Should student debt be dischargeable in bankruptcy?

I’m not an economist who studies education or bankruptcy, and I’m not 100% confident I spelled dischargeable correctly. I am, however, above average at highlighting the difficulty of a question when dissuading a grad student from attempting an impossible thesis question, so let’s dig into this one, which sounds pretty hard to me.

First of all, it is very difficult to discharge student debt during Chapter 7 or 13 bankruptcy, but I think you still can do it if you convince a judge that continued attempts at repayment would create undue hardship i.e. put you in a state of poverty in the wake of previous good faith efforts.

That said, maybe you shouldn’t have to face literal starvation to discharge student loans. That’s a reasonable idea, but what would the broader consequences be? This is tricky question to untangle because there are both welfare consequences and knock-on effects where we are put down different forking paths of politics and policy.

If debt is dischargable, then lenders will expect lower rates of repayment. This increase in lender risk and decrease in return on capital would likely have immediate consequences in the form of:

  1. Higher interest rates
  2. Lower rates of loan approval
  3. Greater dependence on loan collateral
  4. Greater lender interest in what the loaned funds will be applied towards.

Before we tackle those, we also have to consider the different policy environment paths lenders may have to anticipate:

  1. The government stops subsidizing loans. This would lower tuition, but also lower access for low income students.
  2. A loan forgiveness program. Great for people with outstanding debt, but changes how expectations are formed forever going forward.
  3. The government launches a massive “free college” program that covers tuition at state colleges and universities. This would have all kinds of consequences potentially.

But where this really leaves us is with a billion dollar question: will dischargeable students loans lead to lower costs of higher education? I am confident that the answer is a definitive, unassailable maybe.

Higher interest rates is a pretty straightforward prediction, but the consequences are less clear. Higher interest rates could lead to less college matriculation, greater barriers for lower income individuals, and higher expected rates of bankruptcy, in part because decisions are being made by young people who don’t know the future, their future, or, really, anything. Related to this, lenders will become more discerning regarding who they lend to, giving more money on more favorable terms to matriculants from wealthier backgrounds, in no small part because wealthy parents are filled to the brim with collateral, making for excellent co-signers and providers of high school graduation gifts nicer than any car I ever hope to drive.

That is all boring and moderately obvious. It’s 4) that I’m most curious about. If you get into medical school, there is no shortage of institutions eager to dump several hundred thousand dollars in the foyer of your home. Part of the reason for this is the expected future income of physicians and their high graduation rates from medical school thanks to rigorous admission screening. But what is underappreciated is the 100% rate at which medical school students study medicine.

Not so with undergraduate education. You might study electrical engineering with a minor in computer science. You also might study something a senior tells you is the easiest major at your school. You might major in something that sounds fun or interesting. You might study Miscelleneous Studies, where Miscelleneous is a subject that is likely interesting and possibly extremely important, but within which you can choose classes that facilitate your avoiding learning anything useful or applicable in the labor market.

Herein lies the problem. Lenders treat loans for consumption very differently than loans for investment. Nursing and statistics degrees are investments. Art History classes (for most people) are consumption. What’s going to happen to higher education when the lender tells you you can have $200K at 3% to study any STEM field or $75K at 6% to study anything in the humanities? Will the demand for humanities degrees drop? Will the supply of humanities education recede? Are humanities and STEM education complements or substitutes?1

Let me phrase it a different way? Are wealthy fine arts majors cross-subsidizing STEM majors pursuing the first college degrees in their family? Or are they driving up the price of tuition because heavily subsidized credit is facilitating pre-career retirement lifestyles for 4 years?

All of this leaves me with the suspicion that dischargeable student loans will lower tuition for some while raising it for others. This heterogeneity would likely shift the electoral popularity of free tuition programs while also shifting the nature of those program. Maybe “free college” turns into a means-tested program. Maybe “free college” becomes “free STEM college”. Maybe both.

