Category Archives: Intelligence

Individual decisions, aggregate problems. My brother.

My brother, George, is a superbly accomplished, brilliant person. In 2000, he won the National Spelling Bee and took 2nd place at the National Geography Bee. His high school career included him becoming an Eagle Scout and valedictorian. He was accepted to Harvard and to my knowledge graduated with degrees in Chemistry and Russian, presumably with honors.

His intention was to eventually end up in medical school and follow my father into the medical profession. My father, also named George, is a Ph.D. biochemist who went to medical school at 42 and currently practices endocrinology in St. Louis. My father and I have deep differences in personality and ideology but beyond that I have a deep and profound respect for his work. As a physician, his work is profoundly and immediately meaningful in the lives of many, many people. Many have lived where they might have died and learned to live well because of his choice to practice medicine.

My father is well compensated, of course. He works 14-hour days even as he approaches 70. If in my life I am capable of doing a tenth of the good he has done, I will be surprised. A good physician is one of our world’s most valuable real assets.

My brother and I have never really gotten along, but I was proud that he went to Harvard hoping to be a physician. When he graduated, however, he’d lost that dream. He is now an investment banker, working for William Blair, a Chicago-based investment company.

This I think is one part of the story of this economic recession. Brilliant minds converged at the world’s best educational institutions and got blinded by the money they could find in the financial sector. Here is Joseph Stiglitz, the recipient of the 2001 Nobel Memorial Prize in Economics, whose words ring all too true for me:

Finally, I have emphasized how our financial sector failed in its essential societal roles, especially with respect to the allocation of capital, and how the sector’s’ incentive structures may have contributed to that failure. But there is another misallocation of resources that resulted from the sector’s compensation policies, one whose effects are graver and longer lasting, and one which, as a teacher, I have felt intensely. There was a misallocation of scarce human capital, as some of America’s most talented young succumbed to the lure of easy money—brilliant minds that, in another era might have made real discoveries that enhanced our knowledge or real innovations—that would have enhanced societal well being. In earlier decades, our best students went into a variety of areas—some into medicine, many into research, still others into public service, and some into business. Each found fulfillment of their potential at the same time they served their communities in one way or another. At Amherst College, where I serve as a trustee, we talk of helping our youth live lives of consequence. In this modern era of a finance-dominated economy, unfortunately, a disproportionate share of our most talented youth went into finance, lured by the outsized compensation. The costs to our society of this misallocation are incalculable.

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On energy efficiency, conservation, and the behavioral economics of Republicans

I’ve been working on a response to Christine Harbin’s op-ed on Missouri’s green energy sales tax holiday over at the Show-Me Institute. This paragraph particularly stood out to me:

…Acquiring a more fuel-efficient new appliance could also encourage the purchaser to wash dishes and laundry more frequently than before, which means that the overall decrease in energy usage may be much smaller than anticipated — or could even increase. If usage does drop as a result of sanctioned purchases, however, the reduction in overall Missouri energy usage will still be minimal at best unless every Missouri resident purchases a new appliance during the week that rebates are offered.

The assertion that the consumers might respond to increased energy efficiency of course is not a new one, and there is some empirical backing for that claim. This study conducted with Opower suggests that political affiliation may play a role in how consumers respond to these programs. Specifically, conservatives seem to be the single group that increases their energy consumption in spite of (or maybe to spite) efforts to increase the conservation of energy:

In a study evaluating the program’s effectiveness, Opower researchers compared power use before and after the HER reports began arriving, and further compared this change with a group of control households that never received the reports. On average, the HER households reduced their consumption in the months that followed by a little less than 2 percent. Not bad, but probably not enough to save the planet.

Working with the same utility as Opower, Costa and Kahn matched up information on the households in the pilot study to data on political affiliations and a database of past charitable giving to environmental organizations. The economists found that the 2 percent average decline in energy use obscured significant differences in the responsiveness of different types of households to the conservation message. Registered Democrats who give to environmental organizations and live near other liberals reduced their consumption by 3 percent. For liberals who started out as heavier-than-average consumers, the reduction was almost 6 percent. Republicans who live in conservative neighborhoods (and hence had no neighborly pressure to conserve) and had no record of giving to environmental organizations actually increased their consumption by 1 percent.

Why would some energy-conscious Republicans all of a sudden become power hogs? One explanation is that many conservatives don’t believe that burning energy harms the planet, so when they learn that they’re better than average, they become less vigilant about turning the lights off. That is, they’re simply moving closer to what they now know is the norm (what psychologists call the boomerang effect). Costa and Kahn also look for guidance from the patron saint of right-wing fundamentalists, Rush Limbaugh, who encouraged his listeners to turn on all their lights during Earth Hour. Costa and Kahn suggest that ardently right-wing electricity customers might respond to paternalistic nudges by burning more energy, just to thumb their noses at Big Brother.

