Hazards of the Internet of Things 2. Big Brother Is Watching Your Every Breath

Scott Buchanan1 Comment

There seems to be something of a generational divide as to how important is your personal privacy. Folks under, say, age 40, have lived such a large fraction of their lives with Facebook and Amazon and Google and Twitter logging and analyzing and reselling information on what they view and listen to and say and buy, that they seem rather numb to the issue of internet privacy. Install an Alexa that ships out every sound in your home and a smart doorbell that transmits every coming and going to some corporate server, fine, what could possibly be the objection?  So what if your automobile, in addition to tracking and reporting your location, feeds all your  personal phone text messages to the vehicle manufacturer?

For us older folks whose brain pathways were largely shaped in a time when communication meant talking in person or on a (presumably untapped) phone, this seems just creepy. Polls show that a majority of Americans are uneasy about the amount of data on them being collected, but “do not think it is possible to go about daily life without corporate and government entities collecting data about them.”

There are substantive concerns that can be raised about the uses to which all this information may be put, and about its security. Per VPNOverview:

Over 1,800 data leaks took place last year in the US alone, according to Statista. These breaches compromised the records of over 420 million people.” . With smartwatches having access to so much sensitive information, here’s what kind of data can fall into the wrong hands in case of a data leak:

  • Your personal information, including name, address, and sometimes even Social Security Number
  • Sensitive health information collected by the smartwatch
  • Login credentials to all the online platforms connected to your smartwatch
  • Credit card and other payment information
  • Digital identifiers like your IP address, device ID, or browser fingerprint
  • Remote access information to smart home devices

Several times a year now, I get notices from a doctor’s office or finance company or on-line business noting blandly that their computer systems have been hacked and bad guys now have my name, address, birthdate, social security number, medical records, etc., etc. (They generously offer me a year of free ID fraud monitoring. )

The Internet of Things (IoT) promises to ramp up the snooping to a whole new level. I took note four years ago when Google acquired Fitbit. At one gulp, the internet giant gained access to a whole world of activity and health data on, well, you. The use of medical and other sensors, routed through the internet, keeps growing. One family member uses a CPAP machine for breathing (avoid sleep apnea) at night; the company wanted the machine to be connected on the internet for them to monitor and presumably profit from tracking your sleep habits and your very breath. And of course when you don a smart watch, your every movement, as well as your heartbeat, are being sent off into the ether. (I wonder if the next sensor to be put into a smart watch will be galvanic skin response, so Big Tech can log when you are lying).

According to a senior systems architect: “The IoT is inevitable, like getting to the Pacific Ocean was inevitable. It’s manifest destiny. Ninety eight percent of the things in the world are not connected. So we’re gonna connect them. It could be a moisture sensor that sits in the ground. It could be your liver. That’s your IoT. The next step is what we do with the data. We’ll visualize it, make sense of it, and monetize it. That’s our IoT.”

When my kids were little, we let them use cassette tape players to play Winnie the Pooh stories. With my grandkids, the comparable device is a Yoto player. This also plays stories (which is good, better than screens), but it only operates in connection with the internet. The default is that the Yoto makers collect and sell personal information on usage by you and your child (which would include time of day as well as choice of stories). You can opt out, if you are willing to take the trouble to write to their legal team (thanks, guys).

There are cities in the world, in China but also some European cities, where there are monitoring cameras (IoT) everywhere. Individuals can be recognized by facial features and even by the way they walk; governmental authorities compile and track this information. These surveillance systems are being sold to the public with the promise of increased “security.” Whether it really makes we the people more secure is heavily dependent on the benevolence and impartiality of the state powers. Supposing a department of the federal government with access to surveillance data became politicized and then harassed members of the opposing party?

I’ll conclude with several slides from  Timothy Wallace’s 2023 presentation on the Internet of things:

The dystopian  novel 1984 by George Orwell was published in 1949.  It describes a repressive totalitarian state, headed by Big Brother, which was characterized by pervasive surveillance. Ubiquitous posters reminded citizens, “Big Brother is watching you.” Presumably the various cameras and microphones used in the mass surveillance there were paid for and installed by the eavesdropping authorities. It is perhaps ironic that so many Americans now purchase and install devices that allow some corporate or governmental entity to snoop them more intimately than Orwell could have imagined.

