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Links and quotations for September 18, 2015: Conservative vs. liberal Twitter vocab, Obama and behavioral science, and more
Be careful what you say on Twitter… It may scream liberal or conservative, without you knowing it. Take a look at what researchers have found is the vocabulary of each group. Plus, Obama’s latest executive order, pushing the federal government to deploy behavioral science to “better serve the American people” in what is commonly called “nudging.” Read it all.
Verizon Says It’s the First U.S. Carrier to Offer Cellphone Roaming in Cuba – Re/code
Why Apple and Microsoft are suddenly playing nice – CIO – “The companies may be friendly today for revenue’s sake, and for future opportunities in enterprise, but the relationship hasn’t been this way for long.”
Why Facebook’s ‘dislike’ button will be a total disaster – The Week – Businesses will hate it too. The idea that customers visiting their Facebook page will now be able to register antipathy so easily — and in a way that’s instantly understood by other users — must be sending shudders through boardrooms.
Uber’s Latest Justification For Surge Pricing- TechCrunch – “We found that, without surge pricing, Uber is not really Uber — you can’t push a button and get a ride in minutes,” Uber researchers Jonathan Hall and Cory Kendrick wrote on the Uber blog.”
Study finds people’s conservative and liberal traits show up in their Twitter vocabulary – Queen Mary University of London –
The study… fits with previous understanding of the psychology of liberal and conservative people. For example, previous studies suggested that liberals have a greater sense of their own uniqueness, whereas conservatives are more likely to emphasize group identity and consensus: this study found that this also surfaces in everyday language on Twitter, with liberals more likely than conservatives to use words like ‘I’ and ‘me’, while conservatives use words like ‘we’ and ‘our’ more.”
Why the U.S. Government Is Embracing Behavioral Science – HBR –
[On September 15], President Obama ordered government agencies to use behavioral science insights to “better serve the American people.” In his executive order, Obama instructed federal agencies to identify policies and operations where applying findings from behavioral science could improve “public welfare, program outcomes, and program cost effectiveness”… (Here is the full report by the White House Social and Behavioral Science Team, which discusses some of the work that has been already conducted using behavioral insights.)
[…]Public policy has often relied on assumptions of rationality when accounting for human behavior, which has led to suboptimal policies in the past. For example, citizens are sometimes bombarded by mass-media campaigns (designed to decrease smoking, increase seat-belt use, etc.) that assume they will be able to process an onslaught of messages to their best advantage. But such campaigns often have not worked, and may even have backfired at times. Over the last decade or so, insights from behavioral science have been applied to public policy issues such as tax payments, medical decisions, consumer health and wellness, and climate-change mitigation.
Gender Bias Suit Will Soon Shine a Harsh Light on Microsoft – Wired
Microsoft culture was for many years ruled by a long-standing employee review system called stack ranking. […] Microsoft has since retired the system. But it turns up in Moussouris’s suit. […] The system also made Microsoft particularly susceptible to a lawsuit by creating a lot of hard data about exactly how different demographics of employees were being valued. “You can look at the ranking, and if women are overwhelmingly lower than men, that’s your case right there,” Daniels says.
But psychology researchers say this system does more than make it easier to get sued for discrimination. It creates an environment in which gender discrimination, both conscious and unconscious, is more likely. That’s because, according to Tomas Chamorro-Premuzic, a professor of business psychology at University College London, people have trouble distinguishing between overconfidence and competence. And overconfidence, studies show, is a trait more often associated with men. “In most of the western world we mistake self-perceived abilities for competence,” he says. “Men are more likely to overestimate their abilities and more likely to get away with it.”
In a highly competitive environment of the sort Microsoft created with stack ranking, the effect of this phenomenon can be even stronger. “It aggravates the problem when you make things a zero sum game, so the more some win the more others lose,” he says. “You’ll create political tensions, and men will be more aggressive and competitive, so it’s not surprising they end up winning.”
The story of NYC’s Greene Street: There’s government planning — and then there’s government planning
In the FT, Tim Hartford summarizes a new paper from development economists William Easterly, Laura Freschi and Steven Pennings, titled “A Long History of a Short Block.” The paper tells the tale of the “economic development of a single 486ft block of Greene Street, between Houston and Prince Street in downtown Manhattan.” It differentiates nicely between different kinds of government planning. Hartford:
Easterly, a former World Bank researcher, is well known in development circles for his scepticism about how much development can ever be planned, and how much credit political leaders and their expert advisers deserve when things go well. “Here’s a block where there is no leader; there’s no president or prime minister of this block,” he explained to me. Greene Street, he suggests, offers us a perspective on the more spontaneous, decentralised features of economic development.