H/T: MarginalRevolution.

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The job market for economists

From Chessbase:

Richárd’s parents are both economists. His father, Tamas, has built up a successful wood and parquetry business. A few years ago he moved from Szombathely to Sé, where his large young family could thrive better in the quiet village life. He has a strong amateur interest in history, a love that has passed on to Richárd. Richárd’s website, http://www.rapportrichard.hu, as designed by his father, opens with scenes from King Richard’s crusades.

Via MarginalRevolution, who excerpts some insightful portions on how chess theory is evolving in response to computer-trained players.

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On Farmville and social capital

A. J. Patrick Liszkiewicz writes:

One wonders if this is a good thing. It is difficult to imagine Aristotle or Caillois celebrating Farmville as essential to citizenship. Indeed, when one measures Farmville against Roger Caillois’ six criteria for defining games, Farmville fails to satisfy each and every one. Caillois stated that games must be free from obligation, separate from ‘real life,’ uncertain in outcome, an unproductive activity, governed by rules, and make-believe.[12] In comparison:

(1) Farmville is defined by obligation, routine, and responsibility;
(2) Farmville encroaches and depends upon real life, and is never entirely separate from it;
(3) Farmville is always certain in outcome, and involves neither chance nor skill;
(4) Farmville is a productive activity, in that it adds to the social capital upon which Facebook and Zynga depend for their wealth;
(5) Farmville is governed not by rules, but by habits, and simple cause-and-effect;
(6) Farmville is not make-believe, in that it requires neither immersion nor suspension of disbelief.

Of these points, the fourth is the most troubling. While playing Farmville might not qualify as work or labor, it is certainly a productive activity, as playing Farmville serves to enlarge and strengthen social capital. Capital is defined as “any form of wealth employed or capable of being employed in the production of more wealth.”[13] New media companies like Zynga and Facebook depend upon such wealth in generating revenue, just as President Obama depends on social capital to raise money, to organize, and to communicate. Unlike President Obama, though, Zynga is not an elected official, and is not obligated to act with the public’s interests in mind.

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Anti-Mankiw: What’s Wrong with the Most Popular Economics Textbook

Here I am reproducing in its entirety a post over on Facebook from my old college roommate and current TFA teacher, Jack Soltysik. Jack remains a friend, of course, and is the most motivated smart person I know. Since leaving college, we have kept in contact and my respect for his intellectual faculties and integrity has only grown.

On a side note, my 2000 National Spelling Bee winning brother went to Harvard to become a doctor ([sarcasm]and of course is now getting into finance [/sarcasm]) and as recently as 2007 told me that he sometimes had dinner with professors including Mankiw.

In any case, I agree with Jack on Mankiw. But here I’ll let him speak for himself. The entire post is worth reading:

Greg Mankiw writes the most widely used econ text in the country and I thought it was cool that he linked to some recent protests (http://gregmankiw.blogspot.com/2010/04/anti-mankiw-movement.html). What follows, I guess, is my 2 cents.

A few years back, Mankiw wrote:

“Some students may view the economic mainstream as right of center. That assessment is probably correct, at least as judged by the universe of college professors. But the job of an introductory course is to present, as honestly as possible, the consensus of the profession. If the typical economist is more market-friendly than the typical literature professor, then that point of view will likely be reflected in the leading textbooks.”

I think that I’m *generally* satisfied with this approach to academic openness and freedom. Sociologists are to the left of political scientists which are to the left of economists (please keep in mind that something like 80-90% of economists identify as Democrats and the the numbers for journal editors are higher). I don’t think any discipline is crazy; I think most ideas in college curricula are reasonable and to the extent that you disagree with models of thinking, don’t take the course; and if you can’t avoid the course, it will probably do good for you to be exposed to contrarian ideas; and you will have plenty of opportunities to study and read about whatever the hell you want.

But I think a bigger issue is that the foundations of economics, by the beginning of the 20th century, were divorced from ethics, rewedded to calculus, and there has been very little looking back. When Keynes weaved together his General Theory to get a trodden world out of the depression, the entire “trick” was analytical; it was done on pen and paper with maths. He opens up his book by saying:

The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight—as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to thro over the axiom of parallels and to work out a non-Euclidean geometry.”
Continue reading

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Felix Salmon on journalism

Alternatively, you could title this post: Why journalism education programs are useless (in most respects).