Avoid subfield tunnel vision

mdmakowskyLeave a comment

Folks are dunking on a tweet and, indirectly, the underlying research connecting mosquito nets to the degredation of seagrass meadows.

I’ll be honest, the implication that free mosquito nets are net negative for poverty and health sent me into that special kind of rage that can only be fomented by someone on the internet being both condescending and egregiously wrong at the same time. Do I even need to go over why this is bad? Why malaria prevention at a continental level outweighs hypothesized marginal seagress loss? I didn’t think so.

What I want to talk about is is subfield tunnel vision. A common piece of advice passed on to each generation of PhD students is to become a genuine expert in something. If you write a dissertation on the effect of malaria nets on elementary school attenance in Uganda, then you should become an expert, on the bleeding edge of all related-research, on mosquitos, nets, and primary education in Africa. As you career takes shape, the both the questions that strike you as important and the opportunities presented to you by institutions and administrators will shape your research. Bit my bit you will be shaped (and occasionally sanded down) into an ever-narrower expert. And that’s fine, that’s the story of incentives to specialize that comes for us all (NB: if your mind went to one of the public intellectual generalists you admire, do note that being a generalist in the modern world is very much its own niche specialty).

Specialization is good, but do take care that while your expertise becomes narrower that your view of world remains wide. We all know the relevant cliche about all the world becoming a nail whilst holding a hammer, but this is about about the rationalizing of tools and techniques. This is about how your specialization fits within the world and, more specifically, how the consquences of choices you might advise stand in the grand utilitarian calculus.

The authors of the paper in question are the Chief Scientific Officer and Chief Conservation Officer of Project Seagrass. These are people who have dedicated their lives to the preservation of seagrass meadows and, in turn, ocean health and the global stock of fish. Should we be surprised that their paper’s abstract closes with “We conclude that the use of mosquito nets for fishing may contribute to food insecurity, greater poverty and the loss of ecosystem functioning”? No, we should not. First, you could argue that they are just putting, in words, the implied signs of their analysis, and not the relative magnitudes. Maybe they aren’t implying mosquito nets are a net negative. You could be generous and argue that all they are trying to say is “Mosquito nets are great, but as soon as the malaria vaccine is universally distributed we should ditch all these nets because the costs will outweigh the benefits.

I don’t think they are, though. They lean heavily on Short et al (2018) and their claim that fishing nets are the primary use of freely provided mosquito netting. That Short et a result appears to be based almost entirely on an online survey with 113 respondents. The implication is that the massive reduction in malaria specifically attributed to the distribution of free mosquito nets is in fact a mirage, that these nets are instead finding their way into the ocean as improvised capital for small scale fishing operations (“artisanal fishing”, in the parlance of the paper), with the resulting consequence of catching additional juvenile fish at the margin, harming the future stock of fish.

The second part of that equation seems entirely feasible! Unintended costs happen. What I want to emphasize is that the authors are narrowly focused on establishing the cost of future fish in seagrass meadows while also being overly credulous of what is, I’m sorry, a ridiculously crappy survey that dismisses the enormous benefits of those nets to save human lives, especially children under the age of 5.

I don’t think the authors are being selfish, have ill-motivations, or have been bought off by a global conspiracy of wealthy fishery magnates. I just think they have succumbed to a bias that afflicts every scholar at one time or another, myself included. Gatekeepers won’t publish your paper in top journals, fund your research with needed grants, or invite you to prestigious conferences unless you hype your work to the absolute maximum of feasible importance. Spend a couple years as the conductor on your subfield’s hypetrain and maybe you start to believe it just a wee bit too much. Your subject of concern remains concrete, the questions imperative, while everything else increasingly fades into the realm of the abstract, the consequences negotiable.