We could speculate what this means for loan forgiveness or subsidies, but this post is too long already and, as should be already clear, we’re not going to solve anything today. My elegant and succinct point is this:

When you massively subsidize a [knowledge, signal] bundled good for so long that it transforms into a [knowledge, signal, 4-year luxury cruise with your peers] bundle, and to accommodate that subsidy you protect your poorly constructed macro-investment in human capital by exempting it from bankruptcy proceedings, and as a result of this weird landscape a bizarre higher education industry emerges that is both one of the greatest achievements in US history but also a trap that 19-year-olds fall into because, really, is there any trap we don’t fall into when we’re 19, and from which thousands of people never financially recover, but if you just fix one part of it no one knows what will happen, and if you try to fix all of it at once in the back of your mind you’re afraid it could turn into the US healthcare industry part deux, well then what you have is a real and important problem that I don’t know how we will solve but I remain confident that other people will be very confident that they know how to solve it and they will get extremely cross with me for not sharing their confidence.2

So maybe don’t try to solve that in your dissertation.3 Might be safer to just definitively estimate the natural rate of interest that underlines all monetary transactions. That’ll be easier.

1The answer is “Yes”.

2 This is, to be extremely clear, not me picking on Ms. Reisenwitz’s tweet which was good and interesting and left me thinking about student loans for two days when I should have been working on the research topics I have actual expertise in.

3 Of course, if you do find a natural experiment where huge chunks of student debt were accidentally made dischargeable in a state for 2 years because of a legislative SNAFU, you should write that dissertation and put me in the acknowledgements.

The Rise and Fall (?) of Bitcoin Price

Well, it has been a fun party. Here is a chart of Bitcoin prices over the last year or so. Folks that bought in before December were up X4 or more by April. Woo-hoo! But prices have dropped by half in the past two months. Many articles were published over the winter justifying ever greater heights for Bitcoin. It was to be the digital equivalent of gold as a store of value. Also, it is touted as being decentralized and free of government manipulation – – a global, privatized people’s currency. What happened?

Source: Seeking Alpha
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Academic Publishing: How I think we got here

Fabio Ghironi, whom you should be following on twitter already, threaded the #econtwitter needle the other day, managing to write about the growing problems within academic economic publishing without falling victim to the sorts of whining and nihilism that discussions of publishing experiences often degenerate into. Below I’ve included a sample. Do go read the whole thing.

I don’t want to adjudicate the merits and flaws of the economic journal system. I have no idea how it would fare in a benefit-cost analysis or how to improve it, and I’m deeply skeptical of anything that has a whiff of “easy fix” for what is a very complex system of scientific incentives, social benefit, and academic sociology.

Instead, I’d like to discuss how I think we got here. A couple stylized facts about how research in economics has changed over the last 50 years, none of which I expect to be controversial

  1. There are a lot more people writing academic journal articles.
  2. There is a lot more well-executed economic research.
  3. The teams of co-authors on papers/projects have become much larger.
  4. The number of journals whose prestige is commensurate with a tenured position at an elite school has grown slower than the total faculty employed by elite schools.
  5. Economics research has become more expensive and labor intensive.

What is immediately obvious from 1-4 is the journal space squeeze, resulting in journals with vanishingly small acceptance rates. The American Economic Journal: Microeconomics (one of the very top journals that isn’t part of the holy Top-5, hallowed be thy names) managed to go an entire year without accepting a paper! Their editorial team, as any Murphy’s Law aficionado would have predicted, interpreted this as evidence they should publish fewer papers.

[Update: 6/2/21 A reader has pointed out that AEJ:Micro has over the past year managed a more than respectable turnaround time on submissions and eventually accepted 33 papers in 2019, 20 in 2020, yielding acceptance rates of 5 to 9%. Editors Report here]

One of the things that economics has become, and maybe always has been, obsessed with is “super stars”, and not just those who get medals. Within every subfield there are a handful of current researchers who are known to everyone else, whose papers are always top of the list in the best working paper series, who tour the country tirelessly promoting their latest papers. And they are often promoting multiple papers. How is it that they find the time to do so much research?

Well, first and foremost, they are incredibly conscientious, with work ethics bordering on obsessive. But a not distant second is the change in the nature of their jobs. They are not just working at a chalkboard by themselves or analyzing the latest batch of data. They are managing research teams. They are applying for grants that support grad students and post-docs. They are meeting for 3 hours each day with different teams of scholars, some at different institutions. They are coming up with their own ideas and refining the ideas of others, they are guiding the research of apprentices while also collaborating with equally experienced peers. They are the CEOs of miniature research empires.

