Tyler Cowen's Blog, page 42
February 15, 2015
Sunday assorted links
1. Should all children wear helmets?
2. Interview with Amy Pascal, with reflections on Bernard Mandeville.
3. Driverless car beats racing driver for the first time.
4, Interesting Krugman post on what is the real price to Greece of continuing the status quo ex ante. His argument is not exactly my view, but if true in some way, it may imply no deal is on the table. It would be interesting to write a contrasting “nested game” post about how much one euro’s worth of concessions to Greece cost Germany and others ?? through a rewriting of other, larger eurozone bargains.
5. How much of violence is motivated by a desire to be virtuous?
6. The wedding that is Indian.
Is teaching about instruction or selection?
That is the title of a short essay by Gary Davis, here is the essay in toto:
Teaching is commonly associated with instruction, yet in evolution, immunology, and neuroscience, instructional theories are largely defunct.
We propose a co-immunity theory of teaching, where attempts by a teacher to alter student neuronal structure to accommodate cultural ideas and practices is sort of a reverse to the function of the immune system, which exists to preserve the physical self, while teaching episodes are designed to alter the mental self.
This is a theory of teaching that is based on the inter-subjective relationship between teacher and learner. This theory posits that teaching does not, as is commonly assumed, take place via instruction from teacher to students, but rather through a process of selection in the learner’s brain, stimulated by materials and activities utilized by the teacher. In this theory, the mechanism that drives the selection process in learners’ brains is co-regulated emotional signaling between teacher and learner. From this perspective, the power of formative assessment is that it intrinsically carries with it emotional aspects for both learner and teacher, in that it provides a feedback relationship between them both, and so, according to the Greenspan & Shanker theory of cognitive symbolic development, promotes cognitive development.
That is from the Journal of Brief Ideas, a new and worthy web site, and for the pointer to the site I thank Michelle Dawson.
February 14, 2015
Storing Paco (negative nominal interest rates)
Paco is a dog who lives in Norman, Oklahoma. Recently I learned it costs $12 to store him for a day, with webcam services attached. In this sense there is a negative nominal interest rate on Paco.
You might store Paco for a day if you are going to the Thunder-Clippers game, and you see leaving him at home as too risky. For related reasons, you might pay 0.75% to put your funds in Danish currency.
If all resources are costly to store, rather than some of them yielding a return, you would expect an economy to shrink over time, just as your Danish holdings eventually will waste away. Similarly, Paco does not paint your house or make it more valuable, and so both he and the home decline as the clock ticks.
Some parts of the economy are productive, so why pay for storage rather than investing there? Either those sectors are very risky, or there is no free entry into those investments.
In many (but not all) countries, consumer confidence measures are reasonably high and VIX indices are low, indicating that expected volatility is probably not so high. If these safe-ish-looking numbers were wrong, however, we would have a lot of reason to worry. Negative nominal rates — with negative real rates even lower in most cases — would imply there is a great deal of risk.
Alternatively, perhaps there is no free entry into productive investments. That suggests productive investments are not being replenished over time, and we might expect the growth rate to fall, eventually, and in the meantime for inequality to rise. That is another story of decay and decline.
Right now there are about $2 trillion in eurozone bonds with negative yields, or so I am told.
I liked Paco (more importantly Paco liked me), but I do not enjoy living in a Paco economy. I think of the calm before the storm and wonder how to reconcile the observed calm and the potential for the storm. I do not like the most obvious attempts at reconciliation.
When it comes to policy: “Trying to keep nominal rates below the cost of currency storage and movement would convert bankers back into goldsmiths, tightening rather than loosening monetary conditions.” That’s not any fun either.
What is it like to hear your own voice in an automated system?
…Most disturbing for Mr Briggs, was when he received a phone call from himself trying to flog payment protection insurance.
Briggs was also the voice of Siri for a while. Here is from another person who has been the voice of Siri:
The 65-year-old confesses she found listening to Siri a bit creepy. It was not that she hated hearing herself — that is an everyday occurrence for the voice recording artist. She is used to hearing her voice over tannoys at airports and stores, as well as telephone on-hold systems. She is her son’s bank’s automated voice and it tickles her to assume that voice and taunt him by saying: “Thank you for calling the bank. You are overdrawn.”