As for the twitter commenter being dunked on, I just think it’s classic overeagerness to denigrate everything touched by someone you find odious. SBF is a bad person, did bad things, has bad hair. Sure, but maybe don’t? Maybe leave the most successful malaria prevention endeavor in the history of the world out of your public disgust for a <checks notes> young cryptocurrency embezzler? Don’t let your deserved anger for a genuinely bad person make you dumber at the margin. Bad people already impose costs on us all. Letting them skew your view of everything they touch just makes their societal footprint bigger.

Intelligence for School Closing

Joy Buchanan1 Comment

I don’t have much time to write this week because I lost so many work hours to schools closing for “weather.”

Tyler has been saying that we should welcome more intelligence (in the form of LLMs – I’m not getting any smarter). What would we want intelligence for? How about reducing the error rate on school closing?

First, I will recognize that things are already getting better due to computers. The internet and texting and radar help. Compared to when I was a child in New Jersey, it’s more efficient to text all the parents the night before, as opposed to having people get up at 6am to scan the radio for news. Weather forecasting has presumably gotten better.

Now my rant: Right around what was already a three-day official weekend, school was closed three times. Even my kids were irate when that last day was announced. In my opinion, only one of those closures was justified for extreme weather.

There is a lot of dumb in a city. People complain about routine processes being suboptimal. It would be great if we humans could figure out ways to apply more intelligence to these local problems and make less mistakes.

This is a joke for any readers in cold climates. My Alabama kids thought it was fun to collect icicles because they have almost never seen them before.

Teaching Taxes w/GIFs

Zachary Bartsch2 Comments

Last time the gifs were simply about price & quantity and welfare. I’m sharing some more GIFs, this time in regard to welfare and taxes.

First, see the below gif. It shows us that both consumer surplus (blue area) and producer surplus (red area) always rise if there is a demand increase (assuming the law of supply and law of demand).

Next, let’s consider a basic tax. We can represent it as the difference between what the demander pays and what the supplier receives. The bigger the tax, the bigger the difference between the two.

Now let’s combine the tow ideas: If taxes rise, then the quantity transacted falls, price paid rises, price received falls, and both consumer and producer surplus fall. Not only that, since there is an inverse relationship between the tax rate and the quantity transacted, it may be that increasing the tax rate more *reduces* revenue. The idea that there is a tax revenue maximizing tax rate is illustrated below right and is known as the Laffer curve.

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Where is Health Care The Biggest Part of the Economy?

James Bailey1 Comment

State health care spending usually gets reported in terms of dollars per capita, leading to maps like this that show Alaska as the highest-spending state and Utah as the lowest:

Source: https://www.kff.org/other/state-indicator/health-spending-per-capita/

But states differ greatly in how rich they are and how much they have to spend. I wanted to know the states where health care takes up the largest and smallest share of the economy, so I got the data:

Health Care Spending as Share of State Gross Domestic Product in 2019:

Source: I divided 2019 National Health Expenditure Provider data on total health spending by 2019 Gross State Product data.

You can see that health spending as a share of GDP looks pretty different from health spending in raw dollars. We’ve gone from a high-spending North and low-spending South to more of a mix. Health spending is now highest in West Virginia, where it makes up more than a fourth of the economy; and lowest in Washington State and Washington D.C., where it makes up less than one ninth of the economy.

The biggest change when considering things this way is in Washington D.C., which has the highest spending in $ terms but the lowest as a share of GDP because it has an enormous GDP per capita. Many other states that spend a lot in $ also fall a lot in the rankings due to high GDP per capita, including Alaska, New York, and Massachusetts. The states that rise the most in this ranking are poor states like Arkansas, Alabama, and Mississippi. Mississippi rises the most, gaining 37 spots in the rankings of highest-spending states when we go from $ per capita to share of GDP.

I share the data here so you can do your own comparisons:

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Follow the Money in Politics

Jeremy Horpedahl5 Comments

As we enter election season, I can sympathize with those that want to ignore it as much as possible. But if you do want to follow it closely, here is my advice: talk is cheap, so follow the money.

And by money, I am not referring to campaign contributions. I mean prediction markets, where people are putting their money where their mouth is, rather than just making predictions based on their own intuition (or their own “model,” which is just a fancy intuition).

There are a number of betting markets online today, but a good aggregator of them is Election Betting Odds.