Let’s assume that for a second that the number of super stars in the field has remained constant (it’s grown, but lets keep it simple). In 1950 the top 5 journals probably could have published every single full research paper written by super stars and still had room to spare. Nowadays I’m not sure the top 5 journals could handle the research output in a given year just from MIT. I don’t think the top 10 journals could handle all of the research from the Boston metropolitan area

Let’s visit the other side of the fence now. If you are a co-editor at one of the 5 elite journals in economics, you are allotted roughly 13 acceptances per year. These are fixed. For these slots you review roughly 200 papers. Let’s say 50 of those papers are trash and 50 are good but below the bar. These you desk reject. Of the remaining 100, another 25 are a bad match for the aesthetic or substantive targets laid out by the editor-in-chief(s). Another 25 are good, but the reviewers are, upon closer inspection, able to identify real problems that will undermine the impact of the paper, ruling it out for an elite journal such as yours.

That leaves you with 25 papers for 13 slots. That might not sound like a problem, but think about the process of elimination you just went through. These are really good papers that make important contributions to the field and you need to reject half of them. The discipline will not accept you flipping a coin. You need reasons to reject some of these papers. Well, let’s look at the co-authors. You don’t want to be a jerk, but you’re both desperate and don’t want to be remembered in your hallway at work as the person who rejected that massively influential paper that reinvented the field. You’d feel bad, but 20 of the papers have at least 1 superstar on them. Sorry, but status is a heuristic for a reason. You still need to reject 7 more.

Let’s go through those referee reports again. Was there anything questionable? Any possible source of bias speculatively hypothesized by a person who spent two days thinking about the paper that the people who worked on it for three years never thought of? Are they relying on econometrics that someone has recently posited might sometimes fail to calculate error terms optimally? Is it a theory without an application? Is it an application without a theory? Are the coefficients too small to be interesting or too large to be believable?

Now, let’s remember the single most important thing: everyone knows this is happening. This is not a secret process and academic researchers have responded accordingly. Superstars have responded by managing bigger teams, producing even more research, adding more and more layers of robustness checks, alternative specification designs, even entirely different research designs serving as papers within papers that put Hamlet to shame. At the same time comparably excellent, but perhaps slightly less famous, authors with outstanding research records are thrilled to work with a star, knowing that it will increase their odds at a top journal. When designing the research they know what is in vogue, what is falling out of favor, and how to shape their papers to fit the ambitions of current editors. Research designs are defensive from the start, anticipating as many angles of attack as possible. When the research is completed, it will go on the presentation circuit for a year or two, subject to the slings and arrows from the pool of economists where your future referees will be drawn from. It is from these comments that your appendix will grow. And grow. And grow. You must anticipate every attack, lest your paper’s shortcomings make the editor’s job easier.

Now try to imagine what the research lives of everyone start to look like. For the bulk of good researchers, this means working on 3-6 projects at all time, with each of those projects stretching out over 3 to 5 years. Even if you land a 2 year post-doc, submitting your tenure packet in the fall of your 6th year means you have 7 total years to get multiple papers through a process accepting less than 3-5% of submissions and, more importantly, less than half of all the objectively outstanding research. At the same time, superstars are stretching themselves impossibly thin, expected to meet impossible expectations and get papers accepted at journals with impossible standards knowing full well the careers of their co-authors depend on those acceptances. A faculty appointment should come with a free clonazepam prescription.

To sum up: academic economics has more star researchers, managing larger teams producing more high-quality papers than there is space in the elite journals which have been forced to invent impossible acceptance criteria to produce the singular output that journal editors absolutely cannot shirk: rejections.

And if you think the easy answer is to just increase the size of journals, you are missing the entire function of journals. Journals no longer function as disseminators of economic science.** Rather, they are criteria for tenure and promotion. There are a finite number of faculty slots and schools need reasons to keep/dismiss/promote/retain/recruit. If the number of elite journal articles published were to change, the prinipal effect would be to shift the threshold for success or failure in tenure and promotion.

