Friday, April 22, 2016

Economics of Imaginary Worlds

One of my favorite podcasts is talking this week about the economics of imaginary worlds.

As a long time fan (since day 1 of the podcast) and as an economist, I have thought a lot about these questions. I've always planned to teach a class on the economics of science fiction/fantasy. I wrote about Issac Asimov's 2nd foundation as my inspiration for the study of economics in my grad school essays (apparently Krugman did the same) since Asimov's psychohistory was simply the application of math to predict human behavior, which is exactly what economics does. Krugman is also famous within the economics community for working out in grad school the economics of interstellar trade when sub-light speed travel is going to screw up all of your interest rate payments since time is moving at different speeds.

I love all the shows mentioned (BSG, Firefly, and Game of Thrones are among my favorites of all time) and was impressed by how much insight we derived simply the law of scarcity. The idea that scarcity would simply shift from material goods to status or experiential goods once we have replicators is something most people under appreciate. Even my favorite economics podcast planet money got it wrong. But its a natural shift. Even today material goods are a small part of the US economy (see my column in US News) and Adam Smith first wrote about this in the 1750s.

However, there is so much more to economics than simple scarcity. For example, for Lannister's motto (a Lannister always pays his debts) there is a theory called "tying the kings hand" by Nobel Prize winner Douglas North that the reason England eventually became the dominant power in Europe is because England always pays its debts. Most kings have a habit of just deciding not to pay when times get tough. In England, the Magna Carta empowered parliament to "tie the kings hands" and force the king to pay, which made lenders much more eager to lend to the king of England, which gave England more resources than other kingdoms, and therefore the advantage needed to build the British empire.

Other interesting debates exist about the feasibility of a money-less economy as envisioned by Roddenbury. (Mostly dumb) Neal Stephenson (my favorite novelist) does an excellent job unpacking many economic issues, like the invention of monetary policy by Issac Newton, to what happens after the disintegration of the nation state in Snowcrash.

Anyway is a fun exercise to think about how the economies of worlds work in fantasy or scifi worlds where the boundaries of physics as we know it have changed. Perhaps I will get to teach that class someday.

Saturday, September 05, 2015

Pen Fetishes

This was a recent NY Times article about the total fetishization of a disposable pen. Reminded me of my own obsession. In high school, it was the pilot precise rollerballs. In an era when the US was still in the dark ages of Bic ballpoints (although admittedly, I had a period of obsessing over the proltarian simplicity of the classic pointy tipped Bic) the pilot was one of the first japanese imports. I remember how the ink rolled out link silk over butter. It wasn't practical. It totally bled through thin paper, and the ink well totally exploded in my pocket many times but I loved how easily words rolled out of it, without any friction to impede the flow of thoughts. How neat my equations were in my math proofs. I remember seeing other people using the Pilot in public places. We would give each other a small nod, acknowledging membership in that sacred club.

In college, practicality made me adopt the Bic 0.7mm (must be the thicker one, my ideas demanded thick dark lines), disposable mechanic pencil. Disposable was a must. All the fancy gift pens and pencils were quickly lost.

My last obsession in grad school was picked up during one of the many conferences in Europe. The German Staedtler fineliner. The many colors made the many yellow pads of proofs for my dissertation a delightful rainbow of hues.

The pen used to be such a sacred part of my EDC (Every day carry). I was always the kid in elementary school everyone asked to borrow a pen from. So its odd these days, I rarely have a pen on me at all. Even in my office, I have to dig for it when a student needs something signed. And all those forms will go digital sometime soon.

Wednesday, August 05, 2015

The Economics of Strong AI

So a friend asked me:
Artificial intelligence is going to put humans out of work. Or so I hear. Similar arguments about past technologies have proven wrong, but I have to admit that I can't imagine how humans will earn their keep in a post-strong-AI world. Perhaps some will be housed and fed as pets. So, should I be devising a self-sufficient homestead and preparing for the worst?
This is actually something I've thought a lot about (how could I not, my master's degree from MIT was in AI), randomly planet money covered this topic just last month with a series of episodes though I thought this was one of their less convincing set of episodes, although I agree with much of it.

I mean, yes, there could be some movie style robot rebellion, but I see no reason why we can't engineer robots to be productive without giving them enough sentience to want to overthrow us (like Asimov had assumed). So assuming we avoid the Terminator scenario, I see the future as rather utopian

In the case of benevolent robots, the thing to remember is that a robot is simply a form of capital. Whoever owns the robot gets all the returns of the robot. So we could easily setup tax policy to redistribute the capital equally. The only reason we don't do that now is because it would destroy incentives to work. But assuming robots don't need incentives, that wouldn't be a problem.

