Tyler Cowen's Blog, page 291

Further small steps toward designer babies

A personal-genomics company in California has been awarded a broad U.S. patent for a technique that could be used in a fertility clinic to create babies with selected traits, as the frontiers of genetic enhancement continue to advance.

The patented process from 23andMe, whose main business is collecting DNA from customers and analyzing it to provide information about health and ancestry, could be employed to match the genetic profile of a would-be parent to that of donor sperm or eggs. In theory, this could lead to the advent of “designer babies,” a controversial idea where genes would be selected to boost the chances of a child having certain physical attributes, such as a particular eye or hair color.

The technique potentially could also be used to create healthier babies, by screening out donors with genes that are predisposed to disease, either on their own, or in combination with the recipient’s genes.

The awarding of the patent “is a massive addition to what is currently being done” in fertility clinics, said Sigrid Sterckx of the Bioethics Institute Ghent in Belgium, who co-wrote a commentary on the 23andMe patent in the journal Genetics in Medicine on Thursday. “It indicates a different attitude, not just about disease-related traits, but nondisease traits.” 23andMe, based in Mountain View, Calif., says that while its new patent encompasses trait selection in babies, through a tool called the Family Traits Inheritance Calculator, it has no plans to apply it to that end.

As I understand the article, this works only when there is a sperm or egg donor, although a potential marrying couple could use it ex ante (“come on Biff, let’s just try it, I’m just curious.  I’ll always love you.”)  My view has long been that most people, if they have the chance, are willing to embrace and also use eugenics, albeit with some reframing and rebranding.  Eugenics was a very popular idea with Progressives earlier in the twentieth century, and also with economists (in particular, pdf), and ultimately the Nazi connection will be seen as a bump in the road.  Competition with the Chinese will help push Americans toward this ideological shift.  I am more skeptical myself, as I see greater value in the genetic outliers and I fear their disappearance or diminution.  I also am relatively skeptical about the quality of the processes — legal and otherwise — which are likely to govern such experiments.  In any case, you can think of this as the next step after “early intervention.”  Why don’t we call it “very early intervention”?

The story is here, and if you need to get through the gate, enter “Gautam Naik”, the author of the article, into news.google.com.

Will the Swiss vote in a guaranteed annual income?

Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis.

A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state, with the aim of providing a financial safety net for the population.

Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday and tipped a truckload of 8 million five-rappen coins outside the parliament building in Berne, one for each person living in Switzerland.

With that, a married couple could piece together more than 67k and simply not work, so this sum appears infeasible.  There is more information here, hat tip goes to Evan Soltas.

Measuring uncertainty, and its role in business cycles

That is a new paper by Kyle Jurado, Sydney C. Ludvigson, Serena Ng, here is the abstract:

This paper exploits a data rich environment to provide direct econometric estimates of time-varying macro uncertainty, defined as the common variation in the unforecastable component of a large number of economic indicators. Our estimates display significant independent variations from popular uncertainty proxies, suggesting that much of their variation is not driven by uncertainty. Quantitatively important uncertainty episodes appear far more infrequently than indicated by popular uncertainty proxies, but when they do occur, they have larger and more persistent correlations with real activity. Our estimates provide a benchmark to evaluate theories for which uncertainty shocks play a role in business cycles.

It is common these days to criticize “uncertainty theories” by tying them to Republican complaints about President Obama.  But in fact risk and uncertainty approaches to business cycles are increasingly popular, and they exist in much stronger forms than what you usually hear discussed.  There is an ungated version of the paper here (pdf)

Assorted links

1. Lots of links on quantum field theory and string theory.

2. An older piece on the wisdom of earmarks, more relevant than ever.

3. The Karachi stock exchange is up 44 percent this year.

4. Scott Sumner on Chinese ghost cities.

5. How much peer review is there at open access journals?  And the supply chain for dog in Vietnam.

6. David Wilezol on *Average is Over*.

7. The Blizzident (there is no great stagnation).

Competency-based education comes to Wisconsin (hi future)

From The Chronicle:

Later this year Wisconsin’s extension system will start a competency-based learning program, called the Flexible Option, in which students with professional experience and training in certain skills might be able to test out of whole courses on their way to getting a degree.

Competency-based learning is already famously used by private institutions like Southern New Hampshire University and Western Governors University, but Wisconsin will be one of the first major public universities to take on this new, controversial form of granting degrees. Among the system’s campuses, Milwaukee was first to announce bachelor’s degrees in nursing, diagnostic imaging, and information science and technology, along with a certificate in professional and business communication. UW Colleges, made up of the system’s two-year institutions, is developing liberal-arts-oriented associate degrees. The Flex Option, as it’s often called, may cost the Wisconsin system $35-million over the next few years, with half of that recovered through tuition. The system is starting with a three-month, all-you-can-learn term for $2,250.

If done right, the Flex Option could help a significant number of adults acquire marketable skills and cross the college finish line—an important goal in Wisconsin, which lags behind neighboring states in percentage of adults with college diplomas. There are some 800,000 people in the state who have some college credits but no degree—among them Wisconsin Gov. Scott Walker, who dropped out of Marquette University. He had pushed the university system to set up the Flex Option early last year, when he was considering inviting Western Governors to the state to close a statewide skills gap in high-demand fields like health care, information technology, and advanced manufacturing.