Of course, increasing the number of publication slots in historically high prestige journals might still be a good thing. Going back to our editor’s dilemma, if they could accept the entire 12.5% of papers that our editor-under-truth-serum genuinely believes are significant contributions, then everyone’s CV would more accurately reflect the subjectively assessed merit of their work, and less their luck and ability to tirelessly play a zero-sum game. Sure, the high-low prestige bar would inflated upwards, but it would nonetheless increase the signal-to-noise ratio on everyone’s CV.

This, of course, would lower the value of every CV that already includes a Top-5 publication, but such is the struggle of every YIMBY vs NIMBY movement. Increasing the supply of elite journal publications won’t be a Pareto improvement (what is?), but it seems likely to me to be welfare improving. So I lied. I do think I know how to improve the system. Big shocker, an academic who thinks they can solve a complex system in one blog post.

** That role has been entirely usurped by the NBER and their working paper series. Now that I have tenure, I would literally rather receive an email permitting me to distribute my future work as NBER working papers than an acceptance at a Top 5 journal. It’s not even close, actually.

Composting Toilets May Help Save the World

A key discovery of nineteenth century science was that diseases can be transmitted via pathogens in human waste.  In regions of high population density, this can lead to epidemics if adequate sanitation facilities are not available. A milestone in epidemiology was the 1854 cholera outbreak in London. A physician named John Snow analyzed the incidence of the disease and concluded that the Broad Street public water pump was the source of infection. Even though he had no explanation in terms of germ theory at that time, he persuaded the authorities to remove the handle of that pump. This stopped the cholera epidemic. The well from which this pump drew had been dug a few feet away from an infected cesspool. A replica of this pump still stands in London:

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DarkSide Goes Too Far with Colonial Pipeline Ransomware Attack

The ransomware attack on the Colonial fuel pipeline that supplies the U.S. East Coast is such a rich story it is hard to know what to discuss in a brief blog post. As anyone who gets news feeds knows, the software that took out Colonial is supplied by a (probably Russia-based) criminal enterprise called DarkSide. DarkSide’s business model is called “Ransomware-as-a-Service” (RaaS). They partner with affiliates who use the software to perform the actual attacks. The affiliates get paid something like 10-25% of the ransom money.

An article by Sophos Labs, a company that fights ransomware, gives details on how these attacks work. Typically, an attacker gets initial access to a company’s system by tricking some employee into revealing passwords or other critical information (“phishing”). The attacker then spends two or three months roaming around inside the systems, building up credentialling to get more and more access. They steal (“exfiltrate”) sensitive information like accounting, personnel, and R&D. This table shows some of the “tools” used in these attacks:

When it’s showtime, they encrypt the information on the company computers, which typically makes operations grind to a halt. They then demand ransom (in the form of Bitcoin). If the ransom is paid, they will send the victim a decryption program to allow them to decrypt their files.  If their demands are not met, they will publicly release the stolen, sensitive information. So this extortion is a double threat, to both operations and information exposure.

Here is an example of (I believe) an actual ransom demand note:

(Sorry, the text is hard to read).  DarkSide is professional in their own way. They assure their victims that they really will get their data restored if the ransom is paid: “…We value our reputation. If we do not do our work and liabilities, no one will pay us. This is not in our interests. All our decryption software is perfectly tested and will decrypt your data. We will also provide support in case of problems.”   Think of that, a help desk for your ransomware.

DarkSide likes to align themselves with Robin Hood, kind of: “Take from the rich, and give to the poor  keep it”. They claim to be apolitical, just in it for the money, and to not target nonprofits. They even offer to donate money to charities, so we can all feel good about this. (Charities typically refuse to accept stolen money, though).

In most cases, it is far cheaper for the victim to pay the ransom than to tough it out and try to scramble to restart their systems cold and to risk exposure of sensitive information.  DarkSide, after all, has its reputation to protect, so they scale the ransom demands accordingly, but make sure the victims hurt if they do not pay.

Forbes cybersecurity expert Davey Winder explains that with the Colonial hack, however, Darkside (and the affiliate who did the actual hacking) stirred up something of a hornet’s nest.

