Fable on Legibility

Joy BuchananLeave a comment

Claude Fable is Anthropic’s most capable publicly available “Mythos-class” model. It is optimized for long-running autonomous tasks and deep knowledge work. The roll out of this product has been dramatic. Little people like me have access to it for only two weeks, and I doubt I will be able to afford it thereafter. With my window of access, I posed it the following prompt:

“This article indicates that a much smarter model might not be possible because the universe is opaque. Since Tyler Cowen made this statement, AI has helped people make breakthroughs in math and biology. Write this again in 2026 using the latest state of technology. Is the smartest LLM today much smarter than GPT-4? And is the universe legible?” and I copied in my blog post Is the Universe Legible to Intelligence?

Fable replied in 3 pages of text which you can download as a Word doc here.

One line from Fable’s response: “Notice where the wins clustered: mathematics with checkable proofs, protein structures with experimental ground truth, contest problems with known answers. These are the maximally legible domains — places with a fixed target and a way to verify that you hit it.”

The writing is coherent and contains no obvious hallucinations. Is the answer true, and does it tell the whole truth?

Whenever you read something think about who wrote it, and keep in mind that every author/model has a bias and limitations. In my paper with Will Hickman, we found that just reminding people that a paragraph has an author (whether the author is human or AI) increased the demand for fact checking from readers. LLMs will become more persuasive and closer to (but never completely) correct. Keep reading all things with some skepticism whether they are written by scientists, politicians, or AI.

Regardless, there is definitely such a thing as making the known world more legible to AI today. Thus, people are talking about increasing funding for data availability and the possible demise of the “research paper.”

Research papers are more like stories than facts. The demand for stories is not going away, but I definitely cannot predict the future of the write-for-pay scientist.

AI, potentially, could go and get its own new data, instead of waiting for humans to archive it. Thus, the self-improving AI might take us beyond the current models… unless they run up against something that is not legible to intelligence…

By the Numbers: Florida’s Property Tax Amendment (2026)

Zachary BartschLeave a comment

Voters this November will face a proposed amendment to the Florida state constitution on property tax reform. Currently, Florida has what’s called a ‘homestead’ exemption of $50,000. If a residential property is your primary residence, then your home’s assessed value is $50k less before taxes are calculated. There is no exemption for rental property or 2nd homes or vacation homes. The proposed amendment increases the exemption to $250k by 2028 and then indexes it to inflation.

First, let’s get an idea of the magnitudes. The median home in Florida is priced at about $400k and the average property tax rate is around 0.8%. Below compares the current consolidated tax bill against that of the proposed amendment. Given current home prices and local tax rates, the new exemption would have a huge impact on municipal governments who get the bulk of their revenue from property tax. In fact, there is no Florida state property tax, so the proposed amendment would adopt a new rule for municipalities and not the state government.

What Motivates the Amendment?

The current homestead exemption of $50k was established in 2008. A subsequent amendment in 2024 allowed half of that to be indexed to CPI-U. The average home price in Florida has risen 114% since 2008 and 84% since 2020. That’s a lot faster than inflation, but the tax burden is partially offset by a maximum of 3% annual increase in assessed value. Regardless, many individuals face a larger tax bill over time even independent of whether their income or use of public services has changed. Plenty people are feeling the squeeze.

What’s the Purpose of the Homestead Exemption?

The exemption is available for primary residences only. That means that rentals and vacation homes do not qualify. It’s important to keep in mind that, given some total revenue, every tax break for one group or activity implies a higher tax rate for others. So, clearly, the effect is to tax residents less and tax seasonal residents and visitors more. Florida doesn’t have an income tax, but it does have a sales tax, gasoline tax, and others that are disproportionately borne by non-residents. Given that higher income individuals tend to have higher home values, the homestead exemption is a way to lower the tax burden of lower income households. Obviously, the lowest income individuals are renters, but so are non-residents who Florida prefers to tax.

