Tyler Cowen's Blog, page 361

Sentences to ponder

Fashion models are almost twice as likely to get their visas as computer programmers, by one rough measure.

Here is more, and for the pointer I thank Andrew Rowe.

The Adam Smith segment of the Great Economists course is underway

You will find it here, at MRUniversity.com.  We have recorded videos covering, annotating, and explaining every single chapter of Smith’s masterwork Wealth of Nations, along with some coverage of surrounding historical material.  Having to explain a book “along the way” is a very interesting way to read, and I was surprised how much Wealth of Nations rose in my eyes as a result of this project.  I would like to do Keynes and Hayek and perhaps Marx in this manner as well.

When oh when will Henry George make a comeback?

Mr. Tyler’s entire home was only 78 square feet. And while his “Midtown mansion,” as he called it, was a far cry from the lavish town homes and shimmering penthouses that have spawned a thousand lustful television shows, a video tour posted on YouTube of Mr. Tyler’s little room has been viewed nearly 1.7 million times over the past year and a half. A similar video, about a 90-square-foot apartment on the Upper West Side, has been viewed even more times.

Or how about this?:

“I think there’s a lot to be said for utilizing a small space, but I literally saw somebody advertising a 5-foot by 7-foot closet,” said Ryan Nethery, 25, a cinematographer and Kentucky native who started the blog during his own apartment search. “The post read, ‘my bedroom has two closets and I don’t need one of them. Looking to rent it out.’ ”

That ad, accompanied by a small picture that included a visible clothing rod, boasted a Union Square location and asked $1,000 per month. Other posts include a $600 crawl space in South Williamsburg and a gray, L-shaped sofa, which appeared to be in the center of somebody’s living room, for $700 per month.

Here is more.

Assorted links

1. Ryan Avent on liquidity leaks, Paul Krugman also.

2. Some positive results on microcredit.

3. Some not very surprising claims about Joseph Beuys.  I am still waiting for a good book about the massive influence of Rudolf Steiner.

4. Where is the euro breaking point?

5. Is Greece turning the corner?

6. “Tsundoku”, and Abenomics: the show so far.

Do peer effects have inegalitarian implications?

By now it is well known that hanging out with healthy peers predicts (causes?) good health, and unhealthy peers predict (cause?) bad health, for instance as it applies to weight and diet.  So what might that mean?

But perhaps medical care should indeed be given preferentially to those who, in receiving such care, will yield a better return on the investment? Maybe people with families, or people who are merely very popular, should get more care?

That is from Nicholas A. Christakis, who also notes:

Taking network effects seriously means that we should value socially connected people more. From a policy perspective—if not from a moral perspective—the connected should get more healthcare attention.

That is a speculation and a question, so I don’t think you should read him as necessarily endorsing that as a final conclusion.  There is more here, as pointed out by the still under-followed @jflier.

Indeed, once you take peer effects seriously, the popular become very busy people indeed, adding to their already-existing popularity-related busyness.  All sorts of things must be done to help them and to improve them, and for the same reason that people worried about Charles Barkley as a role model.  Of course on average the well-connected are successful and relatively well known or even famous, so the medical attention is not going to the poor or for instance to those unemployed whose weaker networks make it harder for them to get jobs.

I would stress the general point that utilitarian theories are less egalitarian than we often like to think.  The differential marginal utility of money point is very popular, and often true, and it does generally point in an egalitarian direction.  You hear somewhat less about many of the other implications of utilitarianism.

EU survey shows how much people dislike inflation

As reported by the excellent Carola Binder:

Personally, what are the two most important issues you are facing at the moment? 

This question was only asked in May 2012. For the EU as a whole, by far the most common response was rising prices/inflation. In fact, 45% of people in 2012 said that inflation was one of the top two most important issues they were facing. The pie graph below shows, for the EU as a whole, the responses people chose. Only 15% of people chose the financial situation of their household as a top issue. Health and social security also had a mere 15%. I was stunned that three times as many people consider inflation a top issue as consider health and social security a top issue.

Of course the survey respondents are wrong (see the link for more details, including on national distribution of answers).  I believe that a) they are confusing a tight standard of living with “inflation,” and that b) they missed the post on Scott Sumner’s blog where he mentioned nominal gdp as a way of thinking about monetary policy, gobbling up only the items on Swedish liberalism, Chinese economic growth, and Asian cinema.  The best case you can make for their response is that they understand they have privileged/protected service sector jobs, they know they will not see many more nominal wage hikes, they feel more or less protected against nominal wage cuts, they do not like the idea of renegotiating their labor contracts, and so they understand that a higher “p dot” does indeed lower their real wage more or less forever.

In any case, people really do not like “inflation,” as they understand the concept.  They are not keen to hear that “inflation” should be higher, simply on the basis of a theory held by some economist.

By the way, according to one measure cited in the comments on Binder’s post, measured EU inflation is running at about 1.2%.

Compare hospital charges, http://www.opscost.com/

The web site reads:

On May 8th, 2013, the federal government released data on list prices and medicare reimbursements for the 100 most common procedures at over 3,300 hospitals.

This tool allows users to easily search and compare hospital charges.

On the proper interpretation of “The Great Stagnation”

Will Hutton writes:

At least Summers sees some underlying economic dynamism. For techno-pessimists such as economist Professor Tyler Cowen the future is even darker. It is not only that automation and robotisation are coming, but that there are no new worthwhile transformational technologies for them to automate. All the obvious human needs – to move, to have power, to communicate – have been solved through cars, planes, mobile phones and computers. According to Cowen, we have come to the end of the great “general purpose technologies” (technologies that transform an entire economy, such as the steam engine, electricity, the car and so on) that changed the world. There are no new transformative technologies to carry us forward, while the old activities are being robotised and automated. This is the “Great Stagnation”.

Such views make for a convenient target, but that is not close to what I wrote in The Great Stagnation.  For instance on p.83 you will find me proclaiming, after several pages of details, “For these reasons, I am optimistic about getting some future low-hanging fruit.”  Those are not Straussian passages hidden like the extra Nirvana audio track at the end of Nevermind.  The very subtitle of the book announces “How America…(Eventually) Will Feel Better Again.”

I also argue in the book that the internet is the next transformational technology, and that it is already here, though it needs some time to mature and pay off.  I devoted an entire separate book to this theme, namely The Age of the Infovore, which suggests that for autistics and other infovores massive progress already has arrived.

It is also odd that Hutton mentions robots and automation.  My next book considers those factors in great detail, but you won’t find either term or variants thereof in the index of The Great Stagnation.  Nor do I have the dual worry that both everything will be automated and there is nothing left to automate, as stated by Hutton.

The lesson perhaps is that if a book has a pessimistic-sounding title, mentions of optimism will go unheeded, even if they are in the subtitle.  Might that be an example of the fallacy of mood affiliation?

Sentences to ponder

For jazz players, there is a negative relationship between earnings and having a BFA or a MFA.

The quotation is from here (pdf), the original source is Thomas M. Smith, pdf of the underlying paper here.  There are other interesting results in this paper as well.  Do note that if you don’t end up as a jazz player the degree still correlates with higher earnings.

*Stories We Tell*

So far this is the must-see movie of the year, directed by Sarah Polley, Wikipedia entry here, and yes it has plenty of social science.  Descriptions involve spoilers, so I will desist.  If you’ve already seen the film read this to be clued in.