The Open Internet Is Dead; Long Live The Open Internet

Information on the internet was born free, but now lives everywhere in walled gardens. Blogging sometimes feels like a throwback to an earlier era. So many newer platforms have eclipsed blogs in popularity, almost all of which are harder to search and discover. Facebook was walled off from the beginning, Twitter is becoming more so. Podcasts and video tend to be open in theory, but hard to search as most lack transcripts. Longer-form writing is increasingly hidden behind paywalls on news sites and Substack. People have complained for years that Google search is getting worse; there are many reasons for this, like a complacent company culture and the cat-and-mouse game with SEO companies, but one is this rising tide of content that is harder to search and link.

To me part of the value of blogging is precisely that it remains open in an increasingly closed world. Its influence relative to the rest of the internet has waned since its heydey in ~2009, but most of this is due to how the rest of the internet has grown explosively at the expense of the real world; in absolute terms the influence of blogging remains high, and perhaps rising.

The closing internet of late 2023 will not last forever. Like so much else, AI is transforming it, for better and worse. AI is making it cheap and easy to produce transcripts of podcasts and videos, making them more searchable. Because AI needs large amounts of text to train models, text becomes more valuable. Open blogs become more influential because they become part of the training data for AI; because of what we have written here, AI will think and sound a little bit more like us. I think this is great, but others have the opposite reaction. The New York Times is suing to exclude their data from training AIs, and to delete any models trained with it. Twitter is becoming more closed partly in an attempt to limit scraping by AIs.

So AI leads to human material being easier for search engines to index, and some harder; it also means there will be a flood of AI-produced material, mostly low-quality, clogging up search results. The perpetual challenge of search engines putting relevant, high-quality results first will become much harder, a challenge which AI will of course be set to solve. Search engines already have surprisingly big problems with not indexing writing at all; searching for a post on my old blog with exact quotes and not finding it made me realize Google was missing some posts there, and Bing and DuckDuckGo were missing all of them. While we’re waiting for AI to solve and/or worsen this problem, Gwern has a great page of tips on searching for hard-to-find documents and information, both the kind that is buried deep down in Google and the kind that is not there at all.

Robert Solow on Sustainability

2023 continues to be a dangerous year for eminent economists. We have once again lost a Nobel laureate who was influential even by the standard of Nobelists, Robert Solow:

I’m sure you will soon see many tributes that discuss his namesake Solow Model (MR already has one), or discuss him as a person. I never got to meet him (just saw him give a talk) and the Solow Model is well known, so I thought I’d take this occasion to discuss one of his lesser-known papers- “Sustainability: An Economists Perspective“. What follows comes from my 2009 reaction to his paper:

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National Health Expenditure Accounts Historical State Data: Cleaned, Merged, Inflation Adjusted

The government continues to be great at collecting data but not so good at sharing it in easy-to-use ways. That’s why I’ve been on a quest to highlight when independent researchers clean up government datasets and make them easier to use, and to clean up such datasets myself when I see no one else doing it; see previous posts on State Life Expectancy Data and the Behavioral Risk Factor Surveillance System.

Today I want to share an improved version of the National Health Expenditure Accounts Historical State Data.

National Health Expenditure Accounts Historical State Data: The original data from the Centers for Medicare and Medicaid Services on health spending by state and type of provider are actually pretty good as government datasets go: they offer all years (1980-2020) together in a reasonable format (CSV). But it comes in separate files for overall spending, Medicare spending, and Medicaid spending; I merge the variables from all 3 into a single file, transform it from a “wide format” to a “long format” that is easier to analyze in Stata, and in the “enhanced” version I offer inflation-adjusted versions of all spending variables. Excel and Stata versions of these files, together with the code I used to generate them, are here.

A warning to everyone using the data, since it messed me up for a while: in the documentation provided by CMMS, Table 3 provides incorrect codes for most variables. I emailed them about this but who knows when it will get fixed. My version of the data should be correct now, but please let me know if you find otherwise. You can find several other improved datasets, from myself and others, on my data page.