Greene Street’s history certainly offers plenty of rapid and surprising changes to observe. The Dutch, who had colonised Manhattan in 1624, decided in 1667 to cede what is now New York to the British, in exchange for guarantees over their possession of what is now Suriname in Latin America. The Dutch thought sugar-rich Suriname was a better bet but New York City’s economy is now more than a hundred times larger than Suriname’s.
In 1850, Greene Street was a prosperous residential district with several households who would be multimillionaires in today’s terms. Two large hotels and a theatre opened nearby, and prostitutes started to move in. By 1870, the middle classes had fled and the block was at the heart of one of New York City’s largest sex-work districts.
In the late 19th century, perhaps because property values in the red-light area were low, entrepreneurs swooped in to build large cast-iron stores and warehouses for the garment trade. Greene Street’s fortunes waned when the industry moved uptown after 1910, and property values collapsed. In the 1940s and 1950s, urban planners suggested bulldozing the lot and starting again but a community campaign — famously involving Jacobs herself — fought them off. Property values were revived as artists colonised Greene Street in the 1950s and 1960s, attracted by the large, airy and cheap spaces. None of these changes could easily have been predicted; some are rather mysterious even in retrospect.
The lessons of Greene Street? Getting the basic infrastructure right — streets, water, sanitation, policing — is a good idea. Aggressive planning, knocking down entire blocks in response to temporary weakness, is probably not. Predicting the process of economic development at a local level is a game for suckers. Most importantly, even a tremendous development success — the United States and, within it, New York City — is going to show some deep wrinkles to those who get in close.
Oh, and here is how Crain’s New York Business describes Greene Street today:
Ten years after Louis Vuitton bravely opened a store on Greene Street, the onetime quaint SoHo back-water is emerging as the neighborhood’s rising star. As a magnet for high-end shops and shoppers alike, it now rivals glitzy Spring and Prince streets—not to mention SoHo’s original top draw, West Broadway, two blocks to the west of Greene Street. “It’s become the little Madison Avenue of SoHo,” said Faith Hope Consolo, chairwoman of Douglas Elliman’s retail group.
Before 1980s, Americans were as unhappy as they had been since before the Civil War. Then something happened …
This is pretty interesting. Over at VoxEU, Thomas Hills, Eugenio Proto, and Daniel Sgroi describe their research project on tracking long-term, international happiness levels:
With records of subjective wellbeing going back less than half a century, this column asks if we can know the impact of key past events on the happiness of our ancestors. It presents a new historical index that draws on millions of digitised books in the Google Books corpus of words using sentiment analysis. The index – which goes back to the 1776 US Declaration of Independence, 200 years earlier than any other index of happiness – makes it possible to analyse the historical drivers of happiness in France, Germany, Italy, Spain, the UK and the US. … Though we make clear in our research that we need to exercise caution when examining very long-run trends (as language itself has evolved so much), it is nonetheless clear in Figure 2 that short-term events, such as the exuberance of the 1920s, the Depression era, and World Wars I and II show clear and distinguishable influences on subjective wellbeing.
And here is some of what they found, in chart form:
War and depression bad, peace and prosperity good. Obviously. But look, for instance, where the US and UK were around 1980, at historically low levels. Then came strong economic recoveries. GDP may not be everything, but those rising lines sure do suggest those societies started enjoying “higher subjective wellbeing.” Do those charts really sync with the idea that Americans made no progress in the 1980s and 1990s as some analysts contend?
What are the political ramifications of this? Via Gallup:
The percentage of Americans feeling positive about the U.S. job market — saying now is a “good time” to find a quality job — jumped six percentage points in the past month to 45%, restoring this figure to the seven-year high it reached in January. … This month’s six-point increase is the largest increase of the year so far. Despite this spike in optimism, slightly more than half of Americans (51%) continue to say it is a “bad time” to find a job.
To be expected, I guess, when you are monthly creating more than 200,000 net new jobs, some 3 million over the past year. And the slow-but-steady economy continues to plow forward. It’s not “Happy Days are Here Again,” but neither is it “It’s the End of the World as We Know It.” Certainly not as stark a situation as back in 2o12. Then, unemployment was 8%; today it’s just over 5%. Some political-policy advice from economist-blogger Adam Ozimek, via Twitter:
— GOP should be cautious in choosing candidate whose message on the economy is too doom and gloom. 2016 gonna be a good year & that won’t fly.