If you cut off gasoline supplies to the Washington, D.C. area, you better think through the consequences. I am sure that top national security officials were grilled by top top government officials as to “How could this happen?”, and, “You aren’t going to let them get away with this, are you?”. After some days of public waffling on the issue, it seems Colonial did pay DarkSide some $5 million. But..apparently DarkSide did not get to keep the loot, though it is hard to know what is real and what is public theater.

According to Winder,

DarkSide was effectively forced into retreat by alleged law enforcement or unspecified government disruption of the publicity blog and the ransom negotiation dark web site.

The main Russian-language criminal forum that acted as a recruitment post for potential affiliates banned all ransomware groups from advertising. The cryptocurrency wallets used by DarkSide were, it has also been said, found and funds exfiltrated.

You can follow some of the links in the paragraph above for more of the details here. (Most people may not realize the Bitcoin is not as private as imagined. Every transaction is out in public view; although technically the identities of transactors is cloaked behind anonymous user’s ID numbers, sophisticated data analysis programs can be used to trace transactions pretty reliably).

DarkSide has announced some “nicer” guideline for its further extortions. It seems like the good guys at least partially won that battle, but the war goes on. Winder further comments:

The business model will change, just as it has always evolved, but it won’t go away. Why would it when there are so many big corporate targets out there continuing to make the mistakes that let these attackers onto their networks?

If I were king, this is what I might do: Sentence the CEO of any company which is successfully hacked to six months in prison. Overnight, you would see corporate priorities magically realigned, necessary resources allocated, internal security protocols enforced, and so on. I predict the incidence of such hacking would drop by an order of magnitude within three months of such an “executive order”.

The Revealed Preferences of the National Hockey League

American sports leagues are different from their international counterparts for a variety of reasons, but perhaps the simplest and most important is that they exist as singular entities, otherwise natural cartels whose network effects are explicitly codified as clubs whose barriers to entry ensure a steady stream of profits so long as their sport remains sufficiently popular. Negotiating against player unions of varying levels of organization, they routinely negotiate collective bargaining agreements that neatly establish the division of proceeds between capital and labor.

A common mistake made is questioning the choices made by teams as if they were independent firms competing against each other in a ruthless marketplace for economic survival like Sony, McDonalds, or Manchester United, when in fact their survival is largely pre-ordained by the cartel, their choices salient only to the prestige and short-term windfall profits of annual trophies.

Tom Wilson plays for the Washington Capitals, which happens to be my favorite team in the National Hockey League. He is extremely good at hockey. He scores goals, makes good choices in transition, plays commendable defense, and is extremely adept at physically hurting other players. It is for this last bit that he has received the most attention. His team gains a notable advantage when he is on the ice simply because the other team must allocate a disproportionate amount of their attention to where Wilson is and their own relative vulnerability. The other teams in the league, and many of their players, are increasingly of the publicly held opinion that this advantage is not gained in a manner within the rules of the game. Tom Wilson is a cheating bully who threatens the safety of every other player beyond an acceptable level who simply must be stopped immediately.

To be clear, they do not believe this.

The other teams and their players believe he is dangerous (he is). But they clearly do not think he is too dangerous. Tom Wilson is occasionally suspended or fined, his salary donated to charity. The players’ union (the NHLPA) has worked tirelessly to minimize the punishments he incurs for physically injuring the other members of the same union. The other teams within the league cartel has never once imposed a punishment on his employing team. Based on the relatively modest punishments doled out and the minimal interest the players union has in ensuring their members’ physical safety, it would be foolish to conclude that the NHL views Tom Wilson as a net negative or even symptomatic of a net negative institution within hockey.

The NHL sells hockey. Their cartel members aren’t competing with each other, they are competing as a league against other sources of entertainment, principally other sports. They are competing for attention. Three John Wick movies have left me convinced that violence is an excellent means of eliciting attention. The NHL isn’t punishing Tom Wilson or the Washington Capitals because every time he punches a player prone on the ice in the back of their neck, the possibility that a player may be paralyzed or killed receives twenty-five fold the attention that Connor MacDavid receives for being the most skilled player I’ve ever seen.

To be clear, the NHL doesn’t sell hockey or violence, they sell a bundle of goods that includes athletic skill, regional identity, cultural identity, and violence. Compared to the other major US sports, it’s not unreasonable to consider the violence within hockey to be the bundle component that overlaps the least with other competing products and, as such, contributes the most, at the margin, to their share of the market. Violence may literally be the most profitably thing the NHL sells.

