Review of MUGFA (Aerogarden type) Countertop Hydroponic Units

Scott BuchananLeave a comment

Last year about this time, as the outside world got darker and colder, and the greenery in my outdoor planters shriveled to brown – – I resolved to fight back against seasonal affect disorder, by growing some lettuce and herbs indoors under a sun lamp.

After doing some reading and thinking, I settled on getting a countertop hydroponics unit, instead of rigging a lamp over pots filled with dirt indoors. With a compact hydroponics unit there is no dirt, no bugs, it has built-in well-designed sun lamp on a timer, and is more or less self-watering.

These systems have a water tank that you fill with water and some soluble nutrients. There is a pump in the tank that circulates the water. There is a deck over the tank with typically 8 to 12 holes that are around 1 inch diameter. Into each hole you put a conical plug or sponge made of compressed peat moss, supported by a plastic basket. On the top of each sponge is a little hole, into which you place the seeds you want to grow.

A support basket with a dry (unwetted, unswollen) peat moss grow sponge/plug in it.

As long as you keep the unit plugged in, so the lights go on when they should, and you keep the nutrients solution topped up, you have a tidy automatic garden on a table or countertop or shelf.

The premier countertop hydroponics brand, which has defined this genre over the past twenty years, is Aerogarden. This brand is expensive. Historically its larger models were $200-$300, though with competition its larger models are now just under $200.  Aerogarden tries to justify the high cost by sleek styling and customizable automation of the lighting cycles, linked into your cell phone.

I decided to go with a cheaper brand, for two reasons. First, why spend $200 when I could get similar function for $50 (especially if I wasn’t sure I would like hydroponics)? Second, I don’t want the bother and possible malfunction associated with having to link an app on my cell phone to the growing device and program it. I wanted something simple and stupid that just turns on and goes.

So I went with a MUGFA brand 18-hole hydroponics unit last winter. It is simple and robust. The LED growing lights are distributed along the underside of a wide top lamp piece. The lamp has a lot of vertical travel (14“), so you could accommodate relatively tall plants. The lights have a simple cycle of 16 hours on, 8 hours off. You can reset by turning the power off and on again; I do this once, early on some morning, so from then on the lights are on during the day and the evening, and off at night.  The water pump pumps the nutrient solution through channels on the underside of the deck, so each grow sponge has a little dribble of solution dribbling onto it when the pump cycle is on. I snagged a second MUGFA unit, a 12 hole model, when it was on sale last spring. The MUGFA units come complete with grow sponges/plugs, support baskets/baskets for the sponges, nutrients (that you add to the water), clear plastic domes you put over the deck holes while the seeds are germinating, and little support sticks for taller plants. You have to buy seeds separately.

Images above from Amazon , for 12-hole model

I have made a couple small modifications to my MUGFA units. The pump is not really sized for reaching 18 holes, and with plants of any size you’re likely not going be stuffing 18 plants on that grow deck. Also, the power of the lamp for the 18-hole unit (24 W) is the same as the 12-hole unit; the LEDs are just spread over a wider lamp area. That 24W is OK for greens that don’t need so much light, but may only be enough to grow a few (mini) tomato plants. For all these reasons, I don’t use the four corner holes on the 18-hole unit. Those corner holes get the least light and the least water flow. To increase the water flow to the other 14 holes, I plugged up the outlets of the channels on the underside of the deck leading to those four holes. I cut little pieces of rubber sheeting, and stuffed them in channel outlets for those holes.

The 12-hole unit has a slightly more pleasing compact form factor, but it has a minor design defect [1]. The flow out of the outlet of each of the 12 channels under the deck is regular, but not very strong. Consequently, the water that comes out of each outlet drops almost straight down and splashes directly into the water tank, without contacting the grow sponge at that hole. The waterfall noise was annoying. The fix was easy, but a little tedious to implement. I cut little pieces of black strong duct tape and stuck them under the outlet of each hole, to make the water travel another quarter inch further horizontally. Those little tabs got the water in contact with the grow sponge basket. The picture below shows the deck upside down, showing the water channels under the deck going to each hole. There is a white sponge basket sticking through the nearest hole, and my custom piece of black duct tape is on the end of the water channel there, touching the basket. (In order to cover the exposed sticky side of the duct tape tab that would be left exposed and touching the basket, I cut another, smaller piece of duct tape to cover that portion of the tab, sticky side to sticky side.). This sounds complicated, but it is straightforward if you ever do it. Also, many cheap knock-off hydroponics units don’t have these under-deck flow channels at all. With MUGFA you are getting nearly Aerogarden type hardware for a third the price, so it is worth a bit of duct tape to bring it up to optimal performance.

12-hole MUGFA deck, upside down with one basket;  showing my bit of black duct tape to convey water from the channer over to the basket.

Some light escapes out sideways from under the horizontal lamps on these units. As an efficiency freak, I taped little aluminum foil reflectors hanging down from the back and sides of the lamp piece, but that is not necessary.

To keep this post short, I have just talked about the hardware here. I will describe actual plant growing in my next post. But here is one picture of my kitchen garden last winter, with the plants about 2/3 of their final sizes:

The bottom line is, I’ve been quite satisfied with both of these MUGFA units, and would recommend them to others. They provided good cheer in the dark of winter, as well as good conversations with visitors and good fresh lettuce and herbs. An alternate use of these types of hydroponics units is to start seedlings for an outside garden.