Then, of course, there’s the very germane fact that many highly successful bloggers didn’t get a formal training in journalism because they were too busy getting a formal training in the thing they’re writing about — business, finance, economics. The likes of Yves Smith or Brad DeLong or Simon Johnson or John Hempton are popular partly because these people know what they’re talking about and actually do it; it’s surely an advantage to be able to use first-hand rather than second-hand knowledge when you’re writing about something.

Can you think of any popular (and legitimate) economic or finance blogger who a) has a journalism degree and b) didn’t receive a second degree or c) wasn’t self-educated about their subject?

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Chicago charter school Urban Prep has 100% college acceptance rate

From the Christian Science Monitor:

But the Urban Prep charter school, located in the city’s tough Englewood neighborhood, has produced a very different statistic. In March, this school, which is made up of young African-American men, announced that all 107 boys in its first graduating class have been accepted to a four-year college. Just 4 percent of those seniors were reading at grade level as freshmen.

There are I’m sure many lessons to  be taken from this one shining example of American secondary education. Others have already spoken well on the transformative capacity of the charter school model. But that’s not all that’s at work here. One less obvious lesson is that Urban Prep is active in one of the most vibrant debate leagues in America through the sanction of the Chicago Debate League.

Here is Alfred Snider with more:

Even more dramatically, in schools with 90% or more Title I students, participation in the CDL grew by 192%, almost tripling the number of debaters in one year. Moreover, a substantial portion of this growth is from returning schools, not simply the addition of new schools. Returning school growth adds to our overall participation numbers in a very cost-efficient manner.

Low-income students in Chicago are in greatest need of the transformative benefits of competitive academic debate. The Chicago Debate Commission focused a substantial share of its own human and organizational resources to build interest in debate in our schools with high Title I rates. Increasing the percentage of first-generation college students and decreasing the racial achievement gap are proven outcomes of the CDL’s research-driven intervention.

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Margaret Atwood on Twitter

From The Guardian:

So what’s it all about, this Twitter? Is it signalling, like telegraphs? Is it Zen poetry? Is it jokes scribbled on the washroom wall? Is it John Hearts Mary carved on a tree? Let’s just say it’s communication, and communication is something human beings like to do.



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Petraean Signalling Theory

From Vanity Fair:

He still steers the Iraq war, and he oversees the developing strategy for routing the Taliban in Afghanistan. The all-out assault on Marjah in February demonstrated strict Petraean principles in action. It was announced months in advance, which gave civilians a chance to either dig in or clear out. There were civilian deaths, tragedies that were clearly inadvertent and which McChrystal publicly apologized for, but the numbers were a fraction of those common in such urban assaults. By so carefully reducing the potential for civilians to be caught in the crossfire, the offensive all but eliminated what is, perhaps, the strongest incentive for Taliban troops to stand and fight: to exploit such deaths to turn public opinion against America. Since they could not hope to defeat the onslaught of allied and Afghan troops, the insurgents largely melted away. The end result was the same: the allied and Afghan forces reclaimed Marjah, but they did so with relatively little bloodshed. This approach runs directly counter to military convention, which prizes secrecy and surprise. It recognizes that the real battle is not chasing the Taliban out of the city or underground but winning the population, a process which can begin only after the city has been retaken. American commanders have already announced an even larger offensive for later this year, on Kandahar.

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The Most Important Gallup Poll You’ve Never Heard Of

Dennis Blair, the Director for National Intelligence, in testimony to the Senate Select Committee on Intelligence, Feb. 2, 2010:

Finally, I note that Muslim support for violent extremism did not change significantly in 2009 and remains a minority view, according to polls of large Muslim populations conducted on behalf of Gallup and Pew. On average, two-thirds of Muslims in such populations say that attacks in which civilians are targeted “cannot be justified at all.” Support for violent groups is likely diminishing among the Pakistani and Saudi populations, with the percent of Pakistanis who view the Taliban negatively roughly doubling over the past year. In Saudi Arabia, violence and terrorism-related indicators monitored by Gallup decreased since May 2008. I refer you to my classified statement for more information regarding polling and our analysis.

The rest of Blair’s testimony is a compelling read, as it covers most if not all of the major security threats facing the nation. Most notable to me is the section where Blair discusses the impact and probability of ‘mass killings’ aka genocide over the next five years, particularly in the Southern Sudan:

Looking ahead over the next five years, a number of countries in Africa and Asia are at significant risk for a new outbreak of mass killing. All of the countries at significant risk have or are at high risk for experiencing internal conflicts or regime crises and exhibit one or more of the additional risk factors for mass killing. Among these countries, a new mass killing or genocide is most likely to occur in Southern Sudan.

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