The Greatest NBA Coach Is… Dan Issel?

Some economists love to write about sports because they love sports. Others love to write about sports because the data are so good compared to most other facets of the economy. What other industry constantly releases film of workers doing their jobs, and compiles and shares exhaustive statistics about worker performance?

This lets us fill the pages of the Journal of Sports Economics with articles on players’ performance and pay, and articles evaluating strategies that sometimes influence how sports are played in turn. But coaches always struck me as harder to evaluate than players or strategies. With players, the eye test often succeeds.

To take an extreme example, suppose an average high-school athlete got thrown into a professional football or basketball game; a fan asked to evaluate them could probably figure out that they don’t belong there within minutes, or perhaps even just by glancing at them and seeing they are severely undersized. But what if an average high school coach were called up to coach at the professional level? How long would it take for a casual observer to realize they don’t belong? You might be able to observe them mismanaging games within a few weeks, but people criticize professional coaches for this all the time too; I think you couldn’t be sure until you see their record after a season or two. Even then it is much less certain than for a player- was their bad record due to their coaching, or were they just handed a bad roster to work with?

The sports economics literature seems to confirm my intuition that coaches are difficult to evaluate. This is especially true in football, where teams generally play fewer than 20 games in a season; a general rule of thumb in statistics is that you need at least 20 to 25 observations for statistical tests to start to work. This accords with general practice in the NFL, where it is considered poor form to fire a coach without giving him at least one full season. One recent article evaluating NFL coaches only tries to evaluate those with at least 3 seasons. If the article is to be believed, it wasn’t until 2020 that anyone published a statistical evaluation of NFL defensive coordinators, despite this being considered a vital position that is often paid over a million dollars a year:

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OpenAI, IZA, and The Limits of Formal Power

Companies and non-profit organizations tend to be managed day-to-day by a CEO, but are officially run by a board with the legal power to replace the CEO and make all manner of changes to the company. But last week saw two striking demonstrations that corporate boards’ actual power can be much weaker than it is on paper.

The big headlines, as well as our coverage, focused on the bizarre episode where OpenAI, the one of the hottest companies (technically, non-profits) of the year, fired their CEO Sam Altman. They said it was because he was not “consistently candid with the board”, but refused to elaborate on what they meant by this; they said a few things it was not but still not what really motivated them.

Technically it is their call and they don’t have to convince anyone else, but in practice their workers and other partners can all walk away if they dislike the board’s decisions enough, leaving the board in charge of an empty shell. This was starting to happen, with the vast majority of workers threatening to walk out if the board didn’t reverse their decision, and their partner Microsoft ready to poach Sam Altman and anyone else who left.

After burning through two interim CEOs who lasted two days each, the board brought back ousted CEO Sam Altman. Formally, the big change was board member Ilya Sutskever switching sides, but the blowback was enough to get several board members to resign and agree to being replaced by new members more favored by the workers (including, oddly, economist Larry Summers).

A similar story played out at IZA last week, though it mostly went under the radar outside of economics circles. IZA (aka the Institute for Labor Economics) is a German non-profit that runs the world’s largest organization of labor economists. While they have a few dozen direct employees, what makes them stand out is their network of affiliated researchers around the world, which I had hoped to join someday:

Our global research network ist the largest in labor economics. It consists of more than 2,000 experienced Research Fellows und young Research Affiliates from more than 450 research institutions in the field.

But as with OpenAI, the IZA board decided to get rid of their well-liked CEO. Here at least some of their reasons were clear: they lost their major funding source and so decided to merge IZA with another German research institute, briq. Their big misstep was choosing for the combined entity to be run by the the much-disliked head of the smaller, newer merger partner briq (Armin Falk), instead of the well-liked head of the larger partner IZA (Simon Jaeger). Like with OpenAI, hundreds of members of the organization (though in this case external affiliates not employees, and not a majority) threatened to quit if the board went through with their decision. Like with OpenAI, this informal power won out as Armin Falk backed off of his plan to become IZA CEO.

