Author: Joy Buchanan

Updated List of Top Posts for 2024

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In August, I listed the Top EWED Posts of 2024. Here are a few more highlights. This list is roughly based on web traffic, starting with the highest number of views for 2024, since the August list.  

  1. Mike Makowsky has the top post since August with Bad service is a sign of a better world. “What if service in restaurants, hospitality, etc is, in fact, lower in quality than it was one or two decades ago? I would like to suggest that this is a good sign of improving times.”  Thoughtful. Recommended. Bosses will not be requiring “15 pieces of flair” anymore. I have noticed that restaurant servers these days seem to wear whatever they want. It was previously noted by Mike that Kitchen staff were canaries in the coal mine.

2. Grocery Inflation Since 2019: BLS Data is Probably About Right by Jeremy-“What if we actually looked at receipts?”-Horpedahl. You can find him on Twitter/X.

3. You know it’s good when a post with such a cryptic title goes viral. Mike wrote about the topic people were thinking about, in the moment: At the moment (updated 10/22/24) Sometimes we write about the economics community and what began as a critical mass of people that used to call itself #EconTwitter. Some of those people have moved to Bluesky. You can find Mike there at @mikemakowsky.bsky.social, and most of us have accounts there. Getting social media just right is tricky. If you follow the right people and don’t waste too much time on it, then social media can be part of How to Keep Up With Economics (James).

4. Predicting College Closures: Now with Machine Learning James Bailey brings the important (unwanted) news that not all college are going to make it through the next decade, and there are signs. This follows up on what was previously listed as a top post in August: Predicting College Closures

5. Publish or Perish: A Hilarious Card Game Based on Academia My review of a new board game. If it’s not for you, it’s not for you. I played a test copy with some fellow nerds and had a great time.

6. Jeremy explains, “… fast food prices (“limited service meals”), which have definitely outpaced wages over the past 4 years, and continue to grow…” Grocery Inflation is Under Control, Fast Food Prices Aren’t

7. Jeremy asks, Did 818,000 jobs vanish?

8. Scott’s saga is perhaps attracting traffic from search engines from people with the same problem. Recovering My Frozen Assets at BlockFi 2. Scams and More Scams

9. Post-Pandemic Lumber Market Zachary Bartsch writes, “People used to talk about higher gasoline prices all the time, but never discussed with the same enthusiasm when prices fell. The same is true for lumber.” Good for teaching about supply and demand.

10. I Give Up, Standard & Poor’s Wins James lets us learn from his journey- “my stock picks underperformed the incredible 26% return the S&P has posted so far this year.”  This is something most people would rather not admit, and yet for most of us it’s true.

11. James explains, “Cheapflation”: Inflation Really Does Hit the Bottom Harder. People were mad about inflation. Voters were mad about inflation. It’s worth understanding better. Some of us are in an echo chamber and need to peer out, especially if we think a lot about how (in fact) the world is getting better. Or maybe we even think about data indicating that On Average, American Wage Earners are Better Off Than They Were Four Years Ago (Jeremy).

12. Why Podcasts Succeeded in Gaining Influence Where MOOCs Failed attracted some attention. If you are being honest, would you have predicted a priori that Joe Rogan talking in a closed room FOR HOURS would outdo Ivy League professor lectures? In retrospect, it might seem obvious, but I probably would have gotten the prediction wrong. MOOCs and podcasts both launched around the same time because the internet lowered the cost of broadcasting. They both had some success. In terms of shaping culture or voting behavior, I think it’s clear that podcasts win. Until a product is launched on the market, we just don’t know what will become popular, which is a topic that came up in the podcast I recorded recently: Joy on The Inductive Economy podcast

Speaking of what I don’t predict, EWED is starting to get web traffic from LLMs like chatgpt.com. Right now, it’s very small compared to Google search. For a while, I wondered if LLMs would simply plagiarize us without giving us any credit. Maybe that’s our raison d’être. Here’s me being dramatic about it in 2022  –  “Because of when I was born, I believe that something I have published will make it into the training data for these models. Will that turn out to be more significant than any human readers we can attract?” 

However, writers of the world, LLMs might start giving you credit. There is some demand from users for sources and citations. (My paper on made up sources). 

A little more credit to the true 2024 EWED all-stars, even though they were already listed in August: Young People Have a Lot More Wealth Than We Thought, by Jeremy Horpedahl,  continues to be a top performer. And, Mike wrote about an important current event in culture: Civil War as radical literalism   

While we are settling scores and doing web traffic round-ups, there is one thing I’d like to put on the record. I made one resolution last year, publicly on January 3, 2024. I have made good on this promise. The people who run the AdamSmithWorks website have informed me that I wrote their top post of the year, Would Adam Smith Tell Taylor Swift to Attend the Super Bowl?