— Nuance will be needed. And an apocalyptic story will have no credibility with voters when unemployment low and wages are growing fast.
— Inequality, polarization, and mobility will be the needed themes. Not “job destroyer Obama”, and unemployment.
Links and quotations for September 17, 2015: An unequal internet? Plus China attempts controlling citizens’ behavior and US tech
With the rise of online media consumption, and the ability to pay one’s way out of having streamed entertainment interrupted by ads, are we on the verge of a rich-and-poor internet divide? Or is this no different from how television works? That question debated, China’s aggressive moves through cyberspace, and much more below.
UK hands down first ever conviction for illegal drone flying – ArsTechnica
NYPD Union Prez Patrick Lynch: Only Police Are Qualified To Judge The Actions Of Police – TechDirt
The New Cultural Literacy 2016 – Wired
10 Industries Benefiting From Incubators – Entrepreneur – “There was a time when business incubators were largely the domain of early-stage technology companies. Not anymore. According to the National Business Incubation Association, the U.S. houses roughly 1,500 incubators for startups, and an increasing number of them focus on niches (and regions) that were previously overlooked.”
Are we creating a rich internet and a poor internet? – The Week – “In the same way billboards will look different in one part of a city than another, the Internet could soon be rife with rich people being sold different products and opportunities, as well as a different culture, further widening the Internet income gap. This is a divide that — if we continue to ignore it — will become increasingly difficult to bridge.”
China Tries to Extract Pledge of Compliance From U.S. Tech Firms – NY Times
The Chinese government, which has long used its country’s vast market as leverage over American technology companies, is now asking some of those firms to directly pledge their commitment to contentious policies that could require them to turn user data and intellectual property over to the government. […] The letter also asks the American companies to ensure their products are “secure and controllable,” a catchphrase that industry groups said could be used to force companies to build so-called back doors — which allow third-party access to systems — provide encryption keys or even hand over source code. …The document underlines the way China is wielding its power over the American tech industry.
China Is Building The Mother Of All Reputation Systems To Monitor Citizen Behavior – FastCompany
China’s proposals for a “social credit system” don’t seem that radical when you read the dry, official plan posted by the government last year. As befits circulars from a socialist regime, the language is aggrandizing but unspecific … Within all that verbiage, however, is something very radical. China is proposing to assess its citizens’ behavior over a totality of commercial and social activities, creating an uber-scoring system. When completed, the model could encompass everything from a person’s chat-room comments to their performance at work, while the score could be used to determine eligibility for jobs, mortgages, and social services.
[…] “In Europe and the U.S., there’s a notion that the state should be constrained, that it’s not right to intervene in people’s lives, unless for justified reasons. In China, the state has no qualms about that. It says ‘data allows us to make society for better, so we’re going to use it…'”
It Only Took GM Five Years To Patch Dangerous Vulnerability Impacting Millions Of Automobiles – TechDirt
For all the hype surrounding the “Internet of Things” (IOT), it’s becoming abundantly clear that the security actually governing the sector is little more than hot garbage. Whether it’s televisions that bleed unencrypted, recorded living room conversations, or refrigerators that expose your Gmail credentials, IOT developers were so excited to cash in on the brave new world of connectivity, security was an absolute afterthought. Entertainingly, that has resulted in many “smart” technologies being little more than advertisements for the fact that sometimes, it’s ok for your device to be as stupid as possible.
And while it’s annoying for your IOT toaster to be leaking login credentials or your new IOT toilet to be broadcasting bathroom habits on the Internet, when it comes to automobiles — human lives are at stake. And yet auto infotainment and network security is somehow the poster child for flimsy security practices. That was illustrated perfectly when hackers recently revealed that they were able to all-but take over some Chrysler cars from anywhere in the world provided they simply had the car’s IP address — allowing intruders to rewrite the firmware on the car’s head unit.
More on the above in U.S. Said to Have Settled With G.M. Over Deadly Defect – NY Times
View related content: Pethokoukis
Americans are pretty interested in these Republican presidential debates. Last night’s at the Reagan Library appears to be the highest-rated event in CNN’s history. So whatever else the debates are for the GOP, they are an opportunity to present to millions of voters a modern vision about growth, opportunity and shared prosperity in a changing US economy. And talk about a news hook. The Census Bureau yesterday released new figures — whatever their flaws— showing continued middle-class income stagnation.
Yet the “middle” class was mentioned just four times vs. 10 times for the “Middle East.”
“Parent” — as in “single parents,” for instance — was mentioned just three times vs. 23 times for Planned Parenthood.