For example, here is their current prediction for which party will win the Presidency:

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Hazards of the Internet of Things 1. Hacking of Devices (Baby Monitors, Freezers, Hospital Ventilators) in Homes and Institutions

Scott BuchananLeave a comment

For my birthday this year, someone gave me a “smart” plug-in power socket. You plug it into the wall, and then can plug in something, say a lamp, into the smart socket, which you can then control via the internet. Yay, I am now a part of the Internet of Things (IoT). What could possibly go wrong?

However, my Spidey-sense started to tingle, and I chose to give this device away.  At that point, I was thinking mainly of the potential for such devices to get hacked and then recruited to be part of a vast bot-net which can then (under the control of bad actors) conduct massive attacks on crucial internet components. For instance,

Mirai [way back in 2016] infected IoT devices from routers to video cameras and video recorders by successfully attempting to log in using a table of 61 common hard-coded default usernames and passwords.

The malware created a vast botnet. It “enslaved” a string of 400,000 connected devices. In September 2016, Mirai-infected devices (who became “zombies”) were used to launch the world’s first 1Tbps Distributed Denial-of-Service (DDoS) attack on servers at the heart of internet services.  It took down parts of Amazon Web Services and its clients, including GitHub, Netflix, Twitter, and Airbnb.

But it turns out the hazards with smart devices are widespread indeed. IoT devices are so useful for bad guys that that they are attacked more than either mobile devices or computers. One layer of hazard is the hacking of specific, poorly-secured devices in a home or institution, with subsequent control of devices and infiltration of broader computing systems. This will be the focus of today’s blog post. Another layer of hazard is the use to which masses of (sometimes private and personal) data snooped from “unhacked” smart devices are put by large corporations and state actors; that will be considered in a part 2 post.

Here are results from one study from nearly three years ago:

https://www.thalesgroup.com/en/markets/digital-identity-and-security/iot/magazine/internet-threats

A study published in July 2020 analyzed over 5 million IoT, IoMT (Internet of Medical Things), and unmanaged connected devices in healthcare, retail, manufacturing, and life sciences. It reveals an astonishing number of vulnerabilities and risks across a stunningly diverse set of connected objects….

The report brings to light disturbing facts and trends:

  • Up to 15% of devices were unknown or unauthorized.
  • 5 to 19% were using unsupported legacy operating systems.
  • 49% of IT teams were guessing or had tinkered with their existing IT solutions to get visibility.
  • 51% of them were unaware of what types of smart objects were active in their network.
  • 75% of deployments had VLAN violations
  • 86% of healthcare deployments included more than ten FDA-recalled devices.
  • 95% of healthcare networks integrated Amazon Alexa and Echo devices alongside hospital surveillance equipment.

…Ransomware gangs specifically target healthcare more than any other domain in the United States. It’s now, by far, the #1 healthcare breach root cause in the country. …The mix of old legacy systems and connected devices like patient monitors, ventilators, infusion pumps, lights, and thermostats with very poor security features are sometimes especially prone to attacks.

So, these criminals understand that stopping critical applications and holding patient data can put lives at risk and that these organizations are more likely to pay a ransom.

I know people in organizations which have been brought to their knees by ransomware attacks. And I have read of the dilemma of the guy who was on vacation in the Caribbean or whatever, and got a text from a hacker instructing him to deposit several hundred dollars in a Bitcoin account, or else his “smart” refrigerator/freezer would be turned off and he would come home to a spoiled, moldy mess.

What brought all this IoT stuff to my attention this week was a talk I ran across from retired MIT researcher Timothy Wallace, titled “Effects, Side Effects and Risks of the Internet of Things”, presented at the 2023 American Scientific Affiliation meeting. The slides for his talk are here. I will paste in a few snipped excerpts from his talk, that are fairly self-explanatory:

(My comment: 10 billion is a really, really big number…)

(My comment: this type of catastrophic compromise of computer systems being enabled by hacking some piddling little IoT device that happens to be in the home or institution local network is not uncommon. Which is why I am reluctant to put IoT devices, especially from no-name foreign manufacturers, on my home wireless network).