Every time Tom Wilson or another players seriously injures a player, possibly ending a career or reducing the quality of the rest of their life, people will speculate on what sort of event will cause the NHL to change the nature of their sport, but I don’t know why there is any uncertainty.

They’ll change when revenues decline because fans prefer less violence in their sports entertainment consumption or when young athletes with brief peak earning windows express willingness to receive smaller wages in exchange for safer working conditions. Such things have been happening steadily for the last 25 years with all of the major sports, but hockey has put itself in a uniquely bad position to continue transitioning away from selling violence, one what may demand that teams earn smaller profits, and players smaller wages, in the short run in order to enjoy greater success in the long run. I guess it could happen naturally through artful negotiation, earned trust, and thoughtful planning.

You ever know a joke that you know only a small fraction of people will understand, but you tell it anyway?

Bracing for the Swarm of “Charismatic” Cicada Bugs

In the Mid-Atlantic region of the U.S., there are two basic types of cicadas. One type appears every year, but in small numbers. One bug up in a tree can fill a whole block with its buzzing sound. But every seventeen years, the periodic cicadas, also (incorrectly) called “17-year locusts”, emerge and drown out every sound but their own. They can make a residential neighborhood sound like an airport. The seventeen year swarm is due to emerge any day now.

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You simply must go

There is no shortage of travel media. A million writers, marketers, and eternally-aspirational “influencers” are desperate for your ear, while a litany of airlines, trainlines, and cruiselines are more than happy to take you there. Every year there is a new place that “you simply must go”, it’s “transformative”. Places that remain untouched. Places that are now safe to go. Places that are exciting or sandy or have the best seafood you’ve ever had. All desperate to tell you where to go, where you have to go.

It’s all very stupid. Not because you shouldn’t travel, quite the contrary. No, it’s all stupid because there are more places to go than you’ll have months on this earth. There are so many interesting, wonderful places to go, most of which you’ve never been to and never will. You really don’t need that much advice. You just need to go to as many places as you can, which means economizing on your limited resources, which are invariably time and money.

We’re all getting vaccinated and it’s time to get outta here. So where do I think you should go? I have no idea, but here is how I travel:

  1. I write a list of places I/we want to go. It has to be at least 15-20 deep and I try to update it twice a year.
  2. I try to identify pockets of time when we can travel months in advance, the bigger the window, the better.
  3. When its time to book a trip, I just start googling airfare for places on the list and write down numbers.
  4. Whatever is currently the best price opportunity (not just the cheapest) we go and then cross it off the list when we get back. This is a fuzzy “within-destination” estimation. Nashville is always going to be cheaper than Paris, but if Paris is $400 cheaper than the last few times we looked, then that’s a better choice than Nashville at half the price.

That’s the search protocol. Then there is the single most important rule: Never pay for something that you don’t want. This is essentially an “off-season” rule.

  1. Only go to places with beaches in the winter if you don’t want to actually sit in the sand all week.
  2. Only go to the mountains in the summer, unless you plan on skiing everyday.
  3. Avoid large American cities around major holidays.
  4. Avoid ALL large cities around New Years.
  5. Avoid anywhere hosting an All-Star Game, Super Bowl, etc. Same goes for Kentucky during the major horse races unless you have a ticket.
  6. I’d say avoid Spring Break and Beach Week destinations, but is that seriously something you’d even consider? Please.

Simple rules once you are there.

  1. Find a hotel/airbnb walking distance from public transportation.
  2. Walk everywhere you can.
  3. Walk everywhere you intend to drink alcohol.
  4. Eat most meals standing up, sitting outside, or at the bar.
  5. Don’t spread your food budget evenly. It’s better to have one super expensive meal and 13 meals at trailers, trucks, and kiosks.
  6. Go to a local sporting event
  7. Go to the library
  8. Go to bookstores and junk stores, even antique stores, but never knick knack stores. Intentionally adorable is not the same thing as quirky or idiosyncratic.
  9. Drink what the locals are drinking.
  10. Find something they make there, maybe tour a factory or brewery or lavender field.
  11. If there is a major university, see if they have a History PhD program. If they do, see if there are students who will give you a walking tour for cash. I’ve done this twice and it was awesome. Don’t do this in Rome, the student will be arrested and fined.
  12. Find the art they care about that tourists don’t. Opera, theater, symphony, spoken word. If it sucks leave at intermission.
  13. Most tourist traps are traps but sometimes they are the Blue Lagoon hot springs in Iceland and you should actually go.
  14. Keep walking. Bring good socks and shoes, maybe a couple knee sleeves. Advil. Hydrate.

