Economics – Page 161 – artdiamondblog.com

Artificial Intelligence Is a Complement to Human Intelligence, Not a Substitute for It

Source of book image: http://img2-1.timeinc.net/ew/i/2013/11/05/Smarter-Than-You-Think.jpg

(p. 11) Clive Thompson, a Brooklyn-based technology journalist, uses this tale to open “Smarter Than You Think,” his judicious and insightful book on human and machine intelligence. But he takes it to a more interesting level. The year after his defeat by Deep Blue, Kasparov set out to see what would happen if he paired a machine and a human chess player in a collaboration. Like a centaur, the hybrid would have the strength of each of its components: the processing power of a large logic circuit and the intuition of a human brain’s wetware. The result: human-machine teams, even when they didn’t include the best grandmasters or most powerful computers, consistently beat teams composed solely of human grandmasters or superfast machines.

Thompson’s point is that “artificial intelligence” — defined as machines that can think on their own just like or better than humans — is not yet (and may never be) as powerful as “intelligence amplification,” the symbiotic smarts that occur when human cognition is augmented by a close interaction with computers.

For the full review, see:
WALTER ISAACSON. “Brain Gain.” The New York Times Book Review (Sun., November 3, 2013): 11.
(Note: the online version of the review has the date November 1, 2013.)

Book under review:
Thompson, Clive. Smarter Than You Think: How Technology Is Changing Our Minds for the Better. New York: Penguin Press, 2013.

Peck Shows that Job Interviews Do Not Identify Good Hires

(p. A18) Don Peck looked at how companies assess potential hires in an essay in The Atlantic called “They’re Watching You at Work.”
Peck demonstrates something that most of us already sense: that job interviews are a lousy way to evaluate potential hires. Interviewers at big banks, law firms and consultancies tend to prefer people with the same leisure interests — golf, squash, whatever. In one study at Xerox, previous work experience had no bearing on future productivity.
Now researchers are using data to try again to make a science out of hiring. They watch how potential hires play computer games to see who is good at task-switching, who possesses the magical combination: a strict work ethic but a loose capacity for “mind wandering.” Peck concludes that this greater reliance on cognitive patterns and game playing may have an egalitarian effect. It won’t matter if you went to Harvard or Yale. The new analytics sometimes lead to employees who didn’t even go to college. The question is do these analytics reliably predict behavior? Is the study of human behavior essentially like the study of nonhuman natural behavior — or is there a ghost in the machine?

For the full commentary, see:
DAVID BROOKS. “The Sidney Awards.” The New York Times (Fri., December 27, 2013): A18. [National Edition]
(Note: the online version of the commentary has the date December 26, 2013, and has the title “The Sidney Awards, Part 1.”)

The article praised by Brooks is:
Peck, Don. “They’re Watching You at Work.” The Atlantic (Dec. 2013).

Regulators Forbid Doctor from Curing Dentist’s Pelvic Pain

“Dr. Daniel Davidson, an Idaho dentist, has pelvic pain so severe that he cannot sit, and can stand for only limited periods.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A18) After visiting dozens of doctors and suffering for nearly five years from pelvic pain so severe that he could not work, Daniel Davidson, 57, a dentist in Dalton Gardens, Idaho, finally found a specialist in Phoenix who had an outstanding reputation for treating men like him.

Dr. Davidson, whose pain followed an injury, waited five months for an appointment and even rented an apartment in Phoenix, assuming he would need surgery and time to recover.
Six days before the appointment, it was canceled. The doctor, Michael Hibner, an obstetrician-gynecologist at St. Joseph’s Hospital and Medical Center, had learned that members of his specialty were not allowed to treat men and that if he did so, he could lose his board certification — something that doctors need in order to work.
The rule had come from the American Board of Obstetrics and Gynecology. On Sept. 12, it posted on its website a newly stringent and explicit statement of what its members could and could not do. Except for a few conditions, gynecologists were prohibited from treating men. Pelvic pain was not among the exceptions.
Dr. Davidson went home, close to despair. His condition has left him largely bedridden. The pain makes it unbearable for him to sit, and he can stand for only limited periods before he needs to lie down.
“These characters at the board jerked the rug out from underneath me,” he said.

For the full story, see:
DENISE GRADY. “Men With Pelvic Pain Find a Path to Treatment Blocked by a Gynecology Board.” The New York Times (Weds., December 11, 2013): A18.
(Note: the online version of the story has the date December 10, 2013.)

