Inside Job
Apr 9, 2012

This evening I finally got around to watching this award winning documentary. The film is way too Michael Moore for me. The hallmark of this type of film making is the "gotcha" moment. For example, Inside Job shows clips of government/industry officials making incorrect predictions, repeatedly uses footage from a congressional hearing in which legislators sputter angrily at the heads of the big investment banks, and edits interviews with Wall Street's defenders to make them look bad. I find this style of argument insulting to my intelligence. There are two sides to every story, and I feel like I am not hearing the other side.

I actually agree with most of the points the documentary is trying to get across. Investment banks betting against the same assets they are selling to clients is highly questionable business practice. Economists should reveal funding sources or conflicts of interest in published papers. The incentives of the financial industry cause managers to take overly risky bets, and the financial industry has a cozy relationship with the government. I just do not need to have the argument shoved down my throat. The truth is on the film's side. All it needed to do is let the facts speak. I wish Inside Jobs had been more Frontline--present the facts, and let me decide.

Should we eat fish?
Mar 12, 2012

Last night I watched this old bloggingheads discussion between Peter Singer and Tyler Cowen. The interview was mostly Tyler asking Peter tough questions about his positions on a number of issues. The one I want to focus on here is the question of eating fish. Some vegetarian bloggers have claimed the debate was about whether fish suffer. I don't think this is correct. Tyler agrees that fish suffer when they are suffocated in a net, or their organs explode when quickly brought to the surface. Tyler's stance is that fish live by the laws of Malthus, and thus are doomed to painful deaths regardless of whether they are killed by humans or other predators/disease. The marginal effect of fishing, then, is to deprive a fish of a few days or weeks of life--but not to cause fish more pain--and to provide humans with a little bit of pleasure. A utilitarian like Peter might believe that the benefit to humans is greater than the loss to the fish, and be in favor of fish eating.

I think that questioning Tyler's premise is in order here. Is it true that fish in the wild nearly always die deaths equivalent in pain to being killed by fishermen? Also, notice that Tyler focuses on the stronger case of wild game rather than farmed animals.

The debate between Peter and Tyler is one of the best I have seen in a long while. Don't miss it if you are interested in Peter Singer's ethics.

"U: Well, what do you think: We can bury her or burn her?
M: Well, um, which would you recommend?
U: Well they're both nasty. If we burn her, she gets stuffed in the flames, crackle, crackle, crackle, which is a bit of a shock if she's not quite dead. But quick. And then we give you a handful of the ashes, which you can pretend were hers.
M: (timidly) Oh.
U: Or, if we bury her she gets eaten up lots of weevils and nasty maggots, which as I said before is a bit of a shock if she's not quite dead." -Monty Python

Google News pointed me to a thought-provoking Wall Street Journal editorial arguing against organ donation. The editorial argues that legal brain death may not be the same as "actual" death in relevant ways. First, the standard brain death tests check for activity in the stem, but don't look for higher-level brain cortex activity. It may be possible to have higher level brain waves even if the stem is not functioning. Second, the body may exhibit reactions to the organ removal process such as high blood pressure or elevated heart rate. My take is that the editorial wants to imply that the first point means a brain dead body may still be thinking, and the second means that a brain dead body may still feel pain.

I have been a proponent of organ donation, so after reading the article I wanted to make at least a mental rebuttal to the editorial. My first stop was the wikipedia page on brain death. Traditionally, medicine considered someone dead when certain physical processes like breathing and the heartbeat stopped. By the 1960's, however, doctors were able to revive people whose hearts had stopped, and keep biological processes functioning in bodies with non-functional brains. The old criteria for death were no longer applicable, so a new measure was invented: brain death.

The current criteria applicable in most US states is called the Uniform Determination of Death Act. The complete act is only five sentences long, and the first sentence reads:

"An individual who has sustained either (1) irreversible cessation of circulatory and respiratory functions, or (2) irreversible cessation of all functions of the entire brain, including the brain stem, is dead."

I don't think that the author of the Wall Street Journal editorial would disagree with this part. If the entire brain has irreversibly ceased to function, then organ donation has no cost to the dead person and a large benefit to others. The issue is presumably related to sentence two:

"A determination of death must be made in accordance with accepted medical standards."

The editorial author believes that the current medical tests are not thorough enough. A quick glance at recent neurology papers belies this opinion. Not surprisingly, the medical community is very worried about false brain death positives. This recent article in neurology reviews the literature from 1995 to the present, and finds that no one declared brain dead (using some criteria established in 1995) has ever been reported to regain neurological function. A casual reading of the article recommended procedure for establishing brain death convinced me that standard determination is very careful.