It was interacting with herself that felt so peculiar. “It was very strange having my voice coming back to me from my hand. I said, ‘Hi Siri, what are you doing?’ Siri said, disgustedly: ‘Talking to you.’”
That is from Emma Jacobs at the FT, interesting throughout.
Valentine’s Day Nobel Puzzle
Here is a Valentine’s Day puzzle: there have been five husband and wives awarded Nobel Prizes. Name them.
I will give you one hint. Four of the couples won for joint work. Only one of the couples each won a Nobel and that couple included a Nobel prize winner in economics.
Korea (Japan) fact of the day
The average wage of Korean workers has surpassed that of Japan in terms of purchasing power parity (PPP) for the first time. In addition, Korea topped the list of OECD member countries in the pace of wage increases from 1990 to 2013. However, Korean ranked second among OECD counties in terms of wage inequality. Wages rose sharply but it happened around large companies so wage inequality was deepening among workers.
According to the 2014 wage report released by the Economic and Social Development Commission on Thursday, the wage of the average full-time Korean worker stood at $36,354 as of the end of 2013, higher than $36,354 in Japan in terms of PPP.
There is more here, via Jonathan Cheng.
February 13, 2015
China patriotic markets in everything fact of the day
As families around China prepare for Lunar New Year celebrations next week, shoppers in one southeastern city can add another delicacy to their shopping list: “patriotic fish.”
Photos of shoppers in Fuzhou, the capital of Fujian Province, thronging around cases of frozen fish and sea urchins circulated in China on Wednesday. This was no ordinary seafood, however. It was from Mischief Reef, which has been controlled by China since 1994 but is part of the Spratly Islands in the South China Sea also claimed by the Philippines, Taiwan and Vietnam.
“You can steam it, make soup, braise, slice or fry it — it’s all possible!” Lin Zailiang, 82, a former government official who heads the fish-farming program, told the gathered shoppers. Behind him, a blue billboard advertised the products as “South China Sea ‘Patriotic Fish’ — the Third Season.” The entire 8,300 pounds of seafood sold out in two hours, according to the state-run China News Service.
But Mr. Lin, white-haired and wearing a garland of orchids around his neck, also made it clear that the program was about more than just providing delicacies for the table.
Cultivating fish at Mischief Reef, called Meiji Reef by the Chinese, is equivalent to “safeguarding national sovereignty,” Mr. Lin was quoted as saying. “Because once there are residents there — us — it becomes our territory, according to international ocean law.”
There is more here.
An economic model of the mystery novel, and are sports suspense-optimal?
Those questions are considered by Jeffrey Ely, Alexander Frankel, and Emir Kamenica in their new JPE paper “Suspense and Surprise.” Here is one to the point excerpt:
In the context of a mystery novel, these dynamics imply the following familiar plot structure. At each point in the book, the readers thinks that the weight of evidence suggests that the protagonist accused of murder is either guilty or innocent. But in any given chapter, there is a chance of a plot twist that reverses the reader’s beliefs. As the book continues along, plot twists become less likely but more dramatic.
In the context of sports, our results imply that most existing rules cannot be suspense-optimal. In soccer, for example, the probability that the leading team will win depends not only on the period of the game but also on whether it is a tight game or a blowout…
Optimal dynamics could be induced by the following set of rules. We declare the winner to be the last team to score. Moreover, scoring becomes more difficult as the game progresses (e.g., the goal shrinks over time). The former ensures that uncertainty declines over time while the latter generates a decreasing arrival rate of plot twists. (In this context, plot twists are lead changes.)
There are ungated versions of the paper here. Note that at the very end of the paper…well, I’ll just let you read it for yourselves.
Friday assorted links
1. Apes prefer the glass half full, more here.
2. Jeff Bezos is involved at WaPo.
4. Those least admired by Arnold Kling (not Anthony Mason).
5. Is Washington in economic decline? An interesting argument, although I would put more weight on high asset values.
6. Data about on-line education (pdf).
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