Carnegie Created “Plausible Fictions” on the Future Demand for Minor Railroads

Economists and historians continue to debate the importance or unimportance of railroads in the economic growth of the United States. This is a debate that I need to explore more.

(p. 129) It is doubtful that either [Scott or Carnegie] . . . truly believed that the new railroads, when built, would carry enough traffic to earn back their construction costs. A great number of them were along lightly traveled routes, which, like the Gilman, Springfield & Clinton Railroad in Illinois, connected small cities that did little business with one another. The roads were being built because money could be made building them. Carnegie profited from the commissions on the bond sales; Scott from diverting funds earmarked for construction into the hands of the select number of investors, himself included, who were directors of both the railroad and the improvement companies.

To raise money for roads not yet built and probably not really needed, Carnegie and Scott trafficked in what Richard White refers to as “the utilitarian fictions of capitalism.” Together, they constructed “plausible fictions” about the railroads, the passengers and freight that would ride them, the tolls that would be collected, the villages that would grow into towns and the towns into cities, creating new populations, products, and commerce.
Carnegie, a consummate optimist, took naturally to the task.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: bracketed words and ellipsis added.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Patent Allows Mechanic to Profit from Invention to Ease Births

“With Jorge Odón’s device, a plastic bag inflated around a baby’s head is used to pull it out of the birth canal.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) The idea came to Jorge Odón as he slept. Somehow, he said, his unconscious made the leap from a YouTube video he had just seen on extracting a lost cork from a wine bottle to the realization that the same parlor trick could save a baby stuck in the birth canal.

Mr. Odón, 59, an Argentine car mechanic, built his first prototype in his kitchen, using a glass jar for a womb, his daughter’s doll for the trapped baby, and a fabric bag and sleeve sewn by his wife as his lifesaving device.
. . .
(p. A4) In a telephone interview from Argentina, Mr. Odón described the origins of his idea.
He tinkers at his garage, but his previous inventions were car parts. Seven years ago, he said, employees were imitating a video showing that a cork pushed into an empty bottle can be retrieved by inserting a plastic grocery bag, blowing until it surrounds the cork, and drawing it out.
. . .
With the help of a cousin, Mr. Odón met the chief of obstetrics at a major hospital in Buenos Aires. The chief had a friend at the W.H.O., who knew Dr. Merialdi, who, at a 2008 medical conference in Argentina, granted Mr. Odón 10 minutes during a coffee break.
The meeting instead lasted two hours. At the end, Dr. Merialdi declared the idea “fantastic” and arranged for testing at the Des Moines University simulation lab, which has mannequins more true-to-life than a doll and a jar.
Since then, Mr. Odón has continued to refine the device, patenting each change so he will eventually earn royalties on it.
. . .
Dr. Merialdi said he endorsed a modest profit motive because he had seen other lifesaving ideas languish for lack of it. He cited magnesium sulfate injections, which can prevent fatal eclampsia, and corticosteroids, which speed lung development in premature infants.
“But first, this problem needed someone like Jorge,” he said. “An obstetrician would have tried to improve the forceps or the vacuum extractor, but obstructed labor needed a mechanic. And 10 years ago, this would not have been possible. Without YouTube, he never would have seen the video.”

For the full story, see:
DONALD G. McNEIL Jr. “Promising Tool in Difficult Births: A Plastic Bag.” The New York Times (Thurs., November 14, 2013): A1 & A4. [National Edition]
(Note: ellipses added.)
(Note: the online version of the story has the date November 13, 2013, and has the title “Car Mechanic Dreams Up a Tool to Ease Births.”)