The Economics

Homeowners

The exemption is enjoyed by all primary residences, but helps low income owners the most. And, given a stable amount of municipal tax revenue, a higher homestead exemption requires that municipalities replace that revenue. This might take the form of higher local fees and taxes, making life harder for lower income people to, say, own a car or make purchase if taxes on those activities rise. Revenue stability might also be helped by higher property tax rates. The higher the property value is above $250k, the greater the average tax burden that is borne. So, someone with a very high property value may find themselves with an even higher property tax bill after municipalities adjust to the proposed statewide rule. In this sense, the new amendment would be a step in the direction of tax progressivity (a higher proportion taxed from those with higher income/wealth).

Indexing

Normally, I am in favor of indexing nominal values to CPI. In this case, we need to think about what the goal is. Let’s assume that the goals is to provide relief to lower income homeowners specifically and all primary residence homeowners generally. Does indexing to the CPI help? It depends!

Continue reading →

Do NBA Teams Play Worse In Back-To-Back Games?

James BaileyLeave a comment

The conventional wisdom is that the NBA regular season has too many games. Teams play worse because they are tired, or injured, or resting their stars so they can be ready to actually play hard in the playoffs.

New research shows that the conventional wisdom is…. probably right. In particular, teams play worse by many measures when they have to play two days in a row. That’s what Max Aicardi and I found in a paper published today, “Running on Empty: How Back-to-Backs Impact Pace and the Four Factors of Basketball Success“:

Teams on the second night of a back-to-back shoot less efficiently (lower eFG%), grab fewer offensive rebounds, and play at a slower pace. On defense, they allow opponents to shoot more efficiently, force fewer turnovers, and give up more free throw attempts and second-chance opportunities. Turnover percentage and offensive free throw rate did not change significantly, consistent with our conceptual framework’s distinction between effort-dependent and execution-dependent metrics. While not every metric changed significantly, the overall pattern is clear: second-night back-to-back scheduling is associated with a measurable decline in team performance

The effect sizes here tend to be small, around 0.5-2%, but they are statistically significant given that we studied over 20,000 games, and practically significant given how close NBA games are.

Max had the idea for this paper and wrote the first draft as a student in my Economics Senior Capstone class in 2025. After he graduated, I joined the paper as a coauthor to get it ready for journals. We share the data and code for the paper here.

Yes, Americans Probably Are About 46 (or Maybe 65) Times Richer Than in 1776

Jeremy HorpedahlLeave a comment

My post and chart from last week showed the phenomenal growth of average income in the US since the Founding. Using GDP per capita historical estimates and adjusting for inflation, this figure is about 46 times greater today than right around the time we declared independence.

It will probably not surprise you that some folks were skeptical. Could this really be true? Two major objections were raised to using GDP per capita. First, wouldn’t it be better to use a median income value rather than a mean (simple average)? Second, wouldn’t a measure of wages be better than GDP per capita?

I really would like to show you an annual series of median income data back to 1776, but unfortunately it just doesn’t exist. Good median income data are hard to find much before the 1950s, much less the 1770s. However, while median values are often better for showing levels, the growth rates of median wages and mean wages aren’t that different for periods when we have comparable data. Consider the following chart, which compares median wages (as calculated by EPI using CPS data) and mean wages (from BLS’s series for non-supervisory workers) since 1973. I have stated these in nominal terms, so don’t take this as real growth rates, but rather it is a raw comparison of two series (we could apply the same inflation adjustment to both, but that won’t change the picture, only the numbers).

Median wages increased by 667% and mean wages increased by 657%, almost identical. Again, these aren’t inflation adjusted, but that’s not the point of this exercise. The point is that whether you use mean or median wages, at least since 1973, the growth rates are the same. Was this true if we went back another 200 years? We can’t say for sure. But many people have this same skepticism about mean wages in recent decades. I think it is better to use median values when you have them, but we shouldn’t throw up our hands and claim we know nothing if all we have is mean wages.

