New kids on the blockchain

WSJ reports on institutional interest in blockchain technologies. WSJ: Nasdaq OMX Group Inc. is testing a new use of the technology that underpins the digital currency bitcoin, in a bid to transform the trading of shares in private companies. The experiment joins a slew of financial-industry forays into bitcoin-related technology. If the effort is deemed …

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Our Kids and Coming Apart

Nick Lemann reviews Our Kids: The American Dream in Crisis by Robert D. Putnam. At the descriptive level, Putnam’s conclusions seem very similar to those of Charles Murray in Coming Apart. Of course, description is much easier to obtain than causality. NYBooks: … By the logic of the book, access to social capital ought to …

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Value-Added College Rankings

New report from Brookings estimates value added (in terms of economic success) by university, controlling for input factors such as student quality and family income. This is just the first step toward outcomes-driven rankings of universities that will be far more useful than the existing rankings, which are largely based on prestige. Brief summary. See …

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The Fires of Mordor

We’re right in the middle of a multi-week theme here at the Thornapple Blog, so if you are just dropping in you might find it helpful to go all the way back to February if you want to get the full treatment. But the synopsis is that we’re taking a dive into moral dietetics: the …

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Income, wealth, and IQ

I’m occasionally asked about financial returns to cognitive ability. As a rough rule of thumb, judging from the graphs below (obtained here), I would say: On average, an increase of IQ by one SD corresponds to  ~ $30k per annum of additional income. (Somewhat less than 1 SD in income; the distribution is far from …

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The rich (and powerful) are different

Discussions at the meeting I just attended are off the record, so I have nothing to report. But I will link to some previous posts of relevance: Creators and Rulers How the World Works Educational background of US elites A word cloud produced from the collective bios would feature: Harvard, Stanford, Goldman Sachs, Rhodes, Marshall, …

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CBO Against Piketty?

This report using CBO  (Congressional Budget Office) data claims that income inequality did not widen during the Great Recession (table above compares 2007 to 2011). After government transfer payments (taxes, entitlements, etc.) are taken into account, one finds that low income groups were cushioned, while high earners saw significant declines in income. … The CBO on …

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Perils of Prediction

Highly recommended podcast: Tim Harford (FT) at the LSE. Among the topics covered are Keynes’ and Irving Fisher’s performance as investors, and Philip Tetlock’s IARPA-sponsored Good Judgement Project, meant to evaluate expert prediction of complex events. Project researchers (psychologists) find that “actively open-minded thinkers” (those who are willing to learn from those that disagree with them) …

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Crypto-currencies, Bitcoin and Blockchain

Photos from two meetings I attended last week. Some general comments on crypto-currencies: 1. Bitcoin doesn’t really solve any payment problems, unless of course you are a paranoid libertarian who hates “fiat” currencies. But why should you trust the Bitcoin Foundation any more than you trust a central bank? (See Bitcoin dynamics.) 2. Most potential users …

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Garrett Hardin

We’ll finish up “food ethics icons” month with the evil genius of the food/population debates. Everyone I know who ever met Garrett Hardin (1915-2003) spoke well of him. He was by all accounts a generous and open-minded man who welcomed philosophical inquiry and intellectual engagement. So don’t get me wrong when I call him “the …

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Venture capital in the 1980s

Via Dominic Cummings (@odysseanproject), this long discussion of the history of venture capital, which emphasizes the now largely forgotten 1980s. VC in most parts of the developed world, even large parts of the US, resembles the distant past of the above chart. There is a big gap between Silicon Valley and the rest. Heat Death: …

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Quantum GDP

  “It’s been only half jokingly said that today a third of GDP is attributable to quantum mechanics,” — former Lockheed CEO Norm Augustine. I’ve heard the one third or 30% of GDP figure from time to time, but have never seen a detailed analysis. A list of modern technologies that arose from quantum mechanics …

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Economics hegemony

Sociologists decry the ascendance of economics in the social sciences. See also Venn diagram for economics, Confessions of an economist, and Summers and Shleifer: (Ellison, an anthropologist, was Dean of the Graduate School under Summers.) Over lunch not long after Summers took over the presidency in 2001, Ellison said, Summers suggested that some funds should be moved from a …

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Looking for a Deal

The Raw Deal or Some May Call the Real Deal As my fingers hunt for the right keys on this laptop, millions of my fellow citizens, are out hunting for a ‘deal’, a ‘bargain’. Black Friday is the penultimate holiday for consumerism in the U.S. And for a large majority of those bargain hunters, price …