Each story has many important details I won’t go into, and many potential lessons. But I see three common lessons between them. First is the limits to formal power; the board rules the company, but a company is nothing without its people, and they can leave if they dislike the board enough. Second, and following directly from this, is that having a good board is important. Finally, workers can organize very rapidly in the internet age. At OpenAI nearly all its employees signed onto the resignation threat within two days, because the organizers could simply email everyone a Google Doc with the letter. Organizers of the IZA letter were able to get hundreds of affiliates to sign on the same way despite the affiliates being scattered all across the world. In both cases there was no formal union threatening a strike; it was the simple but powerful use of informal power: the voice and threatened exit of the people, organized and amplified through the internet.

Happy Thanksgiving from EWED

I am thankful for food abundance and for general prosperity.

Sometimes it’s easy to take for granted the good things you’ve always had; you don’t know what you’ve got till it’s gone.

In that spirit, after lacking it for much of the last month, I am extremely thankful for reliable indoor plumbing. Our clay sewer pipes that had lasted 100+ years finally started to crack, which made for a big mess and took $8000 to repair. But we’re now back in business, and thanks to the magic of pipe relining we didn’t have to dig through our deck to do it.

Hopefully this lets you all appreciate your plumbing too without having to go through the whole experience yourself.

New Orleans Redux: SEA 2023

I’m heading to New Orleans tomorrow for the 2023 meeting of the Southern Economic Association, where I’ll present research on the labor market effects of Certificate of Need laws.

I’ll take this as an excuse to re-up two previous posts on New Orleans:

First, my travel guide post for anyone else heading there soon

Second, my bigger-picture take on how the city has changed over the last decade: Waxing Crescent: New Orleans 2013-2023

I recommend reading the whole thing, but here’s the conclusion:

As much as things have changed since 2013, my overall assessment of the city remains the same: its unlike anywhere else in America. It is unparalleled in both its strengths and its weaknesses. If you care about food, drink, music, and having a good time, its the place to be. If you’re more focused more on career, health, or safety, it isn’t. People who fled Katrina and stayed in other cities like Houston or Atlanta wound up richer and healthier. But not necessarily happier.

Hope to see some of you there!

Replication Funding for Development Economics

The RWI − Leibniz Institute for Economic Research has funding for researchers to replicate papers in development economics:

RWI invites applications for several positions of Replicator on a self-employed basis to conduct a robustness replication of a published microeconomic study in the field of Development Economics. The successful applicant will work with us on the project “Robustness and Replicability in Economics (R2E)”, funded by the German Science Foundation (DFG) Priority Programme “Meta-Rep”….

The ultimate goal is to contribute to the ongoing debate about replicability and replication rates in eco- nomics. We collaborate closely with the Institute for Replication (I4R). All robustness replications will contribute to a meta-paper summarizing the collective findings. We plan to publish this meta-paper by the end of 2024, and all replication fellows will be co-authors….

The position starts as soon as possible and is limited to six months. The work can be done fully remotely. The applicant will receive compensation of 2,500 € gross in total, possible distributed in installments based upon predetermined deliverables. Additionally, replication fellows will be listed as co-authors on the meta-paper. At the conclusion of the project, it is foreseen to gather all fellows for a final workshop at RWI in Essen, Germany.

I don’t know the team here but I’m always happy to see more attempts to make economic research more reliable. The funding and the planned publication make this potentially a good deal for applied microeconomists, especially grad students. Full details are here (warning: PDF).

Econ Tourism

This week I was in Bretton Woods, New Hampshire. The Mount Washington Resort there is lovely on its own terms as a grand old hotel surrounded by mountains, but it is better known (at least among economists) as the site of the 1944 conference that gave us the International Monetary Fund, the World Bank, and the postwar international monetary system.

This got me thinking about what other destinations should top the list of sites for economics tourism. Adam Smith’s house in Scotland has to be on there. In the US I’ve been trying to visit all 12 Federal Reserve banks; they tend to have nice architecture as well as a Money Museum. You can stay at Milton and Rose Friedman’s cabin in Vermont, Capitaf. I’d like to go to Singapore for many reasons, but one is that they seem to listen to economists more than any other country; I’m not sure what places to visit within Singapore that best reflect that, though.

