince you, just listen to all those Keynesians who are proudly calling this a form of useful economic stimulus, akin to pyramid-building, or an invasion from outer space…oh wait…
Facts about hotel mini-bars (model this)
What’s surprisingly affordable in hotel rooms across the globe is, however, vodka. It’s much cheaper than peanuts and, in some cases, even water.
That is the case for instance in Zurich, Helsinki, and Oslo. (Where is the profitable cross-subsidy? Or is this price discrimination? Is vodka less likely to be claimed for reimbursement from third-party payment?) In Toronto hotel minibars, a can of nuts costs on average $18.23, at least among the hotels sampled.
That is all from Annalisa Merelli, via David Wessel.
Does classroom time matter?
Maybe not so much. There is a new NBER working paper by Theodore J. Joyce, Sean Crockett, David A. Jaeger, Onur Altindag, and Stephen D. O’Connell, the abstract is here:
We test whether students in a hybrid format of introductory microeconomics, which met once per week, performed as well as students in a traditional lecture format of the same class, which met twice per week. We randomized 725 students at a large, urban public university into the two formats, and unlike past studies, had a very high participation rate of 96 percent. Two experienced professors taught one section of each format, and students in both formats had access to the same online materials. We find that students in the traditional format scored 2.3 percentage points more on a 100-point scale on the combined midterm and final. There were no differences between formats in non-cognitive effort (attendance, time spent with online materials) nor in withdrawal from the class. Comparing our experimental estimates of the effect of attendance with non-experimental estimates using only students in the traditional format, we find that the non-experimental were 2.5 times larger, suggesting that the large effects of attending lectures found in the previous literature are likely due to selection bias. Overall our results suggest that hybrid classes may offer a cost effective alternative to traditional lectures while having a small impact on student performance.
I do not see an ungated copy, do any of you find one?
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