The last point I want to make is that there is a trade-off between establishing that someone is truly brain dead, and the urgent need for an organ donation. If there is a one in a billion chance that you will regain some neurological function, versus several people that will likely significantly extend their lives with your organs, it would still be ethical to donate.

In a post today, Andrew Gelman quotes himself on the silliness of microfoundations in economics. The replies in the comments to this post, and his original post, are very nicely written, and represent diverse opinions.

Ok, now let's gather around the campfire. The economics lore on microfoundations begins with the Phillips curve. Until the 1970's, mainstream economists believed that there was a permanent well-defined trade-off between inflation and unemployment. A central bank could lower unemployment, but only at the expense of increasing inflation. Then in the 1970's there was both high unemployment and high inflation--so-called stagflation. On the back of this episode, Bob Lucas made a famous critique of treating historical macro-level relationships like the Phillips curve as fixed when doing counterfactual policy experiments. Unless analysis begins at the level of (unchanging) technological possibility and consumer preferences, altering government policy may affect historical or aggregate relationships which earlier economists took at fixed.

This argument still seems convincing to me, at least. The Gelman post above was written in response to Paul Krugman's post on a similar topic from a couple of days ago. Krugman's points are reasonable, but I don't think that he is really complaining about using microfoundations. Boiling what he wrote down, Krugman has two main points. The first is that reduced form macro relationships are good for intuition, and help us to rapidly interpret the world. The second is that the microfoundations used in economics are patently wrong, and not even a good approximation to the way people behave. Both points are well taken, especially the second. I agree that reduced form relationships aid intuition, but ultimately I would like to be able to derive them from first principles if need be.

Krugman uses a bunch of metaphors from the natural sciences. Physicists often use Newtonian laws as approximations of low energy interactions, even though they know that they are incorrect. If push came to shove, however, the exact calculations could be made--physicists know which events are appropriate to be approximated with Newtonian laws and which are not. The problem is that economists don't know when it is ok to use reduced form relationships, because economists (debatably) don't have a good approximation to how people actually behave. Krugman's second point is right on the money. To really understand the way macro-level economics works, microfoundations are really important. However, that doesn't mean that any old assumptions about the way people act are preferable to just using macro-level relationships. Microfoundations have to at least reasonably approximate the way people actually behave. As far as predicting policy affects goes, garbage in garbage out.

The deserving poor
Mar 4, 2012

Recently AidSpeak wrote a meditation on what the poor deserve (ht: Good Intentions). The point is that your view on how deserving the poor are comes down to why you think the poor are poor. Are the poor themselves at fault? AidSpeak not surprisingly believes "that the poor deserve the best we’re capable of, if for no other reason than simply by virtue of their humanity."

The post reminded me of a point from the Peter Singer book "How are we to live?". I read the book last summer, and I just picked it up from the library to skim it again. If I remember correctly, Singer considers the question of what the poor deserve, but ultimately sidesteps it. As long as your beliefs are not extreme, you probably should be paying more attention and doing more towards helping those in extreme poverty. More on this once I have finished reviewing the book.

Bryan Caplan also frequently posts on this topic. His view is that the deserving poor are those that are poor through no fault of their own. Examples are neglected children and would-be immigrants. Undeserving poor are those who have access to low-paying unpleasant jobs and do not take them. In practice, it can be hard to tell the difference. One problem with this method of separating the poor is that it is hard to imagine that anyone couldn't have exited poverty if they had been in the right place at the right time (buying the right lottery ticket, for example). Is not being in the right place at the right time someone's fault? I don't want to put words in Bryan's mouth, but my impression is that deep down what Bryan cares about is effort. The deserving poor are those who try hard to escape poverty, but are unable to.

In the end, this whole topic is Rawlsian. Suppose that everyone is doing the best for themselves, given things like how conscientious they are and how much support they received from their families. Someone like Bryan Caplan is successful because he is intelligent and working hard is relatively painless for him. Should we condemn as undeserving someone less intelligent who finds working more painful, if these personality traits are largely endowed and not chosen (Bryan also believes that parenting has very little direct effect on children's adult personalities--its all genes and environment, neither of which are chosen by children). How does Bryan reconcile these two positions?

I'm personally attracted to the veil of ignorance position. A sophisticated take on this view would acknowledge that subsidies affect incentives. If a society was to implement the (fair) "from each according to his ability, to each according to his needs" system, the only way to provide enough for everybody would be coercion. In the United States, I think it is fair to ask how close we are to the optimal veil of ignorance allocation. I suspect that much more redistribution is required. Thinking about the whole world, the distribution of wealth and health is scandalous.

Some Links
Mar 22, 2011

Bryan Caplan on why "charter cities" are a second-best proxy for more open migration policies.

Robin Hanson on very good news about solar energy.

Non-GMU link: How does this sort of retaliation make Israeli citizens safer?