Tyler Cowen's Blog, page 247
January 2, 2014
I find this moderately sad (do not share)
One study of 7,000 New York Times articles by two professors at the University of Pennsylvania’s Wharton School found that sad stories were the least shared because sadness is a low-arousal, negative state. People were more likely to share positive stories because it was a way to show generosity and boost their reputations. Sharing pleasant things in public made them appear nice themselves.
That is from a gated piece by John Gapper. To paraphrase Robin Hanson, “sharing isn’t about sharing.”
Interview with John Cochrane
There are many interesting bits from the interview, sometimes polemic bits too, here is one excerpt:
EF: What do you think are the biggest barriers to our own economic recovery?
Cochrane: I think we’ve left the point that we can blame generic “demand” deficiencies, after all these years of stagnation. The idea that everything is fundamentally fine with the U.S. economy, except that negative 2 percent real interest rates on short-term Treasuries are choking the supply of credit, seems pretty farfetched to me. This is starting to look like “supply”: a permanent reduction in output and, more troubling, in our long-run growth rate.
This part reminds me of some ideas in my own Risk and Business Cycles:
There is a good macroeconomic story. In a business cycle peak, when your job and business are doing well, you’re willing to take on more risk. You know the returns aren’t going to be great, but where else are you going to invest? And in the bottom of a recession, people recognize that it’s a great buying opportunity, but they can’t afford to take risk.
Another view is that time-varying risk premiums come instead from frictions in the financial system. Many assets are held indirectly. You might like your pension fund to buy more stocks, but they’re worried about their own internal things, or leverage, so they don’t invest more.
A third story is the behavioral idea that people misperceive risk and become over- and under-optimistic. So those are the broad range of stories used to explain the huge time-varying risk premium, but they’re not worked out as solid and well-tested theories yet.
The implications are big. For macroeconomics, the fact of time-varying risk premiums has to change how we think about the fundamental nature of recessions. Time-varying risk premiums say business cycles are about changes in people’s ability and willingness to bear risk. Yet all of macroeconomics still talks about the level of interest rates, not credit spreads, and about the willingness to substitute consumption over time as opposed to the willingness to bear risk. I don’t mean to criticize macro models. Time-varying risk premiums are just technically hard to model. People didn’t really see the need until the financial crisis slapped them in the face.
I’ve long believed the risk premium is the underexplored variable in macroeconomics and finally this is being rectified.
January 1, 2014
China fact of the day
More than 61 million children — about one-fifth of the kids in China — live in villages without their parents. Most are the offspring of peasants who have flocked to cities in one of the largest migrations in human history. For three decades, the migrants’ cheap labor has fueled China’s rise as an economic juggernaut. But the city workers are so squeezed by high costs and long hours that many send their children to live with elderly relatives in the countryside.
There is more here, via David Wessel.
Assorted links
1. La Repubblica covers Average is Over, in Italian.
2. Various economists on what we learned from 2013.
3. Scott Sumner also will be doing some guest-blogging at EconLog.
4. Scientists’ favorite jokes.
5. James Hamilton is right about Craig Pirrong.
6. Can you be paid to teach a university course which simply does not exist?
Green Wednesday: Colorado pot shops are opening today
Meanwhile, back in the so-called real world, Colorado is pursuing its legalization experiment to a logical conclusion:
Police were adding extra patrols around pot shops in eight Colorado towns that plan to allow recreational sales to anyone over 21 on Jan. 1. Officials at Denver International Airport installed new signs warning visitors their weed can’t legally go home with them.
And at a handful of shops, owners were scrambling to plan celebrations, set up coffee stations, arrange food giveaways and hire extra security to prepare for potential crowds and overnight campers ready to buy up to an ounce of legal weed.
While smoking pot has been legal in Colorado for the past year, so-called Green Wednesday represents another historic milestone for the decades-old legalization movement: the unveiling of the nation’s first legal pot industry.
Here are further details on Green Wednesday., including this: “Federal law says the drug’s possession, manufacture, and sale is illegal, punishable by up to life in prison…” I wonder if this experiment in federalism will survive our next Republican President. My prediction has long been that this kind of legalization will not persist, but the chance I am wrong has been rising.