ENDNOTE

[1] For the hopelessly detail-obsessed technical nerds among us – – the specific design mistake in the 12-hole model is subtle. I’ll explain a little more here.        Here is a picture of the deck for the 18-hole model upside down, with three empty baskets inserted. The network of flow channels for the water circulation is visible on the underside. When the deck is in place on the tank, water is pumped into the short whitish tube at the left of this picture, flows into the channels, then out the ends of all the channels. (Note on the corner holes here, upper and lower right, I stuck little pieces of rubber into the ends of the flow channels to block them off since I don’t use the corner holes on this model; that blocking was not really necessary, it was just an engineering optimization by a technical nerd).

 Anyway, the key point is this: the way the baskets are oriented in the 18-hole model here, a rib of the basket faces the outlet of each flow channel. The result is that as soon as the water exits the flow channel, it immediately contacts a rib of the basket and flows down the basket and wets the grow sponge/plug within the basket. All good.

The design mistake with the 12-hole model is that the baskets are oriented such that the flow channels terminate between the ribs. The water does not squirt far enough horizontally to contact the non-rib part of basket or the sponge, so the water just drips down and splashes into the tank without wetting the sponge. This is not catastrophic, since the sponges are normally wetted just by sitting in the water in the tank, but it is not optimal. All because of a 15-degree error in radial orientation of the little rib notches in the deck. Who knows, maybe Mugfa will send me a free beta test improved 12-hole model if I point this out to them.

Part II: Why agent-based modeling could happen in economics. Eventually.

mdmakowsky1 Comment

Three years ago I ruminated on why agent-based modeling never got any real traction in economics. It got a suprising amount of attention and I continue to receive emails about it to this day. I took care to explicitly punt on what the value-add of agent based models could and/or may yet be.

“ So why should economists give agent-based modeling another shot? That’s another post for another day. …

Well, today is that day, in no small part because this excellent thread led to a new batch of emails about my old post. Now, to be clear, that post was based on a solid decade of experience writing, presenting, and publishing papers built around agent-based models. This endeavor is far more speculative. I have a bit of prickly disdain for the genre of forecasting you find on “I’m not unemployed, I’m an Entrepreneur and Futurist” LinkedIn profiles, so I’ll ask you to indulge even more glibness than usual. With the cowardly caveats now out of the way, let’s get into it.

What are the advantages of agent-based models?

Deep heterogeneity, replicability, scale, flexibility, and time. There are different ways to frame it, but it all boils down to the fact that a multi-agent computational model does not require collapsing to statistical moments or limited heterogeneity (i.e. 3 or fewer types of agent) in order to “converge” or compute. It is not reliant on the single run of human history in order to postulate counterfactuals – you can run the model millions of times and observe the full distribution of outcomes. The population is not limited to the scale of the sample or the population – it can be as large as you can computationally handle. How flexibile can it be? Literally everything but the ur-text of the model can be endogenous. And time? Again, how long you run the model is limited only by computational capacity coupled with your own patience.

Do note that everything I just listed is also a disadvantage.

Agent-based modeling can be a new class of “meta-analysis”

The science of observing, distilling, interpreting, and even managing the scientific project is generally speaking the domain of statisticians and historians of thought. Interestingly, it’s been my experience that historians of economic thought were some of the biggest early enthusiasts for agent modesl (I even wrote a paper with one). I think there is an opportunity, however, to borrow from the logic of applied statistics used in the meta analysis of literatures.

Meta-analysis in economics is pre-demominantly constituted by reviews of empirical literatures that conduct statistical analysis of the coefficients estimated in regression equations across multiple papers. Comparisons across data sets, geographic and temportal settings, and statistical identification strategies allow practicioners, policy makers, and the curious public to better internalize the state of the literature and what it is actually telling us. These are valuable contributions not just because a decades work can be reduced to a paper reduced to an abstract reduced to a title that showed up in a google search conducted by an intern at the think tank recommending policy to a lawyer with good hair who won an election fourteen years ago. They are valuable because they fight against the current wherein we all are drawn to cherry-pick the empirical results that confirm our priors, particularly those that have a political valence associated with them. Meta-analyses have also shown the peculiar biases introduced by the career incentives in all social sciences – the seminal figure being the sharp cutoff in published p-values at traditional 0.05 “statistical significance” threshold.

To reiterate: these papers are useful, but they are also limited by the necessity to find like for like papers whose results can be compared. A framing must be set upon in advance within which the authors of the meta-analysis can curate the contributions to be included and collectively evaluated. Only when the analysis is completed can the authors take a step back and try to adjudicate what the collective results are and how they reflect upon any relevant bodies of theory. It is an inherently atheoretical exercise. There’s a reason schools of thought are rarely (ever?) upended by a meta-analysis that successfully adjudicates between competing models. There’s always just enough daylight between data estimation and a given model to resist acquiescing to claims that any analysis is testing a models validity.

