Rats, Mice, and Humans Fail to Ignore Sunk Costs

(p. D6) Suppose that, seeking a fun evening out, you pay $175 for a ticket to a new Broadway musical. Seated in the balcony, you quickly realize that the acting is bad, the sets are ugly and no one, you suspect, will go home humming the melodies.
Do you head out the door at the intermission, or stick it out for the duration?
Studies of human decision-making suggest that most people will stay put, even though money spent in the past logically should have no bearing on the choice.
This “sunk cost fallacy,” as economists call it, is one of many ways that humans allow emotions to affect their choices, sometimes to their own detriment. But the tendency to factor past investments into decision-making is apparently not limited to Homo sapiens.
In a study published on Thursday [July 12, 2018] in the journal Science, investigators at the University of Minnesota reported that mice and rats were just as likely as humans to be influenced by sunk costs.
The more time they invested in waiting for a reward — in the case of the rodents, flavored pellets; in the case of the humans, entertaining videos — the less likely they were to quit the pursuit before the delay ended.
“Whatever is going on in the humans is also going on in the nonhuman animals,” said A. David Redish, a professor of neuroscience at the University of Minnesota and an author of the study.
This cross-species consistency, he and others said, suggested that in some decision-making situations, taking account of how much has already been invested might pay off.

For the full story, see:
Erica Goode. “‘Sunk Cost Fallacy’ Claims More Victims.” The New York Times (Tuesday, July 17, 2018): D6
(Note: bracketed date added.)
(Note: the online version of the story has the date July 12, 2018, and has the title “Mice Don’t Know When to Let It Go, Either.”)

New Tools May Have Allowed Hominins to Leave Africa Far Earlier Than Previously Known

(p. D1) The oldest stone tools outside Africa have been discovered in western China, scientists reported on Wednesday [July 11, 2018]. Made by ancient members of the human lineage, called hominins, the chipped rocks are estimated to be as much as 2.1 million years old.
The find may add a new chapter to the story of hominin evolution, suggesting that some of these species left Africa far earlier than once believed and managed to travel over 8,000 miles east of their evolutionary birthplace.
. . .
(p. D3) The trigger for that migration? Maybe it was figuring out how to make sharp stone tools.
“Suddenly you had a primate that could obtain meat from a carcass, and it opened up a new world for them,” Dr. Dennell said. “That simple technology was enough to get them out of Africa and right across Asia.”

For the full story, see:

Zimmer, Carl. “Ancient Tools Provide New Insight.” The New York Times (Tuesday, July 17, 2018): D1 & D3.

(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date July 11, 2018, and has the title “Archaeologists in China Discover the Oldest Stone Tools Outside Africa.”)

“A Big Step Toward Regenerative Medicine”

(p. C9) Mr. Zimmer, a New York Times science columnist and author, is careful and well-informed. So when he says that research is overturning things you were taught in biology classes, he’s worth heeding. Acquired traits can be inherited. Biological time can turn backward.
. . .
The bigger breakthroughs are more fundamental. One is the development of induced pluripotent stem cells. By adding four proteins to adult cells, scientists have learned how to make them embryonic–“turning back developmental time,” as Mr. Zimmer puts it. This is a big step toward regenerative medicine, which can grow spare parts customized for your body. It also creates new ways of making babies.
. . .
Another breakthrough is gene editing. Through a process called Crispr, which tags DNA segments for deletion, we’re learning how to program cells to make specific changes to their genomes. We’re also learning how to program organisms to pass down these editing instructions to their progeny. Experiments have shown that this technology could, at some point, cure hereditary diseases such as cystic fibrosis. In addition, scientists think it could wipe out destructive rodents and malaria-carrying mosquitoes.

For the full review, see:
William Saletan. “‘Biology’s Strange New World. Acquired traits can be inherited. Biological time can turn backward. And monsters are real.” The Wall Street Journal (Saturday, June 30, 2018): C9.
(Note: ellipses added.)
(Note: the online version of the review has the date June 28, 2018, and has the title “”She Has Her Mother’s Laugh’ Review: Biology’s Strange New World. Acquired traits can be inherited. Biological time can turn backward. And monsters are real.”)