Many of these vulnerabilities could in theory be addressed by better practices like always resetting factory passwords on your smart devices, but it is easy for forget to do that.

And just to end on a light note (this cartoon also lifted from Wallace’s slides):

You don’t know what you will like

mdmakowskyLeave a comment

There is no shortage of advice that falls along the lines of “If you aren’t eating at least one disappointing meal a weak/month/etc, then you aren’t trying enough new recipes or restaurants.” It all falls along the lines of increasing your risk of experiences that are subpar relative to what you already know you like so that you can increase your probability of adding something new to your portfolio of “likes” while also getting that one-time dopamine hit that comes from personal discovery.

It’s a good framing and broad set of advice. I endorse it.

What’s interesting though is that there’s a greater breadth to the foundational concept. Our lives are sufficiently short that we really don’t have that great of an idea of what we like and don’t like, especially for forking decisions that don’t allow for easy exploration of the counterfactual. At the same time, dedicating your life to the repeated pure act of discovery carries a certain…shallowness. To perpetually be on the lookout for the new and better is to never invest in the experiences that fill us with satisfication and joy. To get really good at doing what makes us happy. To get really good at being happy.

So where’s the balance? I don’t know and I am reasonably certain that’s at the core of the human condition, so I don’t think I going to come up with the answer in a blog post. But it strikes me that cultivating a certain taste for disappointment, not unlike a particularly peaty Scotch, is an incredible adaptation towards a better overall lived experience.

Which is to say that, after 30 years of telling anyone who would listen that I would never want a cat, that I refuse to get a cat, that a cat would offer no value to me, I absolutely love having a cat. My cat rules and it’s left me wondering what other things am I absolutely convinced I have no interest in that would fill my life with greater joy. What are things that I think I can’t stand, that other people love, that I might actually find incredibly-well suited to my tastes. A random list of things that, at the moment, I have no interest in:

  1. Motorcycles
  2. Cricket (the sport)
  3. Lasik
  4. Traveling to (actually) dangerous countries
  5. Committing crimes
  6. Running for office
  7. Eating any dish that includes raw chicken

That’s in no particular order, but I can’t help but wonder if there is something on that list I should give a go. City council? Visiting the Middle East? Larceny? To be clear, I’m not going to do any of those things, but that doesn’t me I shouldn’t. But there is a balance to having experiences you might not like, you probably won’t like, and, every few years, you think you definitely won’t like. Just in case.

Teaching Resource: List of Econ Podcasts for Spring 2024

Joy BuchananLeave a comment

In addition to all the usual items for a principles of macroeconomics class, I’m asking my students to listen to one podcast episode this semester. They have to write a short summary on a discussion board for credit.

It took me a bit of time to collect this list of links. I also give them some discretion to find their own episode, but I’m not posting my rules on that point here. This list is something you can copy, paste, and modify. The point is to have all the web links in one place so that students can just click around. There have been many great podcasts over past 2 decades, but I list relatively new content so that we get a bit of “current events” thrown in. So, even if you’ve assigned podcasts before, this new list might be helpful.

Re-release: Claudia Goldin on the Economics of Inequality
Conversations with Tyler
https://cowenconvos.libsyn.com/re-release-claudia-goldin-on-the-economics-of-inequality
https://podcasts.apple.com/us/podcast/re-release-claudia-goldin-on-the-economics-of-inequality/id983795625?i=1000630726259

Reid Hoffman on the Possibilities of AI
Conversations with Tyler
https://cowenconvos.libsyn.com/reid-hoffman-0
https://podcasts.apple.com/us/podcast/reid-hoffman-on-the-possibilities-of-ai/id983795625?i=1000618616078

Simon Johnson on Banking, Technology, and Prosperity
Conversations with Tyler
https://cowenconvos.libsyn.com/simon-johnson
https://podcasts.apple.com/us/podcast/simon-johnson-on-banking-technology-and-prosperity/id983795625?i=1000613373427

Tom Holland on History, Christianity, and the Value of the Countryside
Conversations with Tyler
https://podcasts.apple.com/us/podcast/tom-holland-on-history-christianity-and-the/id983795625?i=1000605361914
https://cowenconvos.libsyn.com/tom-holland