Agent-based modeling offers the opportunity for meta-analysis of models. In an artificial world with millions of agents, we can program behavior that corresponds with different theories of labor markets, households, crime, addiction, etc. We can model markets characterized by monopoly, monopsony, and competition born of everything from government fiat to specific elasticities of substitution between goods. Hey now, hold your horses. A model of everything is a model of nothing. Once you allow for too much complexity, there’s no room for inference. It’s just noise.

Yes, of course. You can’t model everything. But there is a greater opportunity to find when models are mutually incompatible. Incongruent. Is there a way to run an artificial city of a million agents to formulate a social scientific theory of everything? Absolutely not. But it would be interesting if a million runs of a million models shows that you can never have both a highly monopsonistic labor market and a income-driven criminal market because the high substitutability of cash across sources necessary in the criminal market allows for the kind of Coasean bargains that undermine monopsony. To be clear, I just made that up. But there’s room for as yet unseen cross-pollination across bodies of applied theory.

Pushing the Lucas critique all the way to the hilt

This is essentially a recursive version of modern macroeconomics where agents within the model learn the results being reported in the paper about the model they inhabit, changing their behavior accordingly. Wait, isn’t that just the definition of “equilibrium”? I mean, we already have the Lucas Critique. Yes, but we typically have very well-behaved agents in those models. What if they are a bit noisier in their heterogeneity? What if they took suboptimal risks, many failed, but some won? What if there was an error term in their perceptions of the world i.e. they ran incomplete regressions, observed the results, and then treated the results as a sufficient approximation of the truth? Essentially a behavioral world where agents are often smart but sometimes unwise? Where the churn of human folly and hubris undermined equilibrium while fueling both suffering and growth. A story of Schumpeterian economic growth told by the iterating arcs of Tolstoy and Asimov.

No, I said all the way

I’m not sure if what I just described is just the kind of advanced macroeconomics I am currently ignorant of or complete nonsense. Possibly both. To be clear, I’m deeply skeptical of the preceding paragraphs. One of the ironies of complexity science is that those who take it seriously know that overly complex theoretic ambitions are the death of good science. No, I think if you really want to apply agent-based methodologies within economics, it is best to go in the opposite direction. Simpler models let loose in larger, less constrained sandboxes.

Almost a decade ago Paul Smaldino and I wrote a paper about how groups collectively evolve separate strategies for internal and external cooperation. It’s a cool paper, I’m proud of it, and I kinda, sorta think its a major plotline in “Pluribus“. No, I don’t think the writers are aware of our paper. Yes, I know I sound like a crazy person, but I think the model we designed and explored is relevant to the story they are telling. Maybe next week I’ll lay out the parallels now that season one is complete.

Our paper is a simple story where i) evolutionary pressure on a couple of simple parameters for behavior at the individual level, ii) combined with parameters for how collective behavior emergers from individual pressure, can lead to iii) a world where a society of nice people can be, collectively, quite vicious. The evolutionary pressue is subtle, but also simple. Populations of uncooperative people fail to scale their resources and die off. Populations of cooperative people thrive until they are confronted by aggressive collectives that exploit and expropriate from them, killing them off. But if a group somehow evolves a culture in which members cooperate internally and externally on an individual level, while also being difficult to exploit collectively- if they thread that needle, they thrive.

I think there’s an opportunity for agent-based models within economics to do what we did in our model, but much bigger and much better. Framed as a question: why are the agents in our model only varying along simple parameters? Why aren’t they varying in the complexity of their behavior? Why aren’t they evolving their own rich, multi-layered strategies? Why aren’t they evolving strategies based on their own predictions for not just individual behavior, but how they think that behavior will change the landscape of resources and institutions in the collective? Why they are only playing the game we laid out, choosing amongst the strategies we gave them?

For me, the seminal moment when AI became something worth considering was not as far back as when computers beat players at chess or last week when LLMs were used to fabricate college application essays. It was in 2017 when AlphaGo Zero arrived at a level of play in Go that surpassed grand champions without any outside information besides the rules for the game. It was very specifically not an LLM as I understand them. It learned only by playing against itself. It created knowledge and insight strictly be internally iterating within a set of rules that evaluated success and failure.

We don’t know how to model an entire economy. Apologies to those interested in the Sante Fe Artificial Stock Market, but that’s always been too complex for my blood. So, again, we don’t know enough to make an agent-based model of an entire economy from the ground up, but we do know the rules of evolutionary success (survival and reproduction) and market success (resources and risk). We also have rules that we are comfortable imposing on emotional, sympathetic, and empathetic success (quantity and intensity of interpersonal relationships, observation of other’s success, the absence of suffering). Add in a few polynomial parameters for shape of utility, disutility, and you’ve got a context where agents will learn how to play whatever games you throw at them.

So why not simpy set the rules in place, build a million agents in a world of other agents forced to play games in a world of interactive games? The twist, of course, is that their strategies start as a blank slate.

Step 1: randomly match with another
Step 2: randomly choose to interact or not
Step 3: If you interact, randomly chooes to cooperate or not
Step 4: Go to 1

The question is, can you make the agents smart enough to update and add to those 4 lines of code in a manner that could evolve complex behavior, but not so rigid or intelligent that emergent strategies are obvious from the get go? Can you write a model where not only the strategies being played are endogenous, but the games themselves? There’s at least two people who already think the answer may be yes. And, yes, that paper is exceptionally cool, even if they consider their model outside the rubric of agent-based models.