The article seems to suggest that some professors in the Wisconsin system are opposed to this innovation.  Developing…

Unemployment and Business Cycles (and a rehabilitation of matching models)

That is a new and important paper by Christiano, Eichenbaum, and Trabandt which strengthens and rehabilitates matching models of the labor market.  The abstract is this:

We develop and estimate a general equilibrium model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, wages are not subject to exogenous nominal rigidities. Instead we derive wage inertia from our specification of how firms and workers interact when negotiating wages. Our model outperforms the standard Diamond-Mortensen-Pissarides model both statistically and in terms of the plausibility of the estimated structural parameter values. Our model also outperforms an estimated sticky wage model.

A few points:

1. This model overcomes the empirical problems with matching models stressed by Shimer (2005).

2. In this model the distinction between structural and cyclical unemployment is ill-defined.  To insist that today’s unemployment is one rather than the other is to commit a category mistake.

3. This model very naturally handles the distinction between “sticky wages for workers who already have jobs” and the situation of workers who do not have a job at all.  For most traditional sticky wage theories this is an embarrassment, as quite good theories of incumbent theories cannot be stretched easily to cover sticky reservation wages for the unemployed.

4. This model does not require that any openly available, good for both sides wage bargain is left sitting on the table.

5. In this model money has a positive effect on output and employment, but only by lowering real interest rates and inducing more consumer spending.  It does not in general appear to be a large effect, but there is a real positive effect.  You will note that the underlying parameters of the labor matching model are defined in real terms.

6. This model derives wage inertia and thus matches observed data on “stickiness,” noting that “stickiness” now seems to be a misleading word.

7. It would be a mistake to think that this model (or any) captures the entirety of the U.S. labor market.  Yet if the model reflects a big chunk of our labor market, at the expense of the standard nominal wage stickiness model, that would have significant implications for how we think about monetary and fiscal policies.

8. Unlike in the Keynesian model, I believe in this model it is possible for effective stimulus policy to both improve employment and boost real wages (possibly small amounts).  That is a very common claim (“let’s get some stimulus to boost wages”), yet few people making it realize how much it conflicts with their underlying Keynesian foundations.  Perhaps this is a new way forward.  Please note, however, that is my intuition based upon reading the paper and not a result which the authors have proven formally.

It is oddly fashionable in the economics blogosphere to insist that microfoundations do not matter or are not a worthy matter of study.  Papers like this show that in fact they matter a great deal.

An (earlier?) ungated version of the paper is here.

Betting market in how long the shutdown will last

There is one site here, American Civics Exchange, with a real money payout for the top predictor, the mean consensus says 18 days.  I am not sure how liquid this market is.

For the pointer I thank Chris F. Masse.  Chris also sends along this site on prediction markets.

How is this for polemic?

Here is Patrick J. Deneen on the themes of *Average is Over* and Bill Galston. Excerpt:

The Left laments the income gap, and proposes various forms of social welfare that will cushion the blow, all the while even more enthusiastically constructing the meritocratic society and populating government and leading thinkeries with Ivy League “winners.” These button-down hipsters increasingly accumulate in a select number of urban echo-chambers described most recently by Charles Murray, where they lament the rise of a growing underclass while sipping $7 lattes. These social policies are purportedly to be supported by a tax base of theoretical future citizens that are not being born, a logical outcome of an aggressively expanding and government-subsidized sexual revolution, contracepting, gay marriage, and abortion culture advanced by the very same Left.

Assorted links

1. How is Amazon art-selling working out?

2. Interview on fossil fuels.

3. Dating markets in everything.

4. Redux: Bryan Caplan on the ideological Turing test.  Ross Douthat passes the test in his why the Right fights.  Josh Barro passes the test.  Many others are failing the test.

5. Squirrels instead of birds?  And will these Korean robots stop the jellyfish invasion?

6. Caught by favoring Mises?  On-line drug dealers should be more cautious and perhaps spend more time with Hayek.

Betty Tillman has passed away

A very sad day, Betty in her time did a great deal to help me and she was always sweet to those around her.  She was a vital part of George Mason University, the Center for Study of Public Choice, and above all the efforts of Jim Buchanan.  Here is part of an obituary:

Betty Hall Tillman peacefully went to be with her Lord on October 2, 2013.  She is survived by her children Angela Tillman, Gary Tillman and George Tillman and also one who she loved as a son Lloyd Bryant. Her grand-children Brent Tillman, Deni Sheppard Smith, Dara Lashley, Jeri Tillman, Nickolia and Luca Tillman.  Her great-grandchildren Landon and Matthew Sheppard, Devyn Lashley.

She worked for economist James Buchanan for many years. He hired her in July 1961 at the Thomas Jefferson Center for Political Economy at the University of Virginia (UVA) in Charlottesville, VA. They later moved the center to Va Tech, Blacksburg, VA and he took her with him. In 1983 they then moved the center to George Mason, Fairfax, Va. She did not retire until 2007 at the age of 80. She loved the people she had met from all over the world over the years she was there and never felt like this was a job. She loved it and they loved her too. Some in an interview said about her: “Betty Tillman is the glue—or cement—that makes the center work. She’s jokingly known as the ‘First Lady of Public Choice”, “The center has a family atmosphere thanks to Betty Tillman, better known as ‘Momma Betty.’ “Betty is an inspiration to everyone she comes in contact with.”