Carnegie Failed Twice Before Bessemer Success

(p. 101) [Carnegie] . . . organized his own company to secure the rights to the Dodd process for strengthening iron rails by coating them with steel facings. Thomson agreed to appropriate $20,000 of Pennsylvania Railroad funds to test the new technology.
On March 12, 1867, Thomson wrote to tell Carnegie that his Dodd-processed rails had failed their first test: “treatment under the hammer…. You may as well abandon the Patent–It will not do if this Rail is a sample.” Three days later, Thomson wrote Carnegie again, this time marking his letter with a handwritten “Private” in the top left-hand corner and “a word to the wise” penned in just below. Carnegie had apparently asked Thomson for more time–and/or money–to continue his experiments. Thomson replied that the experiments his engineers had made had so “impaired my confidence in this process that I don’t feel at liberty to increase our order for these Rails.”
Instead of giving up, Carnegie pushed forward, hawking his new steel-faced iron rails to other railroad presidents, attempting to get a new contract with Thomson, and reorganizing the Freedom Iron Company in Lewistown, Pennsylvania, in which he was a major investor, into Freedom Iron and Steel. In the spring of 1867, he succeeded, despite Thomson’s misgivings, in getting the approval to manufacture and deliver a second 500-ton batch of steel-faced rails. The new rails fared as poorly as the old ones. There would be no further contracts forthcoming from the Pennsylvania Railroad or any other railroad.
Carnegie tried to bluff his way through. When his contacts in England recommended that he purchase the American rights to a better process for facing iron rails with steel, this one invented by a Mr. Webb, Carnegie retooled his mill for the new process. He was fooled a second time. Not only was the Webb process as impractical as the Dodd, but there was, as there (p. 102) had been with the Dodd process, confusion as to who held the American patent rights. Within a year, the company Carnegie had organized to produce the new steel-faced rails was out of business.
. . .
These early failures did not deter him from investing in other start-up companies and technologies, but he would in future be a bit more careful before committing his capital. In March 1869, Tom Scott solicited his advice about investing in the rights to a new “Chrome Steel process.” Carnegie replied that his “advice (which don’t cost anything if of no value) would be to have nothing to do with this or any other great change in the manufacture of steel or iron…. I know at least six inventors who have the secret all are so anxiously awaiting…. That there is to be a great change in the manufacture of iron and steel some of these years is probable, but exactly what form it is to take no one knows. I would advise you to steer clear of the whole thing. One will win, but many lose and you and I not being practical men would very likely be among the more numerous class. At least we would wager at very long odds. There are many enterprises where we can go in even.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: bracketed name, ellipsis near start, and ellipsis between paragraphs added; ellipsis internal to other paragraphs, in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

“Despising to Bury in the Ground Any of the Talents . . . Which Might Reach His Coffers”

(p. 97) . . . , Carnegie was concerned that he was overextended. From Dresden, in mid-November, he half jokingly apologized to his brother for placing his–and the family’s–finances in jeopardy. “Your finances are reputed far from healthy,” he had written Tom. “But how can they ever be otherwise? It was never intended. One of the firm, at least, was made to be forever head and ears in debt and to crowd full sail, despising to bury in the ground any of the talents (silver talents, I mean) which might reach his coffers, or to lie long under the suspicion of having at the bank even a moderate balance upon the right side of the ledger.” Carnegie had fantasized that “a whole year’s absence from opening up new enterprises… while the funds remained in charge of a super man, might possibly afford him, upon his return, a new sensation,” that of being solvent. But that was not going to happen.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis in title and at start added; ellipsis in Carnegie quote near end, in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

In 20th Century, Inventions Had Cultural Impact Twice as Fast as in 19th Century

I used Google’s Ngram tool to generate the Ngram above, using the same technologies used in the Ngram that appeared in the print (but not the online) version of the article quoted and cited below. The blue line is “railroad”; the red line is “radio”; the green line is “television”; the orange line is “internet.” The search was case-insensitive. The print (but not the online) version of the article quoted and cited below, includes a caption that describes the Ngram tool: “A Google tool, the Ngram Viewer, allows anyone to chart the use of words and phrases in millions of books back to the year 1500. By measuring historical shifts in language, the tool offers a quantitative approach to understanding human history.”

(p. 3) Today, the Ngram Viewer contains words taken from about 7.5 million books, representing an estimated 6 percent of all books ever published. Academic researchers can tap into the data to conduct rigorous studies of linguistic shifts across decades or centuries. . . .
The system can also conduct quantitative checks on popular perceptions.
Consider our current notion that we live in a time when technology is evolving faster than ever. Mr. Aiden and Mr. Michel tested this belief by comparing the dates of invention of 147 technologies with the rates at which those innovations spread through English texts. They found that early 19th-century inventions, for instance, took 65 years to begin making a cultural impact, while turn-of-the-20th-century innovations took only 26 years. Their conclusion: the time it takes for society to learn about an invention has been shrinking by about 2.5 years every decade.
“You see it very quantitatively, going back centuries, the increasing speed with which technology is adopted,” Mr. Aiden says.
Still, they caution armchair linguists that the Ngram Viewer is a scientific tool whose results can be misinterpreted.
Witness a simple two-gram query for “fax machine.” Their book describes how the fax seems to pop up, “almost instantaneously, in the 1980s, soaring immediately to peak popularity.” But the machine was actually invented in the 1840s, the book reports. Back then it was called the “telefax.”
Certain concepts may persevere, even as the names for technologies change to suit the lexicon of their time.