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Japan’s Folly

Japan’s economy has been in the doldrums for years.  So what are they doing? Their central bank is buying government debt just like the US Fed was doing.  Supposedly, these purchases keep interest rates low and stimulate borrowing and growth.  But the evidence is to the contrary in  a country with zero interest rates and …

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Brussels Riots

Riots broke out a few days ago in Brussels as people protested the government’s austerity policies. In Europe when people are fed up, they riot while in the U.S. our low income people accept their fate and believe it is their fault. Austerity policy has not worked anywhere in Europe, but they hold to it …

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Higher Education and Rising Inequality

In an intriguing article last month on Huffington Post, Harry Boyte, director of the Center for Democracy and Citizenship at Augsburg College and a Senior Fellow at the University of Minnesota’s Humphrey School of Public Affairs,   talks about how the norms of higher education have shifted. In noting a recent report Unseen Disadvantage, Boyte …

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A 0.000007 percent chance

Hamilton Place Strategies Student loans continue to be a popular topic in the media, with most of the stories (at least upon a quick glance) focusing on how terrible the growing volume of student loans is.  A Google news search on one day for the phrase “student loan debt” turned up the following headlines among …

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Institutions and relative incomes

Important insight by Robert Reich– The myth is you get paid what you’re worth. Yet for many occupations it’s just the reverse: Pay is inversely related to the real benefits to society. Social work, teaching, nursing, and caring for the elderly or for children are among the lowest-paid of all professions, but the benefits to …

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The Hobby Lobby Supreme Court decision

Benjamin I. Sachs, a law professor at Harvard University, notes that while federal law lets union members prevent the use of their dues for political purposes, shareholders do not have similar rights. “If we’re going to say that collectives have speech rights, then we should treat unions and corporations the same,” Sachs told me. Employees …

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On the Cheap

Michael Carolan’s Cheaponomics: The High Cost of Low Prices shines some desperately needed sunlight on the current neoliberal hegemony over our economic system. Carolan, who writes with aplomb supported by a lengthy recitation of research unmasks the hidden costs of 21st century capitalism. . Carolan unmasks what he frequently refers to as socialism of the …

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The Financial Outlook in Higher Education

On the heels of Michigan’s two largest universities announcing tuition hikes I felt it pertinent to remind us “7 in 10 Undergraduates Get Financial Aid” (Chronicle of Higher Education). Put into another statistic, that’s 71% (according to the U.S. Department of Education’s National Center for Education Statistics). At Michigan State we have roughly 38,000 undergraduates …

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Financing the Green Economy

I must have missed the NPR and local press coverage of the inaugural UN Environment Assembly held last week in Nairobi, Kenya. The five day conference of more than 1,000 attendees representing 163 member states including 113 ministers was blacked out so that we could focus more on the World Cup, baseball, and other more …

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Why Do Many Embrace Inequality?

Papers and books describe the widening inequality in our society.  They provide little understanding of why the 99% put up with it. The explanation of Prof. Justin Friesen  et. al. suggest that “When we feel a lack of personal control, we compensate by looking for order or predictability in our environment.  So we desire and …

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WW I and other Idiocies

It is the 100th anniversary of WW I, one of the bloodiest and unnecessary wars in human history.  The excuse for the war was the assassination of the Austrian Archduke by a crazy man.  The Austrians demanded compensation (as if there is compensation for murder).  When it was refused, countries began to take sides based …

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Dolla dolla bill y’all: Relative volume and value of U.S. currency in circulation by bill denomination

Last year, Seth Kadish posted some fancy charts showing the relative volume and value of U.S. currency in circulation. Although his charts looked visually appealing, they were fairly heavily criticized because of his use of nested pie charts, which make it notoriously difficult to compare the relative size of areas. For today’s data visualization exercise, …

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Our Fixation on Measurement

To measure the unmeasurable is absurd and constitutes but an elaborate method of moving   from preconceived notions to foregone conclusions. The logical absurdity, however, is not the greatest fault of the undertaking: what is worse, and destructive of civilization, is the pretence that everything has a price or, in other words, that money is the …

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Financial Crisis Redux

A new book says the government should have focused more on homeowner debt and less on banks. But, what would you expect of a former banker like former Treasury Secretary Timothy Geithner? Sure, the banks were frozen and their balance sheets needed to be restored so they could loan or the economy would have been …

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