Tyler Cowen's Blog, page 211

Ski holiday markets in everything

The ski holiday company that is offering to pay parents’ fines for taking children out of school to go skiing has received tremendous support from parents since the promotion went viral.

Lee Quince, the owner of Bedford-based MountainBase, which sells holidays to Morzine in the French Alps, said: “90 per cent of the people who have got in touch have been supportive of what we’re doing.”

It was a fortnight ago an advert called ‘Are Schools in the UK taking the PISTE?’ ran, claiming that the company would pay any local authority fines parents received for taking their children out of school if they booked a holiday in March or April. But it wasn’t until last week the advert was picked up by the national press, reigniting a long running debate about the cost of holidays out of term time.

Mr Quince has admitted his company’s deal encourages parents to break the law, but said he has received a lot of support for the advert.

The company claims it has no choice but to put its prices up by almost 50 per cent during the peak season, which it claims is unfair on customers.

There is more here.

Nate Silver’s 538 is up and running

You will find it here.

Here is a piece on economic data.  What it says is fine, but it won’t interest me.  I wished this piece on hockey goalies had been longer and more analytic.  The same is true for this piece on corporations hoarding cash, which also could use more context.  Maybe it is I rather than they who is misjudging the market, but to me these are “tweener” pieces, too superficial for smart and informed readers, yet on topics which are too abstruse for the more casual readers.  I want something more like the very good Bill Simmons analytic pieces on Grantland, with jokes too, and densely packed narrative, yet applied to a much broader range of topics.  Barring that, I am happy to read one very good sentence or two on a topic.

Here is a piece on whether guessing makes sense on the new SAT.  It is fine but presents material already covered in places such as NYT.

Here is Silver’s introductory essay as to what they are about.  It is too sprawling and evinces a greater affiliation to rigor with data analysis than to rigor with philosophy of science or for that matter rigor with rhetoric.

I have long been a fan of Nate Silver, but so far I don’t think this is working.

Lucy Kellaway on advice

In the process of sounding like Robin Hanson, she refers to:

…something important about advice in general. From the issuer’s point of view, admonitions are not meant to be followed at all. In fact, they are positioning statements that tell the world about the values the issuer would like it to think they hold.

From the recipient’s perspective there is no question of following the advice anyway. As John Steinbeck pointed out “Nobody wants advice – only corroboration.”

From the FT there is more here which you should read.

Only Singapore markets in everything

Selfish Gene Cafe.

For the pointer I thank Michelle Dawson, citing David Dobbs.

Assorted links

1. From Neal Stephensohn’s Reamde.  It concerns aviation and other issues in recent current affairs.

2. New blog on robot economics.

3. Dubious but interesting claims about new ways of punishing prisoners.

4. Is there still communism in China?  And the PRC according to Baidu autocomplete.

5. Are some of the traditional ladders out of poverty disappearing?

What happened to the Malaysian plane?

I have read many of the accounts and I am following this story with interest.  As to what happened, I don’t care to hazard a very particular guess.  But I wish to make a general point about puzzles.  When an event appears extremely puzzling, there are often a few ways out:

1. One or more of the agents in the story has a capacity to behave more irrationally than you might think.  Even if you believe people are reasonably rational, by examining a puzzle you are to some extent selecting for a situation with irrational behavior from some of the participants.  And sometimes the line between irrational behavior and totally incompetent behavior is a thin one or it is absent altogether.

2. Our own ability to use the argument from exclusion (it cannot be A, B, or C, therefore only D remains) to reach reliable conclusions is extremely dubious and limited.

3. There are more conspiracies than we are usually aware of, and sometimes these conspiracies shape events.

I tend to favor #1 and #2 over #3. The core insight perhaps is that it is easier for coordinated events to fail to happen than to happen.  That does not explain what went on, but it does slant me away from some of the more extreme (and worrying) scenarios.

The fate of the plane and its passengers is of course a matter of intrinsic interest.  But I also find interesting the question of whether a social scientist, or an economist, should have a systematically different interpretation of what might be going on, if only stochastically.  And if we don’t…what good are we?

#LimitsofRatiocination

Which of the new mega-web sites will succeed?

There is the NYT’s and David Leonardt’s The Upshot, Nate Silver’s and ESPN’s 538, and the Ezra Klein and Melissa Bell-led Vox.com.  Probably they don’t want to be compared to each other, but they will be anyway so why can’t I make the same mistake?  I would ask the following questions, among others:

1. Which group has a cohesive core of initial workers, loyal to each other, and loyal to a common mission and vision for the project?

2. Which group has a charismatic leader who understands his role is now that of leader, and who can credibly sit down with venture capitalists, bosses, donors, and the like?

3. Which group has the capability to scale from a small operation to a larger, more bureaucratized level, without completely losing its initial inspiration and cohesion?