I don’t know where you should go, just go. You can probably still get a reasonable flight to Toronto or Berlin or Greenville and you should just go.

Was “World War II” Just a Myth?

May 5, 2415

[To:] Mark Livingstone,

25 The Standards,

Verneville, Alassippi

Dear Mark:
in your last letter you made one palpable hit, but only one: I admit that the atomic wars of the Twenty-first Century and the cataclysms of the Twenty-second Century destroyed so much of our cultural inheritance, including nearly all our Nineteenth and Twentieth Century history, that there is very little we can turn to of those times that is authentic. Apparently that is the only point we will be able to agree on.

I cannot possibly believe, for instance, as you do, that there ever did exist an Abraham Lincoln as so glowingly portrayed by our two or three surviving “history” digests; nor can I believe there ever was a World War II, at least such as they described. Wars, yes – there have always been wars, and a World War II may have occurred – but certainly not with such incredible concomitants.

In short, your history is much too fictional for me.

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Active empathy makes for better research

There are skills necessary for good research and policy design, but not all of them can be taught. One of the skills I advocate that my students develop, but to be honest I’m not sure if I’m all that convincing, is active empathy i.e. to willfully try to place yourselves in the context that is driving the model underlying your research question and imagine how you would behave. This is, perhaps, more work than it sounds.

Trying to imagine how you would behave in a given decision context requires not just imagining how you would make the best possible decision, but what you might actually do. This means imagining your own hypothetical state of mind in the model event context. How tired you might be, how frustrated or bored or scared. How invested you are cognitively or how distracted from the entire enterprise. Would you even be conscious of the decision in the moment you were making it, or would you only realize it upon later reflection?

What would your resource constraints be and what would it feel like to live under those constraints? What sort of rewards or punishments are you considering? This is where it pays to be honest with both your current and hypothetical selves. If you’re a car salesman, are you more excited about making the most money or being the best salesperson in the lot? If you’re a cop, are you more excited about making a big arrest or making it through the day with the minimum of interactions? Do you care more about your boss liking you or your fellow street officers?

This also, more often than not, means imaging you are a completely different person. This is where it is strongly advisable to practice not just active empathy, but active humility. I like to think I am pretty good at putting myself in other people’s shoes, but I also know I will never be able to fully empathize with the experience of being a woman in an abusive domestic context with two young children during a global pandemic. What I can do, however, is start by actively empathizing with the elements of that context that are accessible to me and my life experience, and then do my best to add into the exercise the different constraints, outside options, and resources available that might change the decisions made. I can enrich the mental model I am building by trying to appreciate what it means to make decisions, in any context, under the duress of physical fear and heightened uncertainty, while all the while acknowledging my exercise is inherently limited by my own experience.

Having invested real time and energy in this exercise, you’ll be in a better place to guide your research and policy design, not just because you’re thinking about the problem from the ground level, but because you’ve forced yourself to acknowledge where your blind spots are, and can do your best to address them. First person narrative accounts (“anecdotes”) don’t usually make for great data, but they are great way to let someone else’s experience to partially (but never fully) fill in your gaps. To be clear, I don’t view this as an alternative to standard rational choice frameworks of analysis. Quite the contrary, I think it exactly when the choices being made by others seem entirely irrational that it is most advisable to step back and try to actively empathize with the decisionmaker– to try to see the choices, constraints, and other players in the game as they actually see them. It’s amazing what can quickly become completely rational once you consider in resource constraints, especially information constraints, people are operating within.

If it sounds like I’m trying to convince economists everywhere of the merits of Method Acting, don’t worry, I’m not.

No, scratch that. That’s exactly what I’m doing. Just keep your rehearsals to yourself.