Brad DeLong on Intellectual and Technical Progress
Conversations with Tyler
https://cowenconvos.libsyn.com/brad-delong
https://podcasts.apple.com/us/podcast/brad-delong-on-intellectual-and-technical-progress/id983795625?i=1000601069514

Mark Carney on Central Banking and Shared Values
Conversations with Tyler
https://cowenconvos.libsyn.com/mark-carney
https://podcasts.apple.com/us/podcast/mark-carney-on-central-banking-and-shared-values/id983795625?i=1000523160780

EconTalk Episodes
Tyler Cowen on the GOAT of Economics
https://simplecast.econtalk.org/episodes/tyler-cowen-on-the-goat-of-economics

Jennifer Burns on Milton Friedman
https://simplecast.econtalk.org/episodes/jennifer-burns-on-milton-friedman

Michael Munger on How Adam Smith Solved the Trolley Problem
https://simplecast.econtalk.org/episodes/michael-munger-on-how-adam-smith-solved-the-trolley-problem

Daron Acemoglu on Innovation and Shared Prosperity
https://simplecast.econtalk.org/episodes/daron-acemoglu-on-innovation-and-shared-prosperity

Michael Munger on Industrial Policy
https://simplecast.econtalk.org/episodes/michael-munger-on-industrial-policy

Macro Musings Episodes
Tyler Cowen on the Greatest Economist of All Time and Other Macro Awards
https://macromusings.libsyn.com/tyler-cowen-on-the-greatest-economist-of-all-time-and-other-macro-awards

Nicolas Cachanosky on Dollarization in Argentina
https://macromusings.libsyn.com/nicolas-cachanosky-on-dollarization-in-argentina

Charlie Evans on the Past, Present, and Future of U.S. Monetary Policy
https://macromusings.libsyn.com/charles-evans-on-the-past-present-and-future-of-us-monetary-policy

Shruti Rajagopalan started a new podcast called Ideas of India. 
https://www.mercatus.org/ideasofindia

Or you can listen to Shruti here: https://www.mercatus.org/hayekprogram/hayek-program-podcast/peter-boettke-austrian-economics-and-knowledge-problem-pt-1

Women in Economics Podcast from the St. Louis Fed
Women in Economics: Isabel Schnabel
https://www.stlouisfed.org/timely-topics/women-in-economics/isabel-schnabel

Women in Economics: Heidi Hartmann
https://www.stlouisfed.org/timely-topics/women-in-economics/heidi-hartmann

Women in Economics: Stephanie Aaronson
https://www.stlouisfed.org/timely-topics/women-in-economics/stephanie-aaronson

Women in Economics: Christina Romer, Janice Eberly and Shelly Lundberg
https://www.stlouisfed.org/timely-topics/women-in-economics/romer-eberly-lundberg

Cal Newport on Smartphones for Kids

Joy BuchananLeave a comment

EP. 246: KIDS AND PHONES

Are smartphones bad for kids? Cal walks through the data on this question, including how researchers came to be worried, their findings, critiques of their findings, and where we are today. He then gives recommendations for how to think about technology when it comes to your kids.

In May of 2023, Cal Newport shared well-informed opinions about whether smartphones harm young people. In the first half of the podcast, he talks about depression and loneliness data.

Minute 30 of the podcast: Screentime harms teenagers because they inhibit the development of critical thinking skills. Deep critical thinking skills require training. Reading an analog book is better than screens (see my review of Tyler’s AI generative book and poastmodernism).

See my summary of Emily Oster on video games for kids. She does not clutch her pearls over violent video games. However, she is concerned about what activities get crowded out by screentime. She is especially worried about sleep, because on that topic the data are clear.

Minute 31, Call Newport: Tweens and teens scroll on their phones for too long instead of going to sleep. A 13-year-old boy with a smart phone will “be up until 4 in the morning.” A tween told him that middle school girls arrive at school too exhausted to function because they have been on their phones all night.

FYI, if you are the parent in an Apple device network, you can set time limits on the devices in your family. I filed this report about smart watches last year, incidentally in the same week as the release of Newport’s podcast episode.