Is this an AI thing? Because it sounds like an AI thing

Again, we find ourselves in a meta-enterprise relative to the field as it stands, only now we’re talking about game theory and evolutionary behavioral economics where the human contribution is at the meta level – the ur text of the model where rules and parameters serve as a substrate upon which something new can emerge. New, but replicable. Something that you can work backwards from, through the simulated history, to reverse engineer the mechanism underlying the outcomes.

Economics is riding high (as a science, at least. Less so as as policy advocates.) The credibility revolution and emphasis on causal inference placed it in an ideal position to make contributions in what is a golden age of data availability. Before all this, however, was an era of high theory, one where macroeconomists formed schools of thought and waged wars of across texts. It’s no dougbt too conveniently cyclical to predict a new era of high theory on the horizon, but that’s what agent-based models could offer. A new era of theory, only this time centered around microeconomics, where milllions of deeply heterogenous agents are brought into being in a sandbox of carefully selected rules and hard parameters, where those rules and parameters are varied across millions of runs, and the model is run millions of time in parallel, each run a wholly fabricated counterfactual history.

Will the model replicate and explain our world? Almost assuredly not. But the models and strategies the agents come up with? Those could be entirely new. And that’s what the next era of high theory needs more than anything else. Not just new models. New sources of models.

New models for inventing models.

Understanding Vulnerability: What Anna Karenina Can Teach Us About Grooming and Loneliness

Joy Buchanan1 Comment

Ever since becoming aware of the terrible news about “grooming gangs” in the UK, I’ve been wanting to write something about why men succeed in manipulating women. Having a moment to read fiction during my break from classes, I have picked up Tolstoy’s Anna Karenina. Now that I’m past the turning point in the book where Anna and her lover Vronsky have to think about a new life outside the care of Anna’s husband, it’s clear that Anna fell for a person who will struggle to take care of her and any children. How does it work?   

Most women are unprepared concerning how desperate they are for what I’ll call love. Many women receive very little attention. More than 40% of adult women in the US are single. We have statistics on marital status, but profound loneliness can also occur within an official relationship.

Articles about the UK grooming gangs often emphasize the disadvantaged economic backgrounds of the victims. That does matter, and it did make them more vulnerable to manipulation. Vulnerability within most people everywhere is underexplored.

Anna Karenina is married, privileged, admired in society, yet she feels lonely. When Vronsky shows her focused attention she falls hard, even though she knows there could be consequences. Tolstoy shows how powerful validation can be to almost any woman, not just those who might seem the most vulnerable.

Vronsky is charming and attractive on the surface, but ultimately self-centered. He ruins Anna’s life and deprives her children of a mother. Why did he succeed in the first place?

If Anna is beautiful, some would assume that she would not be lonely. There are theories going around about the advantages of being beautiful (lookism). Even Jennifer Garner and Jennifer Aniston get cheated on. Most women are not experiencing something that feels like love to them.

In the case of the grooming gangs, folks with an understanding of emotional deprivation hacked the system for evil. None of this diminishes the responsibility of perpetrators or the reality of coercion. Because the initial phase feels so validating, grooming victims often blame themselves later. We might do better by bringing the system out into the open.

Systems can be used for good by those who understands them. Especially young people with a better understanding of the system can have a better chance of making it work in their favor.

It’s a weird conversation to have with youths (easier to assign Anna Karenina in high schools, but kids are losing the ability to read a novel). Could we educate them with something like: “You have a desire to be loved that may never get fulfilled. That does not make you special. It’s the most unoriginal thing about you. Try to make the system work for you and not get tricked.”

The red flag for Vronsky should have been his lack of family and lack of care for his community (he does not pay his tailor). The classic advice for young women to observe how a prospective boyfriend treats his mother is still very good.

Tolstoy does not give specific advice about what people should do. A superficial reading of the story would be that Anna Karenina is about duty and sin and the wages of sin. But throughout, it is a meditation on happiness. The second word of the novel is “happy,” as in “All happy families…”

In the first line of the novel, Tolstoy situates happiness within a family, not as something experienced by individuals. The characters, Levin and Kitty, who seem happiest at the end, find each other and work toward something greater than themselves.

Continue reading →

Investing: You Vs. All Possible Worlds

Zachary Bartsch1 Comment

This post illustrates a couple of things that I learned this year with an application in finance. I learned about the simplex when I was researching amino acids. I learned some nitty-gritty about portfolio theory. These combined with my pre-existing knowledge about game theory and mixed strategy solutions.

Specifically, I learned a way of visualizing all possible portfolio returns. This post narrowly focuses on 3 so that I can draw a picture. But the idea generalizes to many assets.

Say that I can choose to hold some combination of 3 assets (A, B, & C), each with unique returns of 0%, 20%, and 10%. Obviously, I can maximize my portfolio return by investing all of my value in asset B. But, of course, we rarely know our returns ex ante. So, we take a shot and create the portfolio reflected in the below table. Our ex post performance turns out to be a return of 15%.