Humans are struggling to understand LLM Progress

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Ajeya Cotra writes the following in “Language models surprised us” (recommended, with more details on benchmarks)

In 2021, most people were systematically and severely underestimating progress in language models. After a big leap forward in 2022, it looks like ML experts improved in their predictions of benchmarks like MMLU and MATH — but many still failed to anticipate the qualitative milestones achieved by ChatGPT and then GPT-4, especially in reasoning and programming.

Joy’s thoughts: A possible reason for underestimating the rate of progress is not just a misunderstanding of the technology but a missed estimate on how much money would get poured in. When Americans want to buy progress, they can (see also SpaceX).

I compare this to the Manhattan project. People said it couldn’t be done, not because it was physically impossible but because it would be too expensive.

After a briefing regarding the Manhattan Project, Nobel Laureate Niels Bohr said to physicist Edward Teller, “I told you it couldn’t be done without turning the whole country into a factory.” (https://www.energy.gov/lm/articles/ohio-and-manhattan-project)

We are doing it again. We are turning the country into a factory for AI. Without all that investment, the progress wouldn’t be so fast.

Handmade Sweaters Cost $500

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If you spend any time on Twitter/X, you must know the suit guy, Derek. Given my interest in the economics of fast fashion, I read his new thread about expensive craft sweaters.

He explains that some clothes on this earth are still made by hand. Artisan sweaters cost a lot because of the labor. Supporting that art or tradition is fine, if you have $500 on hand.

The comments on the thread are interesting as well. (Caveat, a good number of anonymous accounts are trolls bent on your destruction – read accordingly always.)

One comment, presumably by an amateur knitter in a rich country: “As a knitter, I know how much work would go into hand making sweaters like these. That’s not even taking into account the cost of a good wool yarn. If anything, they are underpriced.”

Not a lot of people want to spend $500 on a sweater. I really loved this reply about thrift stores. We don’t all have to buy the sweater new.

Someone who has been thinking about how goods change hands in the modern economy is Mike Munger who wrote Tomorrow 3.0: Transaction Costs and the Sharing Economy.

My related posts on fast fashion (a.k.a. factory-made sweaters cost $5):

Cato Globalization book out in paperback – my most optimistic take on this is that AI will facilitate the sharing part of the sharing economy, which will help justify the cost of high-quality new garments.

Is the repair revolution coming? – in my opinion, probably not, although I still think AI could help with this

(Tweet HT: Tyler)

Weight Lifting is for You

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This is a guest post by Mary Buchanan, a Board Certified Behavior Analyst. Here she explores the intersection of behavioral economics with her own health and fitness behavior change.

My childhood dentist often said, “Take care of your teeth, or they’ll go away.” As I approach my 40th birthday, I’m learning the same is true of my muscle mass. I can use it or lose it. And I can lose it faster or slower based on my lifestyle choices. 

As a behavior analyst, I have spent many years practicing the science of behavior, specifically teaching others how to master new, meaningful skills. I see myself as my own client now as I work to replace my old aimless approach to fitness with evidence-based eating and exercise interventions. 

I wish I could say I embraced strength training as soon as I heard about its benefits. Instead, as I noticed more and more recommendations for women to “lift heavy”, I kept filing that information away for someday in the future. When I joined a gym last January, I returned to what I used to do in years past: Pilates classes or cardio machines. After 9 months of that approach with no benefits to show for my efforts, it was time to change my behavior.

Behavioral economics has a term for what causes people to resist changing their behaviors without a significant incentive for doing so: status quo bias. 

Another behavioral economics term, loss aversion, helps to explain what moved me into action. Loss aversion refers to how people are often more motivated not to lose something they have than they are motivated to gain something similar. All humans start to lose muscle mass around age 30, but that fact was not on my radar until recently. I wasn’t interested in building muscles when I thought mine were adequate to my daily tasks. Now that I realize my muscle loss has been underway for years and the liabilities of that loss are clear to me, I’m motivated to rebuild and mitigate future muscle loss. How? By doing heavy lifting 2-3x per week and eating enough protein for my body to keep the muscle it makes. 