The book under review, is:
Zimmer, Carl. She Has Her Mother’s Laugh: The Powers, Perversions, and Potential of Heredity. New York: Dutton, 2018.

China Fears It Can Only Walk Forward by Using Keynes

(p. B1) HONG KONG — Wang Shidong and his two partners were still finishing graduate school two years ago when they raised $45 million in less than two months to start a venture capital fund. His wife, an elementary-school teacher in their home village, was “terrified” that he got to manage so much money, Mr. Wang said.
Things are different this year. After three months and visits with more than 90 potential investors all over China, Mr. Wang and his partners raised only $3 million for a second fund. In June, they shut down the firm.
Their fund, East Zhang Hangzhou Investment Management Ltd., was one of nearly 10,000 founded over the past three years amid a technology gold rush powered in part by China’s government-guided economic growth engine. Now they have become the latest sign (p. B2) that China’s engine is slowing down.
“All industries, institutions and individuals are running short of cash,” said Zhang Kaixing, founder and chief executive of an online asset management company in Shenzhen called Jinfuzi, which means “golden ax.” Jinfuzi, which manages over $4.5 billion in assets, is the type of investor that technology funds court.
“Many investors in private equity and venture capital funds want to take their money back,” Mr. Zhang said.
. . .
“In China we believe in Keynesian economics,” said Mr. Zhang, the Jinfuzi chief executive, referring to the economic theory that favors a bigger role for government. “If what’s going on in China were happening in the U.S., it would have been called a recession. But in China, the government will step in to interfere in significant ways.”
Under President Xi, even economics has become a delicate topic. Many people in China are not willing to speak publicly because even economists aren’t allowed to make downward forecasts.
Yet in private conversations, investors, entrepreneurs and economists admit that with the high debt level and a trade war with the United States, the room for government maneuvering is shrinking. The degrees of pessimism vary, but many of them are bracing for a tough ride ahead.
. . .
Venture funds like East Zhang came into existence in part because, starting in 2014, Beijing made innovation and entrepreneurship top priorities. Leaders hoped that start-ups would help elevate China from a manufacturing power to a technology power. Corporations, banks and wealthy individuals fought to give money to venture funds to invest in start-ups.
“We ended up with a lot of dumb money, managed by inexperienced investors,” said Ran Wang, chief executive of the investment bank CEC Capital Group in Beijing.

For the full story, see:
Li Yuan. “Latest Sign of China’s Slowdown: A Technology Cash Crunch.” The New York Times (Tuesday, July 17, 2018): B1 & B2.
(Note: ellipses added.)
(Note: the online version of the story has the date July 16, 2018.)

Human Intelligence Helps A.I. Work Better

(p. B3) A recent study at the M.I.T. Media Lab showed how biases in the real world could seep into artificial intelligence. Commercial software is nearly flawless at telling the gender of white men, researchers found, but not so for darker-skinned women.
And Google had to apologize in 2015 after its image-recognition photo app mistakenly labeled photos of black people as “gorillas.”
Professor Nourbakhsh said that A.I.-enhanced security systems could struggle to determine whether a nonwhite person was arriving as a guest, a worker or an intruder.
One way to parse the system’s bias is to make sure humans are still verifying the images before responding.
“When you take the human out of the loop, you lose the empathetic component,” Professor Nourbakhsh said. “If you keep humans in the loop and use these systems, you get the best of all worlds.”

For the full story, see:
Paul Sullivan. “WEALTH MATTERS; Can Artificial Intelligence Keep Your Home Secure?” The New York Times (Saturday, June 30, 2018): B3.
(Note: the online version of the story has the date June 29, 2018.)

The “recent study” mentioned above, is:
Buolamwini, Joy, and Timnit Gebru. “Gender Shades: Intersectional Accuracy Disparities in Commercial Gender Classification.” Proceedings of Machine Learning Research 81 (2018): 1-15.