That’s great! We feel good and successful. We clearly know what we’re doing and we’re ripe to take on the world of global finance. Hopefully, you suspect that something is amiss. It can’t be this straightforward. And it isn’t. At the very least, we need to know not just what our return was, but also what it could have been. Famously, a monkey throwing darts can choose stocks well. So, how did our portfolio perform relative to the luck of a random draw? Let’s ignore volatility or assume that it’s uncorrelated and equal among the assets.  

Visualizing Success with Two Assets

Say that we had only invested in assets A and B. We can visualize the weights and returns easily. The more weight we place on asset A, the closer our return would have been to zero. The more weight that we place on asset B, the closer our return would have been to 20%.

If we had invested 75% of our value in asset B and 25% in A, then we would have achieved the same return of 15%. In this two-asset case, it is clear to see that a return of 15% is better than the return earned by 75% of the possible portfolios. After all, possible weights are measures on the x-axis line, and the leftward 75% of that line would have earned lower returns.  Another way of saying the same thing is: “Choosing randomly, there was only a 25% that we could have earned a return greater than 15%.”  

Visualizing Success with Three Assets

Continue reading →

What to Do Before the New Year?

James BaileyLeave a comment

Merry Christmas! I’m gifting you a couple ideas for money things to do in the remaining six days of 2025.

Ways to Help Yourself

Money in US Flexible Spending Accounts (FSAs) often disappears if not requested by New Year’s Day. Don’t forget to draw these down- especially it is a Dependent Care FSA, which can’t carry any money over to the new year. The money goes back to your employer if you don’t spend it, which means they don’t have an incentive to remind you themselves; so I’ll remind you to save you from having to go Krieger.

The next few days are also your last chance to do most tax-deductible spending in 2025, which could be business expenses, or contributing to tax-deductible accounts that don’t expire like a 401k or HSA (not FSA). See a more detailed list of tax ideas here. Depending on your situation (especially whether you itemize), this might also be a good time to make tax-deductible donations, which would:

Help Others

There are many good causes to donate to, but funding high-value low-cost health interventions in poor countries was probably the cheapest reliable way to save a life even before this year. When one of the largest funders of global health, USAID, was shut down this year, the marginal benefit of donations to global health likely went even higher. Givewell does the cost-effectiveness calculations to identify good options for specific charities in this area, like Helen Keller International. I like that I’ve been donating to these charities for years via Givewell’s donation portal and none of them have ever called me (since they don’t require a phone number) or mailed me anything.

This picture shows all the remains of the website of USAID, an agency that spent $32 billion in FY 2024

See you all in 2026

Groceries in November 2025 are the Most Affordable They Have Ever Been

Jeremy HorpedahlLeave a comment

In surveys more than two-thirds of Americans say they are are struggling with the cost of groceries. And yet, relative to average wages:

The chart shows a simple measure of relative grocery affordability. Starting with the levels of wages and grocery prices in 1947, if in any year wages increase more than prices, the line goes up (it can also go down, as it does in some years). Cumulatively, you can see that today groceries are over twice as affordable as in 1947.

You could reasonably complain that there hasn’t been much progress since the early 1970s. Fair enough. But there has been significant progress since the 1990s. Even if the progress is less than we would have liked, groceries are still, right now, the most affordable they have ever been in the US relative to average wages. And since US consumers spend by far the lowest share of their income on groceries in the world, we might be tempted to say that right now groceries in the US are the most affordable they have ever been in human history. Period.

This is not just a trick of using average wages, which can be distorted by outliers. First, we are already using an average wage series that strips out the highest earners (supervisors, managers, etc.). But we can show this more clearly by using a median-wage series, such as the CPS series (calculated by EPI) starting in 1973. Notice this affordability trend gets slightly better if we use median wages from 1973-2024:

It’s true that using the median wage series, 2020 and 2021 look more affordable than 2024 — but that’s because the compositional effects of the job losses in the pandemic really throw off the median wage. But the growth rate since 1973 is slightly better for median rather than average wages — it’s not a trick! And when we have the median wage data for 2025, it will also likely be the most affordable measure on this chart.

So why are people so pessimistic if wages have been rising faster than grocery prices? One theory: availability bias. People focus on the prices where they notice goods becoming less affordable, but ignore the ones that are more affordable. Many consumers could probably tell you that a dozen eggs increased from $1.40 per dozen in November 2019 to $2.86 today, and at times was much higher, topping $6 briefly in early 2025. Likewise they could tell you that a pound of ground beef soared from $3.81 in late 2019 to $6.54 today. Both of these prices increases vastly exceed wage increases over the same timeframe (about 33 percent for wages), but most consumers probably couldn’t tell you that these were outliers and most major categories of food increased by less than average wages since late 2019:

While the “beef and veal” category has clearly outpaced wages — by almost twice as much! — nearly every other category of meat and as well as other food product prices increased less than wages. Poultry is the one exception, though here it is almost equal to wage increases. But if we are talking about pork or fish, or the non-meat categories, most food is more affordable than in late 2019 relative to wages. Consumers won’t as easily identify these more affordable categories, and they probably have no idea how much average wages increased.