There are many great resources that provide advice in this area, but I’ve decided to begin
with learning from Dr. Stacy Sims since she specializes in what works for women. Based on what I’ve learned, here are my target behaviors for increase:

  • Practice strength training for at least 30 minutes, 2x per week.
    Dr. Sims says 3x per week is better, but 2x is an acceptable minimum that I can commit to either through classes at a gym or YouTube videos. As a behavior analyst, I know that I’m more likely to maintain a new behavior pattern when it is easy to feel successful early and often.
  • Continue to challenge myself throughout strength training by adding weight as I get stronger.
    To stimulate muscle growth you must challenge your muscles so they break down and repair stronger. How heavy is enough? If you lift a weight 10x and it’s difficult to lift on the last two reps, but still possible for you to maintain good form, that is an appropriate weight for you to train with. When that weight gets easy to lift, it’s no longer heavy enough for your training purposes.
  • Increase my healthy protein intake.
    In Roar, Dr. Sims suggests that women aim for .75-0.8 grams of protein per lb. on a light or non-training day, and increase to 1-1.2 grams of protein per lb. on strength training days. 

Working on these goals together creates synergy. I am more motivated to make healthier eating choices because my eating is connected to my strength training goal. Strength training has also become more exciting for me the more I’ve learned about its benefits, including:

  • Increased metabolic rate
  • Improved posture and stability
  • Stronger bones
  • Better blood pressure control
  • Improved immunity
  • Maintenance of healthy body composition (lifting heavy helps maintain lean muscle and reduce fat gain)

As if that weren’t enough, I have another reason to keep going. As soon as I started resistance training, my sleep improved! I’ve had difficulty sleeping for many years already, both with falling asleep and staying asleep, and honestly, if sleeping through the night was the only benefit available to me from resistance-based workouts, I would still be all in.

While none of this constitutes professional medical advice, it is worth looking into, especially if you, like me, never saw role models strength training as a young person. Once you understand how it works in your favor now and as you age, the benefits are too good to pass up.

RESOURCES

Stacy Sims, MSC, PHD is an exercise physiologist and nutrition scientist. She specializes in teaching women what works for their bodies based on their body type, stage of life, and fitness goals. 

My first introduction to her work and recommendations was this 26-minute interview: https://www.youtube.com/watch?v=APwKKUtjINo

Her book, Roar, is helpful for those who want to learn about general women’s health, though it is especially geared towards female athletes. https://www.amazon.com/ROAR-Revised-Fitness-Physiology-Performance/dp/059358192X/

Next Level focuses on the physical changes women experience with the natural aging process. It clearly presents how we can use the latest research to work with what is happening in the body instead of against it. https://www.amazon.com/Next-Level-Kicking-Crushing-Menopause-ebook/dp/B091JVW6QR/

Pistol Squats Complete the Home Workout from James

Joy on AI in Higher Education

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I was interviewed for an article “Navigating AI in Christian Higher Education“. Here’s an excerpt:

Rosenberg: What impact do you foresee in your field due to the increasing sophistication of AI, and what kind of skills do you think your students will need to be successful?

Buchanan: AI will reshape economic analysis and modeling, making complex data processing and predictive analytics more accessible. This will lead to more sophisticated economic forecasting and policy design. Economists will become more productive, and expectations will rise accordingly. While some fields might resist change, economics will be at the forefront of AI integration.

For students aiming to succeed, it’s crucial to embrace AI tools without relying on them excessively during college. Strong fundamentals in economic theory and critical thinking remain essential, coupled with data science and programming skills.

Interdisciplinary knowledge, especially in tech and social sciences, will be valuable. Adaptability and lifelong learning are key in this evolving field. Human skills like creativity, communication, and ethical reasoning will remain crucial.

While AI will alter economics, it will also present opportunities for those who can adapt and effectively combine economic thinking with technological proficiency.

Cato Globalization book out in paperback

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A new book is out with chapters by me, Deirdre McCloskey, and others.

Book Title: Defending Globalization: Facts and Myths about the Global Economy and Its Fundamental Humanity

The COVID-19 pandemic, war in Ukraine, simmering US-China tensions, and rising global populism have led to globalization facing renewed attention-and criticism-from politicians and pundits across the political spectrum. Like any market phenomenon, the free movement of people, things, money, and ideas across natural or political borders is imperfect and often disruptive. But it has also produced undeniable benefits-for the United States and the world-that no other system can match. And it’s been going on since the dawn of recorded history.