Also, i don't think scarcity can ever be eliminated. We can see this in Star Trek. There will always be jobs that only humans can do. Sure, they can replicate anything they want, but people still like Cisco's family's homemade gumbo, or Picard's handmade french wine, rather than replicated wine. Objects have stories. and we care about how they were made. We can already make a reproduction of the Mona Lisa to be as good as the original, but we will pay a million times more for the one painted by da Vincii's hand. We will still want to see human dancers, and human musicians, and human athletes, etc.. and yes, these are all sort of winner-take-all professions, where we mostly want to see and hear the best, but I think there is room for the rest of us to find fulfilling jobs. We will still appreciate local bands, and want to watch local sports leagues live, and participate in live theater.

Thursday, July 16, 2015

Beware experts peddling tweaks : the serious economics of tweaking.

Planet Money this week talks to a few social scientists about small tweaks to the economy that would make it better. Here is my letter in response:

(As an aside, you neglected to mention that Kate Baicker also worked at the White House, at the CEA just like Goolsbee. I know because I worked with her there.)

I know this episode was meant to be light, but the topic of tweaks actually touches on a serious economic literature, typically referred to as Path Dependence. It is an important question because the basic theorems of Econ 101 say markets should produce optimal outcomes. For example, if we see inefficiencies that need to be tweaked, like inefficient supermarket queues or signature placement on contracts, a competitive market should create an entrant that has better lines (like Whole Foods actually) or better contracts, and drive the inefficient practices out of business. If this doesn't happen, we typically attribute the inefficiency to market frictions (or as you called it inertia), and use this inertia to justify government action to fix things. The canonical example of this inertia is (like your keypad example) is the QWERTY keyboard.

Two economists however pointed out that we should beware of experts peddling fixes. The standard story is that QWERTY is inefficient, but we are locked in due to inertia, and the world would be better off using a DVORAK keyboard. Liebowitz and Margolis (1990) look at the historical evidence and find that almost all of the studies that say DVORAK keyboards are better were written by Mr Dvorak himself. In fact, for expert typists, QWERTY may be better, because its placements allow better flow. Liebowitz and Margolis then point out that this shouldn't be surprising. QWERTY did not arise out of a vacuum. Instead, it was one of many keyboard layouts in the market, and grew to popularity in part because back then in the competitive typing circuit, the winner, (the Kobayashi of his day) used a QWERTY typewriter.

The lesson being that we should beware of experts (like myself or Dvorak) claiming easy tweaks that government should force us to adopt. Especially in light of growing reserach (by Uri Simonsohn and John Ioannidis and others) that argue that most academic papers are probably wrong. Maybe sometimes we should try to let competition and the market decide.

Thursday, May 28, 2015

Finally Google Photos to the rescue!

I was quite amazed when searching for a cloud photo storage solution for Wyeth's baby photos, about how bad they all were. I have accounts for all of them (dropbox, flickr, icloud, instagram, onedrive etc.) and all of them are annoying for one reason or another.

The one that worked best was google plus, except it had the super annoying feature that you couldn't really get your photos out easily, and could only share through the mostly defunct google plus network.

Today that changed. The new google photos app has unlimited free storage (icloud and dropbox still have annoyingly and unreasonably expensive pricing plans), but importantly, edits your photos for you. This has been the last piece of information tedium that I had still not solved. You go on a vacation and take 500 photos. And then they sit there, unlooked at. Totally forgotten. Nobody wants to look at 500 photos. I used to spend hours and hours editing them into something useful. Google now does this automatically. One review called it "so good its creepy."

Google now makes all your photos searchable (I haven't tried it much, but in addition to faces, its example searches will find things  like "beer" or "bars" or "millenium falcon". It will look at your 500 photos and picks out highlights. It will figure out where the photos were taken based on landmarks. Automatically edits large groups of photos into smaller coherent narratives. Makes photo and video montages, and neat animated gifs.  And finally makes all of this shareable to all of your favorite social networks.

Thursday, May 21, 2015

Sipping from the Firehose

I always had a bad case of FOMO (fear of missing out) when it came to reading. So was always a completist. Even since getting a subscription to Highlights, I would read magazines cover to cover (Even the articles meant for babies). (This was true for books too, and growing up I read literally every book I could find by Asimov, Clarke, Feist, Clancy, dozens each. Also true of video games; sandbox games drove me crazy, compelled to find every single easter egg.). For most of my adult life, I read (or at least skimmed) the Economist, the NY Times Sunday edition, and Time magazine from cover to cover (at times, also completing Bon Appetit, Smithsonian, American Photo, Harper's, American Scientist, the magazines for MIT, Stanford, Stanford GSB and Cornell, all at once, all mostly acquired haphazardly). This practice was especially exhausting with journals.

Finally learning to let the FOMO go. I have slowly shed all of my magazine subscriptions except for Time and the NY Times. Facebook signaled the beginning of this, with the infinite scrolling deliberately making it impossible to "finish." And now media has shattered, there is no trusted news aggregator, who curates all the news, instead you get only snippets tweeted or facebooked out from dozens of outlets like Vox that didn't even exist a year ago.

The other part of letting go came from realizing that I have more books on my bookshelf and kindle and movies in my netflix queue than I can ever finish in a lifetime. I suppose its good to let go.

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