A Visual Summary of the 2025 Economics Nobel Lectures

Scott BuchananLeave a comment

Fellow EWED blogger Jeremy Horpedahl generally gives good advice. Therefore, when the other week he provided a link and recommended that we watch Joel Mokyr’s 2025 Nobel lecture*, I did so.

There were three speakers on that linked YouTube, who were the economics laureates for this year. They received the prize for their work on innovation-driven economic growth. The whole video is nearly two hours long, which is longer than most folks want to listen to, unless they are on a long car trip. Joel’s talk was the first, and it was truly engaging.

For time-pressed readers here, I have snipped many of the speakers’ slides, and pasted them below, with minimal commentary.

First, here are the great men themselves:

Talk # 1.  Joel Mokyr: Can Progress in Innovation Be Sustained?

And indeed, one can find pieces of evidence that point in this direction, such as the slower pace of pharm discoveries.

But Joel is optimistic:

Joel provides various examples of advances in theoretical knowledge and in practical technology (especially in making instruments) feeding each other. E.g., nineteenth century advances in high resolution microscopy led to study of micro-organisms which led to germ theory of disease, which was one of the all-time key discoveries that helped mankind:

So, on the technical and intellectual side, Joel feels that the drivers are still in place for continued strong progress. What may block progress are unhelpful human attitudes and fragmentation, including outright wars.

Or, as Friedrich Schiller wrote, “Against stupidity, the gods themselves contend in vain”.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Talk # 2: Philippe Aghion, The Economics of Creative Destruction

He commented that on the personal level, what seems to be a failure in your life can prove to be “a revival, your savior” (English is not his first language; but the point is a good one).

Much of his talk discussed some inherent contradictions in the innovation process, especially how once a new firm achieves dominance through innovation, it tends to block out newer entrants:

KEY SLIDE:

Outline of the rest of his talk:

[ There were more charts on fine points of his competition/innovation model(s)]

Slide on companies’ failure rate, grouped by age of the firm:

His comment..if you are a young , small firm, it only takes one act of (competitors’) creative destruction to oust you, whereas for older, larger, more diverse firms, it might take two or three creative destructions to wipe you out.

He then uses some of these concepts to address “Historical enigmas”

First, secular stagnation:

[My comment: Total factor productivity (TFP) growth rate in economics measures the portion of output growth not explained by increases in traditional inputs like labor and capital. It is often considered the primary contributor to GDP growth, reflecting gains from technological progress, efficiency improvements, and other factors that enhance production]

I think this chart was for the US. Productivity, which grew fast in the 1996-2005 timeframe, then slowed back down.

In the time of growth soaring, there was increased concentration in services. The boost in ~1993-2003 was a composition effect, as big techs like Microsoft, Amazon, bought out small firms, and grew the most. But then this discouraged new entries.

Gap is increasing between leaders and laggers, likely due to quasi-monopoly of big tech firms.

Another historical enigma – why do some countries stop growing? “Middle Income Trap”

s

Made a case for Korea, Japan growing fastest when they were catching up with Western technology, then slowed down.

China for past 30 years has been growing by catching up, absorbing outside technology. But the policies for pioneering new technologies are different than those for catching up.

Europe: During WWII lot of capital was destroyed, but they quickly started to catch up with US (Europe had good education, and Marshall plan rebuilt capital)…but then stagnated, because not as strong in innovation.

Europeans are doing mid-tech incremental innovation, whereas US is doing high tech breakthrough.

[my comment: I don’t know if innovation is the whole story, it is tough to compete with a large, unified nation sitting on so much premium farmland and oil fields]

Patents:

Red =US,  blue=China, yellow=Japan, green=Europe. His point: Europe is lagging.

Europe needs true unified market, policies to foster innovation (and creative destruction, rather than preservation).

Finally: Rethinking Capitalism

GINI index is a measure of inequality.

Death of unskilled middle-aged men in U.S.…due in part to distress over of losing good jobs [I’m not sure that is the whole story]. Key point of two slides above is that US has more innovation, but some bad social outcomes.

So, you’d like to have best of both…flexibility (like US) AND inclusivity (like Europe).

Example: with Danish welfare policies, there is little stress if you lose your job (slide above).

Found that innovation (in Europe? Finland?) correlated with parents’ income and education level:

…but that is considered suboptimal, since you want every young person, no matter parents’ status, to have the chance to contribute to innovation. Pointed to reforms of education in Finland, that gave universal access to good education..claimed positive effects on innovation.

Final subtopic: competition. Again, the mega tech firms discourage competition. It used to be that small firms were the main engine of job growth, now not so much:

Makes the case that entrant competition enhances social mobility.

Conclusions:

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Talk # 3. Peter Howitt

The third speaker, Peter Howitt showed only a very few slides, all of which were pretty unengaging, such as:

So, I don’t have much to show from him. He has been a close collaborator of Philippe Aghion, and he seemed to be saying similar things. I can report that he is basically optimistic about the future.

* The economics prize is not a classic “Nobel prize” like the ones established by the Swedish dynamite inventor himself, but was established in 1968 by the Swedish national bank “In Memory of Alfred Nobel.”