Creating economic “growth” was mentioned just five times vs. seven times for building an anti-immigrant “wall.”
No mentions of “health” in the context of replacing Obamacare. No talk about “college” affordability. And this was pretty much it for “opportunity.” Jeb Bush on immigration: “We’re at a crossroads right now. Are we going to take the Reagan approach, the hopeful optimistic approach, the approach that says that, you come to our country legally, you pursue your dreams with a vengeance, you create opportunities for all of us?”
Recall the exit poll after the 2012 presidential election that showed by a whopping 81 – 18%, people really looking for empathy in a candidate backed President Obama over Mitt Romney. To the extent that perception about the GOP holds, did last night’s debate change or solidify it? Granted, the moderators did Republicans no favors in questions or topics. But smart politicians can turn most any question into a chance to speak about the favored issues. Maybe next time …
An interesting FT piece on the growing skepticism of China’s GDP numbers:
The view that China is growing far slower than official figures show is increasingly going mainstream, with big global investors among those now basing decisions on a rate of about 5 per cent. According to government statistics China’s economy grew at an annual pace of 7 per cent in the second quarter of this year, in line with Beijing’s target for the year and the World Bank estimate of 7.1 per cent. However, doubts have long lingered about the veracity of Chinese economic data, with many analysts believing them to be understated during times of rapid growth and overstated during the current slowdown. A strategist at one European asset manager described the official growth figure as “a very crude propaganda tool”. …
Some have instead turned to alternative estimates, such as the “Li Keqiang index” — a composite of various indicators favoured by the Chinese prime minister, such as electricity production and railway freight volumes. Many of those gauges fell into outright contraction late last year. “If you look at the kind of hard data that are entering into the composition of the so-called Li Keqiang index, the growth is today probably closer to 5 per cent than to 7 per cent,” said Jean-Louis Nakamura, chief Asia investment officer at Lombard Odier. Some are even more bearish. Lombard Research reckons China grew at an average rate of 4.7 per cent in the first half of the year, while Citi’s chief economist Willem Buiter believes growth could already be as low as 4 per cent.
Now Donald Trump tell us that China is a nation that wins, a nation run by very smart guys as opposed to the dummies in Washington. Yet the Chinese miracle is fading as its genius leadership has moved away from market reforms. Indeed given possible mismeasurement of US economic growth, China may not be growing much faster than the US, a much larger advanced economy that’s many, many multiples as wealthy. Ah, yes, the deep magic of America.
In a newly released study, Caleb Quakenbush and I find that a typical couple retiring today is scheduled to receive about $1 million in cash and health benefits; many millennials will receive $2 million or more. In effect, we’ve now scheduled many young adults to be future Social Security and Medicare bi-millionaires. And the growth continues; the succeeding generation, born early in the 21st century and sometimes referred to as the homeland generation or generation Z, is scheduled for significantly higher benefits. Add to these amounts additional Medicaid expenditures that also go to many elderly if in a nursing home for any extended period of time. (These figures are “discounted”— that is, they show what amount would be required in a saving account, at age 65, earning real interest, to provide an equivalent level of support.)
In fact, a very high proportion of all growth in federal government spending over the next several decades is currently scheduled for Social Security and Medicare. Almost all other spending, whether for children or defense, infrastructure, or the basic functions of government, already is held constant or in decline in absolute terms, and sometimes in a tailspin relative to the size of the economy and the federal government. Only other forms of health care and retirement support, interest costs, and tax subsidies are on the rise.
Such developments are hardly sustainable. Simple math tells us that they will continue to impose costs that the millennials and younger generations are already experiencing: cuts in other benefits for them and their children, higher taxes, and reduced government services when they are in school, working, or middle-aged.
Right. It really does not seem sustainable that a single-earner, married couple of average income will receive lifetime Social Security and Medicare benefits worth $2 million while paying taxes of $600,000.
Vox’s Matthew Yglesias informs us how badly America has been doing in the 2000s:
I was a senior in high school in 1999 and it was pretty awesome — we played that Prince song a lot and didn’t care about our grades. As it turned out, it was also the peak of real median household income in the United States for all major racial and ethnic groups, according to new data released today by the Census Bureau.
Indeed, the Census Bureau has released its annual income and poverty numbers. And according to Census, median household income adjusted for inflation was $53,657 in 2014, statistically about the same as last year’s $54,462 and about 6.5% below its 2007 level with the peak in 1999. How we miss you, Bill Clintonomics!