Out-of-staters, by the way, can purchase only a quarter ounce at a time and are not supposed to carry the pot outside Colorado borders. There is also this:
Colorado projects $578.1 million a year in combined wholesale and retail marijuana sales to yield $67 million in tax revenue, according to the Legislative Council of the Colorado General Assembly. Wholesale transactions taxed at 15 percent will finance school construction, while the retail levy of 10 percent will fund regulation of the industry.
December 31, 2013
Happy public domain day!
I received this email from James Boyle at Duke:
Dear Tyler, An early Happy New Year to you and your family — I hope all is well? You may remember our annual survey of the stuff that would be entering the public domain if we had the copyright laws from 1976.
The list this year is a particularly scrumptious one. The mouseover of the book covers is another pleasure.
· Samuel Beckett, Endgame (“Fin de partie”, the original French version)
· Jack Kerouac, On the Road (completed 1951, published 1957)
· Ayn Rand, Atlas Shrugged
· Margret Rey and H.A. Rey, Curious George Gets a Medal
· Dr. Seuss (Theodor Geisel), How the Grinch Stole Christmas and The Cat in the Hat
· Eliot Ness and Oscar Fraley, The Untouchables
· Northrop Frye, Anatomy of Criticism: Four Essays
· Walter Lord, Day of Infamy
· Studs Terkel, Giants of Jazz
· Corbett H. Thigpen and Hervey M. Cleckley, The Three Faces of Eve
· Ian Fleming, From Russia, with Love
· A.E. Van Vogt, Empire of the Atomhttp://web.law.duke.edu/cspd/publicdomainday/2014/pre-1976
Movies:
The Incredible Shrinking Man, The Bridge on the River Kwai, A Farewell to Arms, Gunfight at the O.K. Corral, 3:10 to Yuma, 12 Angry Men, Jailhouse Rock, Funny Face, An Affair to Remember, Nights of Cabiria and The Seventh Seal..
(Is this list depressing when set against 2013?)
In the world of fine arts, Picasso’s Las Meninas set of paintings… only themselves legal because no copyright covered Velazquez’s.. would also be entering the public domain.
Assorted links
1. The lost art of the cutaway.
2. On net, will these trends make the country more or less libertarian? And Sarah Binder on whether we have gridlock.
3. Peter Thiel’s graph of the year is about student debt.
4. By Neil Shah, the evolution of heavy metal drumming. And can a computer enter Tokyo University? Can robots better spot terrorists at airports?
5. Cities should diversify, not specialize.
6. Is fusion going to end up working? That’s nuclear fusion, not Asian fusion cuisine.
7. Scott Winship and David Schneider on mobility and inequality.
Where are people respected the most?
Following up on Noah Smith’s earlier blog post, we discussed this question at lunch. Noah cites Japan as a country where there is a high degree of respect granted, and a relatively high equality of respect, and very likely that is true for artisans, manufacturing workers, foreign dignitaries, and foxes. But is it true more generally if we take into the position of women, who are often locked out of good jobs? How about the position of the young “lost generation,” namely all those guys with virtual girlfriends, who have given up on real sex and won’t leave their apartments? How about various minorities in Japanese society, such as the ethnic Koreans? Does Japan lose out on the forms of respect that come from large, extended families, as you might find say in Sicily?
Those judgments have some subjective elements, but I do think they bring Japan down a few notches when it comes to respect and equality of respect.
Oddly I think of the United States as a country with a fair degree of both respect and equality of respect. The diversity of niches and the diverse geography create many pathways for being thought highly of, or for thinking highly of oneself, and there are many insulations from the overweening standards of elites. And we have plenty of indifference, which is a kind of equality of respect, albeit not to be confused with respect per se.
Arguably the most powerful and influential men find plenty of respect in just about any society. A lot of the cross-national variation in respect might come on the female side of the ledger. That would likely favor the Nordic countries and Iceland in a ranking of respect.
Cowen’s Third Law says there is a literature on everything, but the most obvious Google searches did not yield concrete results. (There is however Richard Sennett’s Respect in a World of Inequality.) Can any MR readers speak to the empirical knowledge on this question? We all know the literature on happiness across nations, but here we are interested specifically in respect, where people are respected the most, and where equality of respect is most robust.
How would one go about measuring respect?
Addendum: Justin Wolfers suggest this link, and some Gallup World Poll data, showing respect is positively correlated with wealth:
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