Next, consider the following chart. It begins in 1790, but instead of using GDP per capita, as I did last week, it uses a measure of average wages from economic historian Lawrence Officer. This measure is for “production workers in manufacturing,” and it is a total compensation measure, meaning that it will include the value of fringe benefits as well — though these aren’t noticeable in the data until the 1930s. This is still an average value, but because it is for manufacturing laborers, it won’t be distorted by the wages of managers and owners in that industry, and it won’t be affected by the growth of new industries that might require more years of education (indeed, manufacturing wages are lowering than overall average wages today, so this is taking the hard case). I have also included a second line, which only includes manufacturing wages (not benefits) that I have blended with Officer’s compensation series starting in the 1930s, in case you think including benefits is somehow “cheating.” (Note the log scale again, as in last week’s chart.)

The trends here are very much in the ballpark from the GDP per capita chart I created last week. Using total compensation, wages are 65 times higher than in 1790. Using only wages, they are 49 times higher. Notice that these are both better than the 46 times multiplier using GDP per capita. How is that possible, since I am using the same price deflator in both cases? First, average hours of work have fallen significantly since the 18th century, so incomes haven’t risen quite as much as wages. Second, there was a bit of a decline in GDP per capita during the Revolutionary War, and if we use 1790 as the baseline for GDP per capita, the multiplier is 63. But again, these numbers are all in the ballpark: whether the true figure for a typical American is 46x, 49x, 63x, or 65x, this is a tremendous amount of economic growth.

If you want to look at that chart pessimistically, you will see that there is some reduction in growth rates in the past few decades. That’s true whether we use wages or compensation. This is a well known issue, and has been discussed endlessly in academic papers and on social media. I don’t want to glaze over it here, but I mostly will: the long-run trend of growth in the US is amazing. That’s true whether you use GDP per capita, or wages or compensation for production workers.

So once again, Happy 250th Birthday to the USA and all of you living in the wake of that amazing 250 years of economic growth!

Some Must-Knows for Dying Well

Scott Buchanan1 Comment

I have been involved in caregiving for two persons as they were dying. Some years ago, I was the main caregiver for the last few days of a parent, and quite recently I was a support person for another death in my extended family.

On the Internet, there are plenty of compendiums of advice on how to prepare for this eventuality. There are also old-fashioned hardcopy books out there. It’s too big a subject to treat as a whole in a short blog post, so I am going to just focus on one link in the chain of end-of-life care. I am picking out this item because it’s so vital, but it can be one of the hardest steps to execute well.

This step is for the responsible caregivers to obtain, nay, demand, hospice care status, when the appropriate time comes. And then to insist on maximum levels of palliative meds, again, as appropriate.

You might think that this is the obvious, normal course of medical treatment. But (and this is a key point) this runs contrary to what medical practice is normally geared for. Doctors and hospitals exist largely to “save” lives. When someone gets carted into the emergency room, the normal response is to stick tubes into them and fight to keep them alive. Anything less would be considered irresponsible (and possibly grounds for a lawsuit).

And so, the family caregivers may need to fight with the hospital doctors at this point. I am not overdramatizing here. I know of a case where someone in their 90s, and the family and the nursing home staff had good reasons to believe this person was in the process of dying, and at the emergency room was found to have a secondary condition that was probably treatable by antibiotics. The emergency room doctor naturally wanted to do all the usual stuff with IVs and meds, but in this case the family caregiver (backed up by the nursing home staff) insisted on palliative care only and on immediate hospice qualification. Things got kind of testy with the emergency room staff, but these strong women (caregiver and nursing home nurse) got their way, and so the patient was able to quickly receive palliative care.

Hospice care is amazing. It allows the provision of what a professional caregiver called “comfort juice” – – a cocktail of morphine for physical pain relief, and anti-anxiety meds for psychological calming.

That’s the kind of thing you want when the dying process sets in. Most people wish that they could just pass peacefully in their sleep, or maybe from an instantaneous massive heart attack or brain aneurysm. Sadly, that’s not usually the way it happens. The body is programmed to fight to stay alive, so the death process can be prolonged, uncomfortable, and very undignified. Even with the pain meds, there may be stages in the process that are distressing for the family to witness, but at least they know they are doing all that can be done.