The original essays compiled in this volume offer a diverse range of perspectives on globalization-what it is, what it has produced, what its alternatives are, and what people think about it-and offer a strong, proactive case for more global integration in the years ahead. Covering the basic economic and political ideas and historical facts underlying globalization, rebutting the most common arguments against globalization today, and educating readers on the intersection of globalization and our societies and cultures-from where we live to what clothes we wear and what foods we eat-Defending Globalization demonstrates the essential humanity of international trade and migration, and why the United States and the rest of the world need more of it.

You can read a summary, in a previous EWED blog post, of my chapter on fashion, previously posted on the Cato website as Fast Fashion, Global Trade, and Sustainable Abundance.

It takes all of us to be rich. We need “a great multitude that no one could count, from every nation, tribe, people and language,” so to speak.

Two years ago, on Twitter, I summarized my contribution as follows, in the form of a dialogue:

Person from the Past: “So, how is it with 8 billion people?”

Me Today: “It’s bad. We have too many clothes.”

Person from the Past: “Right. With 8 billion you wouldn’t have enough clothes for everyone.”

Me Today: “Too many.”

I made it to the book launch event in D.C. near the Capitol.

Some people still have not heard of “fast fashion.” Maybe you heard it here first: New legislation is likely coming to regulate the clothing industry. It might start at the state level, in progressive places like California or Seattle. Demands include making information about supply chains more transparent and taxing the clothing companies in order to pay for trash disposal. For example, you can read about the New York Fashion Act. Similar to the way the food companies have to provide clear information about calories, clothing retailers might have to provide more information about chemicals, labor, and disposal issues.

Plastic fibers making new clothing cheap. I sometimes hate the flood of cheap products that American families are drowning in. Plastic products are so cheap to stamp out and give to kids. Some days you’ll find me grumpy about the latest bag of plastic swag and candy my kids came home with. There are some negative externalities to consuming tons of plastic items and tossing them out.

It’s a privilege to have this problem. Perhaps we are overindulging in clothing abundance and need some modern solutions to modern problems. We also need to figure out how to stop getting obese off of food abundance. (Hello, Ozempic.) But let’s still be grateful for the abundance, on this Thanksgiving week. My controversial take is that it’s good for the cost of clothing to be low. We don’t want to regress. We don’t want to make clothing scarce again.

If you were to want to cite my work on fashion and globalization, then you could use something like this:

Buchanan, Joy. “Fast Fashion, Global Trade, and Sustainable Abundance” (2024) In S. Lincicome, & C. Packard (Eds.), Defending Globalization: Facts and Myths about the Global Economy and Its Fundamental Humanity, Cato Institute, (pp. 367 – 380).

Human Pettiness Knows No Bounds

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Just when you think there might be one arena of human life free of status competition, you will turn out to be wrong.

Consider the 4th graders who get to do “safety patrol” as volunteer work. This is a badge of honor and the kids like power. A casual observer might think that any kid who volunteers to do safety patrol would simply be having a great experience. Surely this is as simple as adding a unit of utility from consumption, in comparison to the times when the child is not allowed to do safety patrol.

But all is not well. Jackson Carter, says Rachel Pratt, has been hogging the prime safety patrol spot for weeks. He walks to school earlier than anyone and sits on the good spot, excluding the other 4th graders from having the chance to catch the highest volume of younger kids to boss around.

Rachel Pratt and several other girls are conspiring to, collectively, prevent Jackson from getting so disproportionately many days on the prime spot. They have agreed that if any one of them can beat him to the spot, they will share it with anyone except Jackson. The crew has also planned to loudly comment on the situation in earshot of the school principal in hopes that Jackson will have to share the spoils more evenly.

Do humans even want to be happy?

Why Podcasts Succeeded in Gaining Influence Where MOOCs Failed

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When MOOCs (Massive Open Online Courses) burst onto the education scene in the early 2010s, they were hailed as the future of learning. With the promise of democratizing education by providing free access to world-class courses from top universities.

Leading universities rushed to put their courses online, venture capital poured in, and platforms like Coursera and edX grew rapidly. Yet today, while MOOCs still exist, they’ve largely retreated to the margins of education. Meanwhile, long-form podcasts have emerged as a surprisingly powerful force in American intellectual life.

Is this ironic? I wanted to learn a bit about MOOCs while I took a walk before writing this blog post. I typed “MOOCs” into the Apple Podcasts search bar.

One of the first results was: John Cochrane on Education and MOOCs

I learned about MOOCs from Russ Roberts at a reasonable pace (when I listen to podcasts, I do it at 1x speed but I’m almost always doing something like driving or folding laundry).

