Economics & Marginalia: January 20, 2023

Hi all,

We (as in my family, not CGD) are in the process of moving into a new home, which involves a great deal of choice: choosing paint colours, tiles, locations for various bits of furniture. It’s normal in economics to consider more choice to be a good thing, but this assumes that we’re able to optimise how long we spend looking at different shades of whitish-creamy-eggshell before choosing. As the difference between options gets smaller, it becomes less worth spending time to choose between them, and there comes a point where it’s better to just pick from the options at random, rather than spend any time deliberating. In my case, this point usually takes about 15 minutes to reach; and yet, nothing is ever this quick, there’s always one more layer of choice they force us through. “Excellent choice, Pale Sarcophagus, a lovely shade of whitish-creamy-eggshell. Now, which of our 14,023 finishes would you like that in?” And they’re all near-identical again! I’m convinced this is all a scam to force us to hire people to do all this stuff for us: supporting service sector jobs that exist to simply winnow choices down to a manageable level. Expect further rants over the next few editions. I apologise in advance.

1. “The British economy is in a generation-long slough of despond, a slow-burning economic catastrophe. Real household disposable income per capita has barely increased for 15 years. This is not normal.” I write this email in a small office at the top of my poorly insulated flat, in Baltic temperatures, listening to the insistent drone of a van-sized generator powering the other half of the street after some sort of power failure, and this line from Tim Harford’s dirge for the British economy feels palpably real, lucky though I am to be in a position to move. He points out that not only has there never in living memory been such a prolonged period of stagnation in private incomes, things are no better when we look at what the state provides: we have rising taxes, persistently high debt and diminishing public services. Like a frog boiling in a pot of once-cold water placed on the fire, many Brits don’t realise quite how badly we’re doing compared to our peers. He has no solutions, at least not in this piece, but helping people understand just how bad things have gotten is surely a good place to start.
2. If I’m going to start on such a downer, I feel the need to immediately balance the mood, with another Harford piece: inspired by Randall Munroe’s What If? 2 (which I got my nephew for Christmas), he considers some of our most ridiculous economics hypotheticals here.
3. I recommend a cup of tea and a little time for this one, but I strongly recommend it nevertheless: David McKenzie summarises his new paper with Rachael Meager and Leonard Iacovone which considers how to use Bayesian analysis to use the information contained in our prior expectations of how a programme would work into an impact evaluation of the programme. At a very simple level the intuition behind this approach is that policymakers and implementers know something useful about the world they work in, and this knowledge helps them form expectations about whether things will work well or not that are better than random guesses. Using Bayesian analysis allows us to account for that information and incorporate it into how we interpret the results of an impact evaluation. I still need more time to digest this one, but I think this is a really exciting paper.  
4. In a similar vein, I really liked this VoxDev write up of new work by Lauren Bergquist and co-authors, which show how to use information from impact evaluations together with modelling to get a better sense of how interventions that are evaluated when applied to a small number proportion of a population will do when they are scaled up to cover a much larger group. This accounts for how the general equilibrium effects of an intervention might be different to how they affect a small group, and how the effects might vary across groups, but of course a large part of the difficulty of reaching scale is about how hard it is to do big things well, and how much working infrastructure (in the broadest sense) it takes.
5. Given how hard it is to do big, ambitious things well, it’s always particularly sad when we do them well and then allow them to wither away. That seems to be the fate of Operation Warp Speed in the US—a huge, ambitious, unequivocally successful large programme that seems to be dying away, starved of love from both sides of the political divide, for different reasons. Related, Alex Tabarrok and Robert Tucker Omberg argue that measures of pandemic preparedness do not, in fact, suggest that being better prepared better shielded countries from the effects of the pandemic. I think there is something to this, but also that it says something about how we measure preparedness. It’s likely that given that unexpected events are likely to be novel in multiple ways, it’s not just specific pre-specified actions that we need to be prepared with, but a flexible way of making decisions, acting and course-correcting. I’m not sure any metric adequately measure that.
6. ChatGPT continues to exert a pretty strong hold on my twitter timeline, and now Planet Money are in on the act too, but covering Edward Tian’s efforts to create an app that can tell if an article was written by the AI or not (transcript). It’s a cool tool, but I rather like Erik Brynjolfsson’s take, that ChatGPT will eventually settle into being a ‘calculator for writing’—a tool that let’s us do time consuming but dull and routine tasks more efficiently. That sounds about right; and much like things like the automatic teller machine, I suspect that rather than eliminating the need for writers, it will free them to do more. Imagine how much of your day you could free up with an AI that had access to your calendar and simply spent its time replying to scheduling tasks? Or providing links to documents people can’t find? And can do it all in something that approximates your tone and voice?
7. It feels odd to end the links with a Conversation with Tyler, but I think this interview of the music producer Rick Rubin by Tyler Cowen belongs here most of all. Rick Rubin is a genius—or at least a genius-whisperer, having had a hand or word in the production of many of the greatest albums of all time, from Johnny Cash’s American Recordings to System of a Down, from Neil Diamond to Run-DMC, LL Cool J to Danzig. What’s striking about his answers, though, is how open he is to the idea that music is all about opinion and emotional reaction; I was surprised by how little he seems to want to claim direct influence on these albums. It’s a great interview of a fascinating subject, and gave the excuse to link some absolute bangers, and this list of his 100 best albums, too.  

Have a great weekend, everyone!

R