Lunch at the Labs

Various web links I found to be of interest recently.

• Growth of income and welfare in the U.S, 1979-2011

  John Komlos, NBER Working Paper.

  The major consistent findings include what in the colloquial is referred to as the "hollowing out" of the middle class. According to these estimates, the income of the middle class 2nd and 3rd quintiles increased at a rate of between 0.1% and 0.7% per annum, i.e., barely distinguishable from zero. Even that meager rate was achieved only through substantial transfer payments. In contrast, the income of the top 1% grew at an astronomical rate of between 3.4% and 3.9% per annum during the 32-year period, reaching an average annual value of $918,000, up from $281,000 in 1979 (in 2011 dollars).
  ...
  With interdependent utility functions only the welfare of the 5th quintile experienced meaningful growth while those of the first four quintiles tend to be either negligible or even negative.

• How the Pentagon punished NSA whistleblowers

  Long before Edward Snowden went public, John Crane was a top Pentagon official fighting to protect NSA whistleblowers. Instead their lives were ruined -- and so was his.

  The first is Thomas Drake, who blew the whistle on the very same NSA activities 10 years before Snowden did. Drake was a much higher-ranking NSA official than Snowden, and he obeyed US whistleblower laws, raising his concerns through official channels. And he got crushed.
  ...
  But there is another man whose story has never been told before, who is speaking out publicly for the first time here. His name is John Crane, and he was a senior official in the Department of Defense who fought to provide fair treatment for whistleblowers such as Thomas Drake -- until Crane himself was forced out of his job and became a whistleblower as well.

• Intuitive And Reflective Responses In Philosophy

  Cognitive scientists have revealed systematic errors in human reasoning. There is disagreement about what these errors indicate about human rationality, but one upshot seems clear: human reasoning does not seem to fit traditional views of human rationality. This concern about rationality has made its way through various fields and has recently caught the attention of philosophers. The concern is that if philosophers are prone to systematic errors in reasoning, then the integrity of philosophy would be threatened. In this paper, I present some of the more famous work in cognitive science that has marshaled this concern. Then I present reasons to think that those with training in philosophy will be less prone to certain systematic errors in reasoning. The suggestion is that if philosophers could be shown to be less prone to such errors, then the worries about the integrity of philosophy could be constrained. Then I present evidence that, according to performance on the CRT (Frederick 2005), those who have benefited from training and selection in philosophy are indeed less prone to one kind of systematic error: irrationally arbitrating between intuitive and reflective responses. Nonetheless, philosophers are not entirely immune to this systematic error, and their proclivity for this error is statistically related to their responses to a variety of philosophical questions. So, while the evidence herein puts constraints on the worries about the integrity of philosophy, it by no means eliminates these worries. The conclusion, then, is that the present evidence offers prima facie reasons to ascribe a mitigated privilege to philosophers' ability to rationally arbitrate between intuitive and reflective responses.

• Scientists say there's such a thing as "ethical amnesia"

  and it's probably happened to you

  A study published (paywall) today (May 16) in the Proceedings of the National Academy of Sciences indicates that when we act unethically, we're more likely to remember these actions less clearly. Researchers from Northwestern University and Harvard University coined the term "unethical amnesia" to describe this phenomenon, which they believe stems from the fact that memories of ourselves acting in ways we shouldn't are uncomfortable.
  
  "Unethical amnesia is driven by the desire to lower one's distress that comes from acting unethically and to maintain a positive self-image as a moral individual," the authors write in the paper.

• Is Big Data Taking Us Closer to the Deeper Questions in Artificial Intelligence?

  A Conversation With Gary Marcus (with Edge Video and audio).

  Even though there's a lot of hype about AI and a lot of money being invested in AI, I feel like the field is headed in the wrong direction. There's been a local maximum where there's a lot of low-hanging fruit right now in a particular direction, which is mainly deep learning and big data. People are very excited about the big data and what it's giving them right now, but I'm not sure it's taking us closer to the deeper questions in artificial intelligence, like how we understand language or how we reason about the world.

• An introduction to The Nordic Gender Equality Paradox

  Nordic societies seem to have it all: a historic tradition of women's entrepreneurship, modern welfare states that provide support to working parents, outstanding levels of women's participation in the labour market and populations that strongly support the idea of gender equality. It therefore comes as a surprise that Nordic countries, in one international ranking after another, are shown to have few women among top-managers and business owners. Another surprise is that the three Baltic countries, which have more conservative societies and a more small-government approach than their Nordic neighbors, have more women managers, top executives and business owners.
  ...
  In this book, Dr. Nima Sanandaji shows that the apparent paradox has a simple answer: Nordic welfare states are -- unintentionally -- holding women back. Public sector monopolies and substantial tax wedges limit women's progress in the labour market. Overly generous parental leave systems encourage women to stay home rather than work. Welfare state safety nets discourage women from self-employment.