The places I’ve listed so far are somewhat inward looking to the economics profession; you could get a much bigger list by looking outward to the economy itself, doing “economic tourism” rather than “economics tourism”. Visit a port, a mine, or a factory (like Adam Smith visiting a pin factory and getting ideas for the Wealth of Nations); visit a stock exchange or a bazaar. Visit whatever country currently has the fastest economic growth, or the worst inflation.

Those are my ideas, but I’d love to hear yours: what are the best places for econ tourism?

The Underpriced Joe Biden

President Biden winning the Democratic nomination is currently priced at 72 cents on PredictIt, implying a roughly 72% chance of winning the nomination. Not the general 2024 election- where he is priced at a mere 43 cents- but the Democratic nomination.

To me it seems crazily underpriced to put the odds of an incumbent president being renominated by his own party at only 72%. Yes, his approval ratings are underwater, and yes he’s old, but the base rates here very much work the other way. No incumbent president has lost a vote to be renominated since Chester Arthur in 1884. It think its extremely unlikely Biden would run for nomination and lose; it makes more sense that he would choose not to run, like LBJ in 1968, but I see no indications of that.

I think Biden will only fail to be renominated if he dies or experiences a major decline in his health by the convention next August. This is certainly possible for an 80 year old but the odds of it are well below the 28% implied by PredictIt. A recent WSJ article lays out the details:

a nonsmoking male with Biden’s birthday, in good health, would be expected to live nine more years after next year’s Election Day, while for one with Trump’s birthday, it would be 11 years.

WSJ focuses on his chance of finishing a second term and doesn’t give an estimate for just making it to renomination, but my own look at actuarial tables shows that the average 80 year old has only a 6.5% probability of dying within a year. The chance of dying or getting a disabling health condition in a year is of course higher than that, but the convention is actually less than a year away in August, and the primaries will be done by June. Plus the WSJ article gives several reasons to think Biden is in better health than the average 80 year old:

First, the median includes people who drink alcohol. Regular drinking of two or more drinks, three or more times a week, shortens life expectancy by about seven years. Both Trump and Biden are teetotalers, in addition to being nonsmokers.

“Those are two of the biggest killers right there,” said Bradley Willcox, a professor and research director at the Department of Geriatric Medicine at the University of Hawaii. “When you eliminate excessive alcohol intake and smoking, one thing you’re left with is genetics.”

Here, Trump and Biden picked their parents well. Trump’s mother lived to 88 and his father to 93, though late in life he developed Alzheimer’s disease. Biden’s mother died at 92—living long enough to see her son become the sixth-oldest vice president. Joe Biden Sr. died at 86. That is even more impressive than it sounds: When those four individuals were born, life expectancy was around 50. 

Biden and Trump are each highly educated at a time when the life-expectancy gap between the educated and uneducated has been growing. They are wealthy, also a strong predictor of longer life. They receive excellent healthcare.

Add it all up and I think Biden has over a 90% chance of being renominated, so being able to bet on him at 72 cents seems like a great deal (even if it means tying up money that could now earn 5% interest elsewhere). PredictIt has betting limits and high withdrawal fees, but other prediction markets are in the same ballpark; Polymarket currently has Biden at 75c.

For similar reasons Trump is may also be underpriced to win the nomination, currently at 68 cents on PredictIt. He’s not an incumbent the same way, but he’s enough of one that I don’t think any of his electoral opponents can beat him for the nomination; he’d have to beat himself by dying or withdrawing (very unlikely), or be beaten by the legal system (he’ll continue to have trouble but I don’t think it will be enough to get him disqualified or in prison by the June convention).

It’s boring and its not my preference, but I think we are headed for a rematch of 2020. On the bright side, 80 isn’t what it used to be:

Source: Longevity Illustrator

Disclaimer: Not investment advice. I did put my money where my mouth is here, and so am now talking my book