Earned Income Matters More Than Equal Income

(p. A13) The concept of a universal basic income, or UBI, has become part of the moral armor of Silicon Valley moguls who want a socially conscious defense against the charge that technology is making humanity obsolete.
. . .
We need policies that encourage job creation and working, not policies that pay people not to work.
In the mid-1960s, about 5% of men aged 25 to 54 were jobless. For 40 years that share has risen, and for much of the past decade the rate has remained over 15%. Suicide, divorce and opioid abuse are all associated with nonemployment, and many facts suggest that the misery of joblessness is far worse than that of a low-paying job. According to the most recent data, only 7% of working men in households earning less than $35,000 report being dissatisfied with their lives. But that share soars to 18% among the nonemployed of all incomes. This suggests that promoting employment is more important than reducing inequality.
. . . 50 years of evidence about labor supply in the U.S. suggests that giving people money will lead them to work less.
The Negative Income Tax experiments of the 1970s–when poorer households in a number of states received direct cash payments to keep them at a minimum income–are the closest America has come to a UBI. But they did not show “minimal impact on work,” as Mr. Yang suggests. Rather, they produced a quite significant work-hours reduction of between 5% and 25%, as well as “employment rate reductions . . . from about 1 to 10 percentage points,” according to one capable study.

For the full review, see:

Edward Glaeser. “‘BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.” The Wall Street Journal (Tuesday, July 10, 2018): A13.

(Note: first two ellipses added; third ellipsis in original.)
(Note: the online version of the review has the date July 9, 2018, and has the title “BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.”)

Entrepreneur Mackay Deserved to Be Dealt Four Aces

(p. C9) One evening sometime in the 1850s, John Mackay, a prospector, was playing poker with his fellow silver miners in Virginia City, Nev. The wagering was furious, and Mackay was playing well. In one hand, he was dealt an improbable three aces. The man next to him was “betting like a cyclone,” when Mackay drew the astonishing fourth ace, whereupon he laid down his cards and walked away without picking up the pot. “Leave me out, boys,” he said. He didn’t need it. At this point in his life, he had more money than he could ever spend.
. . .
With not a cent to his name, Mackay began swinging a pick ax for subsistence wages on other peoples’ claims, eventually working his way up to mine supervisor. “Mackay tried to cast his imagination into the rock,” Mr. Crouch says, “looking for clues that would lead him to a greater understanding of what wealth lay underground.” By 1865 he had acquired enough cash to buy a stake in a promising mine called the Kentuck. At first the investment looked to be another bust, but it suddenly hit big, paying out $1.6 million of the “precious needful,” as miners called valuable ore, over the next two years.
. . .
The author saves for last an account of the delicious comeuppance Mackay delivered to the American businessman Jay Gould –“the most hated man of the age.” Gould had secured a monopoly on trans-Atlantic telegraphy. Without competition, he gouged users, prompting Mackay, a believer in private enterprise, to lay his own undersea cable, thus breaking Gould’s stranglehold and winning public admiration on both sides of the Atlantic.
Mr. Crouch clearly admires his protagonist, at times nearly to distraction. He portrays Mackay throughout this well-written and worthwhile book as a man of high principle–kind, charitable and fair, dependably doing the noble thing. Strong and silent, he is the Gary Cooper of the sagebrush set. It ever so lightly strains credulity, however, to believe that Mackay didn’t harbor a little larceny in his heart, like nearly everybody on the Comstock during the mad rush. But readers may well want to take the author’s word that a man of such humility and generosity was exactly that. Nowhere will you read John Mackay’s name among the robber barons of his era. Some men who are dealt four aces in life deserve them.

For the full review, see:
Patrick Cooke. “‘The Man Who Hit the Mother Lode.” The Wall Street Journal (Saturday, July 7, 2018): C9.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 5, 2018, and has the title “‘The Bonanza King’ Review: The Man Who Hit the Mother Lode.”)

The book under review, is:
Crouch, Gregory. The Bonanza King: John Mackay and the Battle over the Greatest Riches in the American West. New York: Scribner, 2018.