Main Takeaway:  If you are the potentially dying person, choose your medical POA (Power of Attorney) very carefully. The POA needs to be strong, competent, and 100% on board with your wishes of no prolonging life. She/he may have to fight like a bulldog to get your pain meds increased if there are signs of distress. We often treat our dogs better than we do our dying seniors. A good pet owner doesn’t let them suffer unnecessarily.

The PAO (and his/her allies) may have to take tough, unpopular stands. Within the broader family, there will likely be a few squeamish members who may want to hold back on the transition to hospice care. Maybe they fell they should “give mom/dad another chance” or they just don’t feel ready to lose the person quite yet. I think doctors may read the room, and withhold hospice if there are some family members that are advocating the normal treatment measures.  Again, no doctor wants to be sued.  Therefore, instruct your POA and your tougher caregivers to try to keep the weak family members away as much as possible when decision making must be done.

Sport rivalries work best when the hate isn’t real

mdmakowskyLeave a comment

Mexico plays England tonight in the World Cup and I will be rooting for Mexico. Which is interesting considering that Harry Kane is one of my favorite global players to watch and Mexico, for most of my life, as been the primary rival for the US Men’s National Team (who play Monday night against Belgium, another household dilemma since my wife used to run a Belgian restaurant).

I could go on about this, but Ryan Rosenblatt covers it ably. The rivalry was fun so long as it stayed on the pitch. After 12 years of racist political rhetoric about Mexico and Mexicans, it’s no fun to root against them. Combined with the fact that the team plays genuinely enjoyable soccer (relative to the broad standard of international soccer, which I am contractually obligated to note is aesthetically inferior to 95% of club soccer), I would love to see Mexican soccer fans collectively lose their minds advancing deep in the tournament.

There is a broader theme this World Cup of wonder and awe at the sense of camaderie amongt fans from 48 different countries and the communities hosting them. Which is wonderful and the World Cup as an institution deserves a lot of credit (the Cup itself, mind you, not FIFA- they’re as corrupt as they come), but honestly I think this is the result of just a lot of people coordinating to travel at the same time.

The reality is and always has been that most people don’t carry any (or, at least, much) nationalistic hate in their hearts, and certaintly not the ones willing to the incur the discomfort of flying to a different part of the world. The hate isn’t real. It’s mostly a fugazi, a masquerade carried out because it’s materially and politically profitable for a few hundred and the only source of identity and pride for a few thousand. The World Cup, by comparison, is a collective endeavor of a few million, and once you get to those numbers, it’s mostly folk who like having a good time with other folk.

Freddy and Tocquevillian Hope

Joy Buchanan1 Comment

We made it to 250! Some people didn’t even think we would make it this long. Happy 4th of July!

I have seen America 250 merchandise and banners all over this year. American patriotism was not so cool a decade ago, and it’s interesting to see the displays back in.

An example of the “USA Merch” seen all over this year. This was near Chattanooga, TN (which is the city the Spanish national team picked for their World Cup training base).

Something that has been fun this year was watching the 2026 Winter Olympics and the ongoing World Cup hosted here (Remember we went around the moon? People are just watching soccer now). People have told me how much fun they had either witnessing or hearing about Scottish World Cup fans partying in Boston. Fun is back, at least in one sense.

Americans enjoy winning. Getting knocked out of the World Cup early would have been disappointing. But most Americans don’t care if we completely win the World Cup. In fact, fun mode is highest if we get to watch someone else enjoy a victory. A nontrivial percent of Americans were genuinely rooting for Cape Verde.

For EconLog, I wrote a piece about Freddy the German World Cup tourist.

Freddy the World Cup Tourist and Tocqueville’s Hopes for America

At the link, I present Freddy and his Twitter/X posts as evidence that some of Tocqueville’s highest hopes have been fulfilled, so far.

If you go looking for Freddy, as of when I checked on July 3, he has deactivated his X account. With nearly a million followers he probably could have become a paid influencer, but he does not want to. I suppose he wants to return to Germany and live a more stable life. He never expected to get this much attention.