But’s it’s not that simple, as Yglesias goes on to partly explain: (a) the income numbers are adjusted using the Consumer Price Index, which likely overstates inflation, (b) Census uses “cash income,” a narrow measure; (c) changing demographics means that relative “to 1999, we’ve become a less “middle aged” society. We have a larger share of retired people than we used to, and we also have a larger share of twentysomethings. People in their twenties earn less than older people … and retired people have very low earnings.”
Ygelsias concludes: “All that said, data limitations have always applied to efforts to measure living standards. Those efforts used to show a clear upward trend. More recently they have not. That’s a change that should worry us, even if the real situation is likely less bleak than this chart makes it out to be.”
My take: Whenever you hear about how well or poorly the average American household is doing — how their income is doing — you need to understand the different ways “income” can be defined. This from the Congressional Budget Office:
— Market income consists of labor income, business income, capital gains (profits realized from the sale of assets), capital income excluding capital gains, income received in retirement for past services, and other sources of income.
— Before-tax income is market income plus government transfers (cash payments and in-kind benefits from social insurance and other
government assistance programs. Those transfers include payments and benefits from federal, state, and local governments.)
— After-tax income is before-tax income minus federal taxes.
How does Census define “income?” Like this:
The income and poverty estimates shown in this report are based solely on money income before taxes and do not include the value of non-cash benefits, such as those provided by the Supplemental Nutrition Assistance Program (SNAP), Medicare, Medicaid, public housing, or employer-provided fringe benefits.
Like I said, kind of narrow. Scott Winship expands up that definition in a 2013 analysis:
To provide some necessary background, the official household income definition used by the Census Bureau is called “money income”. It aggregates the incomes of all people living together in the same housing unit. Money income comes from two broad sources—the market and the government. Market income is comprised of cash income received in the private economy—mostly earnings, retirement benefits, investment income, and money from friends and family.*
Government cash benefits include Social Security, unemployment benefits, workers’ compensation, welfare and Supplemental Security Income, educational assistance, payments to veterans, and public employee pensions.
Noncash benefits are not included, which means that money income does not reflect the value of food stamps, Medicaid and Medicare, housing subsidies, or free or reduced-price school lunches and breakfasts. Nor does it include employer fringe benefits like health insurance or retirement contributions. Finally, money income is a “pre-tax” measure—it does not reflect the disposable incomes of households because most people pay taxes on at least some of their money income.
When Winship took into account transfers and taxes, he found that by “2011 the safety net had returned middle-class and poor households’ incomes to the highest levels ever seen. Since then, the situation has likely improved. Disposable income among the poor and middle class is probably at an all-time high.” Or as he said on Twitter today:
Indeed, CBO put real median household after-tax income at $67,200 in 2011 vs. $59,100 in 1999. Market income, on the other hand, was $61,300 in 2011 vs. $65,000 in 1999. I would also suggest that we may significantly be overstating inflation and understating productivity/economic growth.
Some great stuff on college affordability from my colleague Andrew Kelly in the WSJ:
— It is critical that we diagnose the problem clearly. Student debt and the struggles of some student-loan borrowers are symptoms of underlying problems: runaway college prices and discouraging student outcomes. These underlying problems are, in part, a function of the incentives facing colleges. Existing federal-aid programs give colleges every incentive to enroll students and less reason to worry about whether they are successful. Students lack basic information on the costs and quality of different options, and lax federal lending standards make it easy to amass debt at bad colleges. The next president should be focused on reforms that push colleges to increase the value of the education they provide—either by reducing tuition rates, increasing quality, or some mix of both. Specifically, he or she should aim to: empower students with better data about their postsecondary options; hold colleges accountable for postgraduation outcomes; and increase competition by lowering barriers to entry that keep new, innovative models out.
— Setting free as the goal defines affordability according to price alone, when I think affordability should primarily be about value—the cost of the education relative to the effect it has on your life. I worry that a flood of new federal and state money will lower tuition temporarily by shifting costs but do little to focus states and institutions on spending those dollars as efficiently and effectively as possible. Even if institutional spending hasn’t risen much faster than inflation at some colleges, that doesn’t mean the money they do spend is allocated in ways that maximize student success.
— How do we do better? I’ve proposed having colleges share in the risk that students (and taxpayers) take on when they borrow federal loans to attend. The top predictor of loan default is whether students complete; so putting colleges on the hook—financially—for a portion of loans that go unpaid will encourage them to contain their costs and focus resources and attention on boosting student success. Critics argue that schools will simply admit fewer students, so I think we should couple risk-sharing with a financial award for every Pell student that graduates. [Pell grants are federal grants that aim to help low-income students attend college.]