• Denmark Ranks as Happiest Country; Burundi, Not So Much

  The report found that inequality was strongly associated with unhappiness -- a stark finding for rich countries like the United States, where rising disparities in income, wealth, health and well-being have fueled political discontent.

Some web links related to economics and finance.

• Chameleons: The Misuse of Theoretical Models in Finance and Economics
  • Cherry Picking in Empirical Research = Carefully Selecting Data to Support a Desired Result
    • If one has sufficient freedom to select the data, one can support almost any result.
  • Potential Cherry Picking in Theoretical Research = Searching for a Set of Assumptions that Produces a Desired Conclusion
    • If one has sufficient freedom to select assumptions, one can create a model to support almost any result.
    • Are the assumptions reasonable?
    • Are there other more reasonable assumptions that explain what we see?

• Risk Doesn't Stand Still

  Review of Greg IP's book, Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe

  In this provocative new book, the Wall Street Journal's chief economics commentator Greg Ip contemplates how actions to reduce and control risk are often discovered to have increased it in some other way, and thus, "how safety can be dangerous."
  
  This is an eclectic exploration of the theme, ranging over financial markets, forest fires, airline and automobile safety, bacterial adaptation to antibiotics, flood control, monetary policy, and financial regulation. In every area, Ip shows the limits of human minds trying to anticipate the long-term consequences of decisions whose effects are entangled in complex systems.

• The State of the Art in the Economics of Education

  the most promising areas for policy are:

  • Teacher effectiveness is by far the most important thing that matters in school. The difference in outcomes for pupils taught by effective or ineffective teachers is huge.   . . .
  • Investment in the early years of child development is very important.   . . .
  • A coherent market structure for schools to operate in is very important.   . . .
• Jeremy Grantham's Take on Oil, Metals and Agriculture

  Quarterly market outlook from the hedge fund manager.

  The commodities guru argues that oil stocks can recover while farmland is his "first choice" for the long run.

• Exploiting Emotions About Paris to Blame Snowden, Distract from Actual Culprits Who Empowered ISIS
  Glenn Greenwald
  

  One key premise here seems to be that prior to the Snowden reporting, The Terrorists helpfully and stupidly used telephones and unencrypted emails to plot, so Western governments were able to track their plotting and disrupt at least large-scale attacks. That would come as a massive surprise to the victims of the attacks of 2002 in Bali, 2004 in Madrid, 2005 in London, 2008 in Mumbai, and April 2013 at the Boston Marathon. How did the multiple perpetrators of those well-coordinated attacks -- all of which were carried out prior to Snowden's June 2013 revelations -- hide their communications from detection?

• Spying on Congress and Israel: NSA Cheerleaders Discover Value of Privacy Only When Their Own Is Violated
  Glenn Greenwald
  

  In January 2014, I debated Rep. Hoekstra about NSA spying and he could not have been more mocking and dismissive of the privacy concerns I was invoking. "Spying is a matter of fact," he scoffed.
  ...
  But all that, of course, was before Hoekstra knew that he and his Israeli friends were swept up in the spying of which he was so fond. Now that he knows that it is his privacy and those of his comrades that has been invaded, he is no longer cavalier about it. In fact, he's so furious that this long-time NSA cheerleader is actually calling for the criminal prosecution of the NSA and Obama officials for the crime of spying on him and his friends.

• Why Governments Lie About Encryption Backdoors
  Lauren Weinstein
  

  They know that the smart, major terrorist groups will never use systems with government-mandated backdoors for their important communications, they'll continue to use strong systems developed in and/or distributed by countries without such government mandates, or their own strong self-designed apps.
  
  So it seems clear that the real reason for the government push for encryption backdoors is an attempt not to catch the most dangerous terrorists that they're constantly talking about, but rather a selection of "low-hanging fruit" of various sorts.

• What the FBI Really Wants from Apple -- and Why Apple Has Said No
  Lauren Weinstein
  

  In other words, what we're seeing play out right now may be the federal government's first real attempt to get "the camel's nose under the tent" of strong phone encryption systems, to try demonstrate any feasibility of full-blown backdoor attacks against these systems.
  ...
  For if the government can gain access to these systems in such manners, it is axiomatic and unquestionable that evildoers of all stripes will find ways to do so as well, in a black hat hacking dream come true.