Fiscal Trends: USA’s 250th (And the Government’s 237th)

Zachary BartschLeave a comment

We celebrate 250 years since the Declaration of Independence was signed on July 4th, 1776. That’s the day that we celebrate our country’s birth. So, it’s very American of us to celebrate the day that we merely declared independence (not the day that the revolutionary war ended). We simply said we were independent from the crown. Regardless, we celebrate 250 years as a people. BUT, our government is only 237 years old.  The current constitution replaced the articles of confederation in 1789.  So there are some caveats to the whole semiquincentennial thing.

An important distinction that is baked into the American pie is that we are not our government. Our government is younger than we are. Our government has a piggy bank called ‘US Treasury’. It can spend and borrow for the US national government. It can also impose tax liabilities on the population in order to service those outlays. Now that it’s the government’s 237th birthday, what’s its basic financial track record?

I like to think in the long run, for better or for worse, and I don’t like to get hysterical. So, let’s look at the full span of the 237 years – well – 235 years. The oldest annual data that we have is from Bicentennial Historical Statistics, which goes back to 1792. Below are the series for Federal Receipts and Outlays (revenue and spending).

The blue line is in nominal dollars and the orange line is the natural log so that we can see the changes in growth rates more easily. These aren’t inflation adjusted numbers, so we should expect to see some inflationary patterns. Long-run inflation was pretty stable prior to the 1913 Federal Reserve act and wee can see that reflected in both series. There was some drift upward in terms of revenue and expenditures. But the primary pattern was one of punctuated rises followed by plateaus. That’s a pretty standard ratcheting leviathan pattern. There’s a bump up for the big events in the first half of our history: the War of 1812, Civil War in 1861, and World War I in 1917.

Then, after the great depression and leaving the gold standard (mostly), in about 1933 a new and positive trend in cash flows began. In fact, it’s amazing how consistent the raw nominal series is.  We can see where World War II is in the series, but after that we appear to have traded punctuated increases for steady increases. Even the higher inflation rates of the 1970s look pretty muted and on trend (Btw, the blip in 1976 is a record-keeping artifact. There was a 3 month gap-period when the US government changed its fiscal year start/end). Even the new growth in total cashflows seems to be slightly bending downward and growing a little more slowly.

But rest assured, spending has exceeded revenues. Below is the long run deficit. I don’t take the log for this one since there are negative numbers. It’s hard to tell from the line graph, but the first big and persist swing in the deficit arrived after the Fed was established and the onset of WWI. The deficit hit $9 billion in 1918, which was 10x the prior peak of $0.9 billion at the end of the civil war in 1865. Notice that the above government revenues stayed flat or fell after 1920, but the outlays began trending upward before the revenues. The deficit doesn’t really start its long, steady march until 1932. Of course, for the past quarter century, the national government has been in a deficit mess (even if you measure the proportion of GDP).

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Expressionism Is To Cameras As…. Caity Weaver?…. Is To Writing?

James Bailey2 Comments

I don’t think it’s a coincidence that movements like expressionism, impressionism, and abstract art took off after the invention of the camera. Photorealistic paintings are impressive, but once they are duplicating what a camera does, they’re less interesting.

We’re due for similar movements in other fields to emerge as reactions to AI. Like writing in a way totally different from how an AI would write- ideally better than an AI would write, but even writing worse than an AI can be interesting if it is at least different.

It’s still early days for both AI and our reactions to it. But since the release of ChatGPT in 2022, what is the good new essay or book that you’re most confident was not written by AI, one that was written in an almost deliberately extra-human manner?

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Happy Birthday, USA

Jeremy Horpedahl3 Comments

For America’s 250th birthday, my present to all of you is this chart showing our economic history. Average income in the US has increased dramatically since the country was founded. This chart attempts to provide one, continuous series, using the best available income data and inflation adjustments (well, mostly continuous — before 1790 there are just a few estimates). Sources are listed at the bottom of the chart. The y-axis is a log scale.