Here is an AI summary of the 2025 economics prize:  

The 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work on innovation-driven economic growth. Mokyr received half of the prize for identifying the prerequisites for sustained growth through technological progress, emphasizing the importance of “useful knowledge,” mechanical competence, and institutions conducive to innovation. The other half was jointly awarded to Aghion and Howitt for developing a mathematical model of sustained growth through “creative destruction,” a concept that explains how new technologies and products replace older ones, driving economic advancement. Their research highlights that economic growth is not guaranteed and requires supportive policies, open markets, and mechanisms to manage the disruptive effects of innovation, such as job displacement and firm failures. The award comes at a critical time, as concerns grow over threats to scientific research funding and the potential for de-globalization to hinder innovation.

Joy on The Subscription Economy

Joy Buchanan2 Comments

An Al Jazeera talk show called The Stream had me back again for

“Why subscriptions are taking over our lives”

along with journalist guest Sanya Dosani.

Our episode began with some clips from TikTok of young people expressing anger over feeling trapped in “the subscription economy.” Watch our show at the link above to see.

The subscription economy is a business model shift where consumers pay recurring fees for ongoing access to products/services (like Netflix, SaaS) instead of one-time purchases, focusing on “access over ownership” for predictable revenue. Gen Z feels upset that they are getting charged for subscriptions, some of which they simply forgot to cancel. They have nostalgia for the days of toting a zipper case of CDs onto the yellow school bus in 2004.

My commentary starts around minute 5:30 in the show. The first thing I point out is that, by and large, we have more entertainment available to us at a lower price than people did in that bygone era of mostly cable TV and physical discs. (This is a bit like the point I made on The Stream in March 2025 about how fast fashion represents more stuff for consumers at lower prices, which is good.)

In the episode, we discussed how people can still buy CDs today. Sanya Dosani made the point that, “there’s a place for buying and a place for renting.” Everyone should be aware of how cheap DVDs, books, and CDs are at rummage sales in the United States in 2025. You can get a music album for 50 cents. Some youths have (re)discovered that DVD players are cheaper than a year of streaming subscription costs.  

Around minute 17, I got to bring up my research about intellectual property, digital goods, and morality.

I have two papers with Bart Wilson about taking and digital goods. In 2014, we published “An Experiment on Protecting Intellectual Property”.

And now we have a new working paper titled “You Wouldn’t Steal a Car: Moral Intuition for Intellectual Property” that makes a clean comparisons between the taking of rivalrous physical goods versus nonrival digital goods.

We find that people do not feel bad about taking the digital goods, or “pirating.” We even find that, in a controlled experiment with no previous context for what we might call intellectual property protection, the creators of these digital goods do not call such taking stealing either. It seems to be understood that folks will take and share if they can.

The proposed reason for artificially restricting the taking and resale of intellectual property is that creators need a way to profit from providing a public good. (Intellectual property rights in the U.S. Constitution are covered by Article I, Section 8.)

I said in the interview, “If you were able to just give a song to all of your friends, you probably would, and then that artist might not be able to make songs the next year.”

Thus, I suggested, “The subscription economy is a reaction to the fact that most people don’t view it as wrong to take things they can take and not necessarily pay for them. Companies had to find a new way to be able to make money and stay in business.”

I’ll clarify that I have not done quantitative research to prove that subscription models emerged causally because of pirating. I’m speculating. Another side to this is that people simply want to stream and companies are providing exactly what people want (despite the complaints circulating on TikTok). People reminisce about the “golden days” of early Netflix, but most people forget that the company was losing money at that time.  Media production and distribution companies have to make money to stay in business.

At the end, the host asked me, “… what does it mean for who we are as humans, more of an existential question, where we are going with this age?”

That’s a deeper question than you might expect for a conversation about CD-ROMs. However, people do care about having some tangible form of art about them. Think of the ancients buried alongside beads and dolls. Netflix will never be the only thing that people want. As for Gen Z being upset about convenient Spotify, “what does it mean for who we are” has got to be part of it.

References:

“An Experiment on Protecting Intellectual Property” (2014) with Bart Wilson. Experimental Economics, 17:4, 691-716.

“You Wouldn’t Steal a Car: Moral Intuition for Intellectual Property,” with Bart Wilson 

As an aside, furthermore, I’ll say here on the blog that Gen Z is by some measures the most entertained generation in history. For spiritual, not financial, reasons, I encourage them to cancel their subscriptions, take out their AirPods, and feel the silence and dread for a week.

Consumption Then and Now: 2019-2025

Zachary BartschLeave a comment

In aggregate, consumer spending on different broad categories of goods is relatively stable. The year 2019 feels like forever ago – and it was more than half a decade ago. But since then we’ve been hit by a pandemic and an AI shock and a trade war, and tariffs, and… plenty. We live in different times. Except, broadly, consumers are spending their money much as they did six years ago. Let’s compare some data from the 2nd quarter of 2019 and 2025.

First the Spending

Consumption spending is categorized in the below table.    

If total consumption spending (not inflation-adjusted) is 100%, then how has the allocation of spending changed? Below is a graph comparing each consumption component’s 2019 share versus 2025. The dotted line denotes an identical share. I haven’t labeled the categories because, suffice it to say, that spending shares are little different. None is more than one percentage point different.