4. Which group has the best core idea for how to deliver a sustainable and interesting product?

5. Which group has the tightest connection to a web-obsessed back-up firm for project development and support?

6. Which group has the best and deepest collection of talent?

7. Which group has the strongest brand name behind it?

It seems to me The Upshot wins on #7, although arguably that is a partial weakness as well.  It helps them “survive at all,” but gives them less incentive to come up with a new and workable model.  ESPN is a strong TV and sports brand, but maybe not so strong among those who crave data-driven analysis.  The ESPN connection might even give 538 too many readers who want something else, at least insofar as the ESPN home pages are used as feeders.  It is hard to write for uninspired readers.  I would think Vox wins on #2, possibly on #1, and at least tie on #5 and possibly win on it.  About #4 — which of course is central — we are quite uncertain and thus we must be highly uncertain overall.

For legal reasons, U.S. lags in commercial drone use

In Japan, the Yamaha Motor Company’s RMAX helicopter drones have been spraying crops for 20 years. The radio-controlled drones weighing 140 pounds are cheaper than hiring a plane and are able to more precisely apply fertilizers and pesticides. They fly closer to the ground and their backwash enables the spray to reach the underside of leaves.

The helicopters went into use five years ago in South Korea, and last year in Australia.

Television networks use drones to cover cricket matches in Australia. Zookal, a Sydney company that rents textbooks to college students, plans to begin delivering books via drones later this year. The United Arab Emirates has a project underway to see if government documents like driver’s licenses, identity cards and permits can be delivered using small drones.

In the United Kingdom, energy companies use drones to check the undersides of oil platforms for corrosion and repairs, and real estate agents use them to shoot videos of pricey properties. In a publicity stunt last June, a Domino’s Pizza franchise posted a YouTube video of a “DomiCopter” drone flying over fields, trees, and homes to deliver two pizzas.

But when Lakemaid Beer tried to use a drone to deliver six-packs to ice fishermen on a frozen lake in Minnesota, the FAA grounded the “brewskis.”

Andreas Raptopoulous, CEO of Matternet in Menlo Park, Calif., predicts that in the near term, there will be more extensive use of drones in impoverished countries than in wealthier nations such as the U.S.

He sees a market for drones to deliver medicines and other critical, small packaged goods to the 1 billion people around the globe who don’t have year-round access to roads.

There is more here, via Claire Morgan.

Open Borders Day!

Today, March 16, is Open Borders Day, a day to celebrate the right to emigrate and the right to immigrate; to peacefully move from place to place. It is a day worth celebrating everywhere both for what has been done already and for the tremendous gains in human welfare that can but are yet to be achieved. It is also a day to reflect on the moral inconsistency that says “No one can be denied equal employment opportunity because of birthplace, ancestry, culture, linguistic characteristics common to a specific ethnic group, or accent” and yet at the same time places heavily armed guards at the border to capture, imprison, turn back and sometimes kill immigrants.

 

Crimea through a game theory lens

That is my latest NYT column and you will find it here.  Here is one excerpt:

Long before Malcolm Gladwell popularized the concept [of tipping points], Mr. Schelling created an elegant model of tipping points in his groundbreaking work “Micromotives and Macrobehavior.” The theory applies to war, as well as to marketing, neighborhood segregation and other domestic issues. In this case, the idea of negotiated settlements to political conflicts may be fraying, and the trouble in Crimea may disturb it further, moving the world toward a very dangerous tipping point.

First, some background: With notable exceptions in the former Yugoslavia and in disputed territories in parts of Russia and places like Georgia, the shift to new governments after the breakup of the Soviet Union was mostly peaceful. Borders were redrawn in an orderly way, and political deals were made by leaders assessing their rational self-interest.

In a recent blog post, Jay Ulfelder, a political scientist, noted that for the last 25 years the world has seen less violent conflict than might have been expected, given local conditions. Lately, though, peaceful settlements have been harder to find. This change may just reflect random noise in the data, but a more disturbing alternative is that conflict is now more likely.

Why? The point from game theory is this: The more peacefully that disputes are resolved, the more that peaceful resolution is expected. That expectation, in turn, makes peace easier to achieve and maintain. But the reverse is also true: As peaceful settlement becomes less common, trust declines, international norms shift and conflict becomes more likely. So there is an unfavorable tipping point.

In the formal terminology of game theory, there are “multiple equilibria” (peaceful expectations versus expectations of conflict), and each event in a conflict raises the risk that peaceful situations can unravel. We’ve seen this periodically in history, as in the time leading up to World War I. There is a significant possibility that we are seeing a tipping point away from peaceful conflict resolution now.

Do read the whole thing.

More generally, here is a new edited volume on the economics of peace and conflict, edited by Stergios Skaperdas and Michelle Garfinkel.

And here is the new forthcoming Robert Kaplan book Asia’s Cauldron: The South China Sea and the End of a Stable Pacific.  I have pre-ordered it.