I consider myself a lifelong learner. I buy and read books. Like hundreds of millions of people around the world, I like podcasts. I will attend lectures sometimes, especially if I personally know someone in the room. I did sit in classrooms for course credit throughout college and graduate school. I took extra classes that I did not need to graduate purely out of interest, and yet I have never once been tempted to sign up for a MOOC.

Enough introspection from me. My viral “tweet” this week was: “MOOCs never took off, as far as I can tell, and yet long-form podcasts are shaping the nation.”

https://twitter.com/aboutJoy/status/1854188563757158517

Did MOOCs fail? Many millions of people signed up for MOOCs. A much smaller percentage of people completed MOOCs. Some users find MOOCs worth paying for.

However, if you listen to the podcast with John Cochrane in 2014, you can see the promise that MOOCs failed to live up to. The idea was that many people who did not have access to a “top quality” education would get one through MOOCs. Turns out that access is not the bottleneck.

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Effort Transparency and Fairness Published at Public Choice

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Please see my latest paper, out at Public Choice: Effort transparency and fairness

The published version is better, but you can find our old working paper at SSRN “Effort Transparency and Fairness”

Abstract: We study how transparent information about effort impacts the allocation of earnings in a dictator game experiment. We manipulate information about the respective contributions to a joint endowment that a dictator can keep or share with a counterpart…

Employees within an organization are sensitive to whether they are being treated fairly. Greater organizational fairness is shown to improve job satisfaction, reduce employee turnover, and boost the organization’s reputation. To study how transparent information impacts fairness perceptions, we conduct a dictator game with a jointly earned endowment. 

The endowment is earned by completing a real effort task in the experiment, an analog to the labor employees contribute to employers. First, two players work independently to create a pool of money. Then, the subject assigned the role of the “dictator” allocates the final earnings between them.

In the transparent treatment, both dictators and recipients have access to complete information about their own effort levels and contributions, as well as those of their counterparts. In the non-transparent treatment, dictators have full information about the relative contributions of both players, but recipients do not know how much each person contributed to the endowment. The two treatments allow us to compare the behaviors of dictators who know they could be judged and held to reciprocity norms with dictators who do not face the same level of scrutiny.

*drumroll* results:

This graph shows the amount of money the dictators take from the recipient contribution, in cents.  There are two ways to look at this. Notice the spike next to zero. Most dictators do not take much from what their counterpart earned. They are *dictators*, meaning they could take everything. Most take almost nothing, regardless of the treatment. We interpret this to mean that they are acting out of a sense of fairness, and we apply a humanomics framework to explain this in the paper.

Also, there is significantly more taken in non-transparency. When the worker does not have good information on the meritocratic outcome, then some dictators feel like they can get away with taking more. Some of this happens through what we call “shading down” of the amount sent by the dictator under the cover of non-transparency.

There is more in the paper, but the last thing I’ll point out here is that the “worker” subjects (recipients) anticipate that this will happen. The recipients forecast that the dictator would take more under non-transparency. In our conclusion, we mention that, even though the dictator seems to be at an advantage in a non-transparent environment, the dictator still might choose a transparency policy if it affects which workers select into the team.

View and download your article*   This hyperlink is good for a limited number of free downloads of my paper with Demiral and Saglam, says Springer the publisher. Please don’t waste it, but if you want the article I might as well put it out there. I posted this on 11/2/2024, so there is no guarantee that the link will work for you.

Cite our article: Buchanan, J., Demiral, E.E. & Sağlam, Ü. Effort transparency and fairness. Public Choice (2024). https://doi.org/10.1007/s11127-024-01230-9

Can researchers recruit human subjects online to take surveys anymore?

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The experimental economics world is currently still doing data collection in traditional physical labs with human subjects who show up in person. This is still the gold standard, but it is expensive per observation. Many researchers, including myself, also do projects with subjects that are recruited online because the cost per observation is much lower.

As I remember it, the first platform that got widely used was Mechanical Turk. Prior to 2022, the attitude toward MTurk changed. It became known in the behavioral research community that MTurk had too many bots and bad actors. MTurk had not been designed for researchers, so maybe it’s not surprising that it did not serve our purposes.

The Prolific platform has had a good reputation for a few years. You have to pay to use Prolific but the cost per observation is still much lower than what it costs to use a traditional physical laboratory or to pay Americans to show up for an appointment. Prolific is especially attractive if the experiment is short and does not require a long span of attention from human subjects.

Here is a new paper on whether supposedly human subjects are going to be reliably human in the future: Detecting the corruption of online questionnaires by artificial intelligence   

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