The below figure displays the spending share difference. We’re spending less of our consumption on gasoline and the like, recreational services, and clothing. Surprisingly, we’re also spending less on healthcare and food for off-premises consumption (non-restaurants). However, we’re spending a greater share on housing, recreational goods, food services for on-premises consumption (restaurants). 

Let’s get Real

Continue reading →

2025 In Books

James BaileyLeave a comment

What I read in 2025:

Econ Books I Wrote Full Reviews Of:

The Little Book of Common Sense Investing: “John Bogle, the founder of Vanguard, wrote a short book in 2006 that explains his investment philosophy. I can sum it up at much less than book length: the best investment advice for almost everyone is to buy and hold a diversified, low-fee fund that tracks an index like the S&P 500.”

The Little Book that Beats the Market: “Greenblatt offers his own twist on value investing that emphasizes just two value metrics- earnings yield (basically P/E) and return on capital (return on assets). The idea is to blend them, finding the cheapest of the high-quality companies…. Greenblatt’s Little Book is a quick and easy way to learn a bit about value investing, but I think Bogle’s Little Book has the better advice.”

When Genius Failed: “Myron Scholes was on top of the world in 1997, having won the Nobel Prize in economics that year for his work in financial economics, work that he had applied in the real world in a wildly successful hedge fund, Long Term Capital Management. But just one year later, LTCM was saved from collapse only by a last-minute bailout that wiped out his equity (along with that of the other partners of the fund) and cast doubt on the value of his academic work…. The story is well-told, and the lessons are timeless”

The Art of Spending Money: “Its main point is that people tend to be happier spending money on things they value for their own sake- rather than things they buy to impress others, or piling up money as a yardstick to measure themselves against others (this is repeated with many variations). Overall it is well-written at the level of sentences and paragraphs with well-chosen stories and quotes, but I’m not sure what it all adds up to.”

Non-fiction I didn’t previously mention here:

The Napoleonic Wars: A Global History, Alexander Mikaberidze: Aims to educate us about the surprisingly major effects of the Napoleonic Wars outside of Europe. Succeeds wildly; I also learned a lot about the main European theatre. Hadn’t realized how poor British Russian relations were in this era, since they defeat Napoleon together in the end. But they were heading for war early on until a czar was assassinated, then actually went to war in the middle over Sweden and trade. Outside Europe, Britain briefly took Buenos Aires and Montevideo, and accidentally (?) captured Iceland, along with all the French and Dutch overseas colonies.

Talent: How to Identify Energizers, Creatives, and Winners Around the World, Tyler Cowen and Dan Gross: A business book that works best for someone who hires a lot. How to attract and retain diverse candidates, including but not limited to the most-discussed types of diversity. Tyler says that when he lived in Germany people often thought he was Turkish, and one told him to ‘get out of here, you Turk’.

Almost Human: The Astonishing Tale of Homo Naledi and the Discovery That Changed Our Human Story, Lee Berger and John Hawks: The story of how the authors excavated a cave in South Africa that held many remains from a previously unknown type of early human. Good storytelling, good explanations of what we know about early humans from other discoveries, and surprisingly frank discussions of the academic politics behind getting paleontology research funded.

The Ends of the World, Peter Brannen: The book explains Earth’s 5 previous mass extinctions and the geology / science behind how we found out what we know about them. Written explicitly about what all this means for current global warming; see my full review on that here.

Annals of the Former World, John McPhee: New Yorker writer follows geologists from New York to San Fransisco to learn about the land in between. Published as a series of 4 books (Basin and Range, In Suspect Terrain, Rising from the Plains, Assembling California), each one focusing on a different geologist and region. McPhee is known as an excellent stylist but the books are also quite substantive, I feel like I learned a lot.

Fiction

The Works of Dashiell Hammet: My friend Dashiell mentioned that this is who he was named after, and that Red Harvest was a good book of his to start with. He was right, and it lead me to read many others: The Thin Man (you may have heard of Hammet because of the movies adapted from this and The Maltese Falcon), Best Cases of the Continental Op, Honest Gain: Dicey Cases of the Continental Op. Almost every story has a twist more interesting than “the murderer isn’t who you suspected”.

Tress of the Emerald Sea, Brandon Sanderson. Sanderson is one of the most prolific authors of our time, so where do you start with him? He suggests “Mistborn or Tress of the Emerald Sea, depending if they want something more heisty and actiony or something more whimsical.”

The Frugal Wizard’s Handbook for Surviving Medieval England, Brandon Sanderson: Sanderson doing his best impression of Terry Pratchett rewriting Mark Twain’s Connecticut Yankee in King Arthur’s Court, with shades of Scott Meyer’s Off to Be the Wizard.

Janissaries, Jerry Pournelle: What if instead of going to a more primitive world alone, you got sent there with an army?

The Narrow Road Between Desires, Patrick Rothfuss: Enough of an expansion of The Lightning Tree to be worth reading, but at this point anything Rothfuss does other than finally finish Doors of Stone can’t help but be disappointing.

Beguilement, Lois McMaster Bujold: Her Sci Fi works are great so I looked forward to her take on the Fantasy genre, but this turns out to be her take on the Romance genre.

Meta

This year I realized that Hoopla has a lot of books that Libby doesn’t, it is worth checking both apps for a book if you have access to libraries that offer both