Five Articles/Posts for the 3rd of July, 2020

  1. “Accordingly, antifragile systems and organisms tend towards a common theme: bottoms-up decision-making, rather than top-down decision making. Antifragility requires real options, and real options are low-cost. Antifragility is only successful if you can actually detect, react, and grow in response to deviations from your present state in real time; the only way you can feasibly do this is for disorder detection and response to take place at a small enough resolution, and tight enough turnaround time. Top-down systems have a hard time with antifragility, because for them, all options are costly.”
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    I’m late in posting this, having read this a while ago, but a useful essay by Alex Danco on how to think about anti-fragility, the term coined and popularized by Taleb. There are a lot of very useful ways to think about anti-fragility, but this essay explores immunity and how to think about our bodies immunity from the prism of anti-fragility. I found it especially useful to think about our bodies (which are at risk from the virus) and our governments (which are supposed to help us protect ourselves against the virus) and ask which is more anti-fragile, and why.
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  2. Kevin Kelly (a man worth learning more about) recently posted “68 bits of unsolicited advice“. Each advice is worth reading – here’s one that is easy to understand, difficult to implement on a sustained basis. Ask me. I should know.
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    “Being enthusiastic is worth 25 IQ points.”
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  3. “Grades destroy curiosity. Too many kids learn for the sole purpose of raising their GPA because that’s what the system incentivizes. From an early age, I observed that my success in school depended more on my grades and less on how much I learned. In college, even though I wrote essays on my own and worked as an intern in New York City for companies like Skift, I was almost kicked out of my fraternity because my GPA was below 3.0. Likewise, my college counselors evaluated me on two metrics: grades and SAT scores. Neil deGrasse Tyson once said: “When students cheat on exams, it’s because our school system values grades more than students value learning.””
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    Read this essay by David Perell. Please. Read it.
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  4. This link came to me via Recommendo, which is a newsletter I have subscribed to about a month or so ago. Worth a ponder, it is about the art of critical thinking.
  5. Great visualizations, as always, from the NYT. This one is about the spread of the coronavirus in the USA.

Ec101: Links for 9th January, 2020

Five articles on sunk costs today.

  1. First up, a somewhat basic introductory article. Feel free to skip it if you’re sure you know what sunk costs are (pausing only to note that it is not so much the knowing that matters with sunk costs, but remembering to apply it)
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  2. “The United States has invested much in attempting to achieve its objectives. In addition to the many millions of dollars that have been spent, many thousands of lives have been lost, and an even greater number of lives have been irreparably damaged. If the United States withdraws from Vietnam without achieving its objectives, then all of these undeniably significant sacrifices would be wasted”
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    The quote itself is a quote (if you see what I mean) from this paper, which is a wonderful rumination on sunk costs. Read Taleb on the subject (and not just his tweets!)
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  3. This entire post by Alex Tabarrok is very short (and I have linked to it before, I think), but it is worth reading. Especially the last sentence: do think about it, if you are an economics student.
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  4. “Once your model of choice is at all complex, no one knows what a sunk cost means any more. So a theoretical scolding of those who honor “sunk costs” is not completely well-defined. That being said, there is still the empirical question of whether most people attach too much weight to previous plans and have a status quo bias. The experimental evidence suggests that we are more rigid than we need to be. The propensity to honor previous commitments may have efficiency properties, but we cannot discard this proclivity when we ought to.”
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    The bottom line from Tyler Cowen’s post on the topic. He was responding to Tabarrok’s post above.
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  5. “Suppose that you are trying to pursue a morally worthy goal, but cannot do so without incurring some moral costs. At the outset, you believed that achieving your goal was worth no more than a given moral cost. And suppose that, time having passed, you have wrought only harm and injustice, without advancing your cause. You can now reflect on whether to continue. Your goal is within reach. What’s more, you believe you can achieve it by incurring—from this point forward—no more cost than it warranted at the outset. If you now succeed, the total cost will exceed the upper bound marked at the beginning. But the additional cost from this point is below that upper bound. And the good you will achieve is undiminished. How do the moral costs you have already inflicted bear upon your decision now?”
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    I am reminded, very strongly indeed, of the Mahabharata. That is the abstract of this paper.

EC101: Links for 11th July, 2019

  1. “The two approaches reflect different attitudes toward risk, the role of government and collective social responsibility. Analogous to America’s debate over health insurance, the American philosophy has been to make more resilient buildings an individual choice, not a government mandate.”
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    Risk, how (not) to measure it and therefore understand it. As Taleb is fond of saying, “The absence of evidence is not the evidence of absence”.
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  2. “Is it possible that interest rates are a net input cost in the Indian context? This existential monetary question is yet to be even acknowledged by economists, let alone addressed.”
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    A superb (and I use the word advisedly) overview of monetary policy and how it works in India.
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  3. “I would challenge my students at the start of the new semester with the following three questions; 1) how much does it cost you to go to the beach (we lived in a coastal city)? 2) should Tiger Woods mow his own lawn? or 3) should Lebron and Kobie go to college?”
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    Opportunity costs, economic costs and accounting costs – all in one article, and therefore a great read.
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  4. “The cornerstone of Harvard professor N. Gregory Mankiw’s introductory economics textbook, Principles of Economics, is a synthesis of economic thought into Ten Principles of Economics (listed in the first table below). A quick perusal of these will likely affirm the reader’s suspicions that synthesizing economic thought into Ten Principles is no easy task, and may even lead the reader to suspect that the subtlety and concision required are not to be found in the pen of N. Gregory Mankiw.”
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    A hilarious (but perhaps only to an economist) take on the ten principles of economics.
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  5. “And the long version of the history is crucial here. It shows that for much of the 20th century, total taxes on the very wealthy were much higher than they are now. Before World War II, the average rate hovered around 70 percent. From the mid-1940s through the mid-1970s, the average rate was above 50 percent.”
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    David Leonhardt on taxing the rich in America. His newsletter is worth subscribing to, by the way.