Links February 2021

Regulation chills minor (but not radical) technological innovations. While there is suggestive evidence that regulations may have a stifling effect on innovation, there is as yet no rigorous economic framework to quantify the magnitude of such regulatory effects on innovation and the aggregate economy. This column proposes such a framework tests its implications on data from France. As the framework predicts, regulations do indeed hamper innovation, but the negative effects concern only incremental innovations and are absent for radical innovations. Overall, regulations are estimated to reduce aggregate innovations by 5%. [source]

Houses in Japan rapidly depreciate like consumer durable goods – cars, fridges, golf clubs, etc. After 15 years, a home typically loses all value and is demolished on average just 30 years after being built. According to a paper by the Nomura Research Institute, this is a major ‘obstacle to affluence’ for Japanese families. Collectively, the write-off equates to an annual loss of 4% of Japan’s total GDP, not to mention mountains of construction waste. [source]

Teens who bully, harass, or otherwise victimize their peers are often using aggression strategically to climb their school’s social hierarchy. [link]

The following links and research are from a 2020 roundup that I never posted.

From Alrenous, a constantly updated list of thinking techniques, currently at 29 entries. The first on the list, the true null hypothesis is ignorance. 

Nintil’s monthly link post. Google Search. RSS subscribe. 

Eric Lofgren’s Acquisition Talk Blog.

“Deactivating Facebook for the four weeks before the 2018 US midterm election (i) reduced online activity, while increasing offline activities such as watching TV alone and socializing with family and friends; (ii) reduced both factual news knowledge and political polarization; (iii) increased subjective well-being; and (iv) caused a large persistent reduction in post-experiment Facebook use. Deactivation reduced post-experiment valuations of Facebook, suggesting that traditional metrics may overstate consumer surplus.” [source] 

In China, private-owned enterprises (POEs) outperform state-owned enterprises (SOEs) but only in environments with high-quality market institutions. In environments with low-quality market institutions, SOEs outperform POEs. [source]

Efforts by Facebook and Twitter to reduce misinformation on their platforms seem to have worked. [source]

A new research paper finds that “efforts to reform voter ID laws may not have much impact on elections.” It seems these laws don’t do much to influence registration numbers or turnout, and there is no impact on fraud either. [source] 

“Facebook is a Girardian scapegoat for a media ecosystem that is unable or unwilling to consider its own role in the 2016 fiasco.”  –  Jake Seliger [source] 

On the deal that eventually failed, Jim Pethokoukis noted, “One recent poll had NYCers approving the Amazon deal by 20 points.” [source]

Doug Dawson argues that a combination of untested technology (microtrenching) along with a tough business model caused Google Fiber to exit Louisville. [source]

“[A]lthough better forecasting allows colluding firms to better tailor prices to demand conditions, it also increases each firm’s temptation to deviate to a lower price in time periods of high predicted demand. Overall, our research suggests that, despite concerns expressed by policy makers, better forecasting and algorithms can lead to lower prices and higher consumer surplus.” [source]

“Strong localized knowledge spillovers, high startup costs, skilled labor abundance, or low commuting costs make intermediate firms more likely to cluster and a science park more likely to form.” [source]

80,000 fake pitch emails were sent to 28,000 venture capitalists and business angels. Female entrepreneurs received an 8% higher rate of interested replies than men pitching identical projects. [source]

Beto’s Senate campaign followed what Silicon Valley types call “‘hyperscale’ — a system flexible enough to expand at exponential speed, paired with an understanding that getting big quickly can excuse and justify all kinds of other shortcomings.” [source]

Research suggests that e-commerce spending “reached 8% of consumption by 2017, yielding consumers the equivalent of a 1% permanent boost to their consumption, or over $1,000 per household.” [source]

The aging work force helps explain between 0.3 and 0.7 percentage points per year of the growth slowdown over the last 15 years. [source] 

US companies created a record number of robot workers in 2018. [source] 

“Bay Area tech reporters were much more impressed with Cambridge Analytica than the DC consultants who were pitched by CA.”  –  Nu Wexler [source]

“35% of Americans told pollsters that they trust the Federal government’s handling of domestic problems, while 72% said they trust their local government. Given this mismatch in public confidence, should Washington do less and local governments do more?”  –  Ed Glaeser on Raghuram Rajan’s “The Third Pillar” [source]

Interestingly, the logit model finds its origins in Malthus. Mathematicians weren’t convinced that population growth was geometric as Mathlus had said. Pierre François Verhulst used the guess and check method to discover the function. Paul Poast has all of the details.

How does youth minimum wages affect youth employment? Using Danish data, it was found that hourly wage jumps up by 40 percent while employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. [source]

Via Pedro Domingos: “People don’t trust transparent models any more than opaque ones, and have more difficulty detecting large errors in transparent ones.” [source]

The R&D tax credit is so complex that it requires AI. From Chris Edwards: “Corporations contract with KPMG to calculate their R&D tax credits, then KPMG subcontracts with experts at IBM Watson to help them out.” [source]