For the full story, see:
NATASHA SINGER. “TECHNOPHORIA; In a Scoreboard of Words, a Cultural Guide.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.
(Note: ellipsis added; bold in original.)
(Note: the online version of the article has the date December 7, 2013.)

Early Carnegie Profits “Were Quickly Reinvested in Other Projects”

(p. 78) The tens of thousands of dollars Carnegie earned in the four years he held the Columbia Oil stock were quickly reinvested in other projects.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Buffett’s Returns Not Due to Ability to Pick Good Managers

(p. B7) Investors for years have been searching in vain for a formula to replicate Warren Buffett’s legendary returns over the past 50 years.
The wait could be over.
A new study that claims to have uncovered this formula was published [in November 2013] . . . by the National Bureau of Economic Research in Cambridge, Mass. Its authors, all of whom have strong academic credentials, work for AQR Capital Management, a firm that manages several hedge funds and other investment offerings and has $90 billion in assets.
The study’s authors analyzed Mr. Buffett’s record since he acquired Berkshire Hathaway in 1964.
. . .
One factor that is conspicuous in its absence from the formula is anything to account for Mr. Buffett’s significant investments in privately owned companies. But that isn’t necessary, according to the researchers, because the public companies in which he has invested have outperformed the private ones.
This is somewhat surprising, given that Mr. Buffett has often trumpeted his abilities to pick good managers. Yet the researchers nevertheless find that his “returns are more due to stock selection than to his effect on management.”

For the full commentary, see:
MARK HULBERT. “Hulbert on Investing; Can the Buffett Investing Formula Really Be Bottled?” The Wall Street Journal (Sat., Dec. 14, 2013): B7.
(Note: ellipses, and bracketed words, added.)
(Note: the online version of the commentary has the date Dec. 13, 2013, and has the title “WEEKEND INVESTOR; How to Invest Like Warren Buffett; How can investors emulate Warren Buffett’s approach?”)

The National Bureau of Economic Research (NBER) paper that is discussed above:
Frazzini, Andrea, David Kabiller, and Lasse H. Pedersen. “Buffett’s Alpha.” NBER Working Paper # 19681, November 2013.

Ignorance of Economics Makes U.S. Agency Complicit in Elephant Deaths

“Crushed ivory falls out of the crusher as the U.S. crushed its six-ton stock of confiscated ivory at the Rocky Mountain Arsenal National Wildlife Refuge . . . .” Source of caption and photo: online version of the WSJ article quoted and cited below.

The higher the price of ivory, the greater the incentive for ivory poachers to kill elephants. The U.S. Fish and Wildlife Service could have put their cache of ivory on the market, thereby increasing the supply, and reducing the price. If they had done so, they would have reduced the incentive of the poachers to poach. (This is basic price theory that I teach in each of my micro-economic principles classes.) Instead they crushed the ivory and thereby doomed some elephants to death, who otherwise could have been saved.

(p. A3) COMMERCE CITY, Colo.–The U.S. government spent the past 25 years amassing contraband ivory in a warehouse here, with pieces ranging from tiny statuettes to full elephant tusks tattooed by intricate carvings. Ultimately, the pile grew to six tons–equivalent to ivory from at least 2,000 elephants.

On Thursday, the stash collected by the U.S. Fish and Wildlife Service was pulverized by an industrial rock crusher as government officials, conservationists from around the world and celebrities gathered to watch the destruction.
The move, which follows similar events in the Philippines and Gabon in recent years, is part of a global effort to combat elephant poaching, on the rise because of growing demand for ivory trinkets in Asia. Proponents argue that crushing the ivory conveys to illegal traffickers and collectors that it has no value unless it is attached to an elephant.
. . .
But critics of the practice said they worry that destroying the coveted commodity, sometimes referred to as “white gold,” could instead create the perception that the world’s remaining ivory is more valuable–and drive poachers to kill more elephants for their tusks. “This could be self-defeating,” said Michael ‘t Sas-Rolfes, an independent conservation economist.
. . .
While praising efforts to preserve elephants, some in conservation circles consider crushing contraband ivory to be an ineffective strategy.
Kirsten Conrad, a wildlife conservation consultant who has studied the Chinese ivory market, said elephants could be better served if sustainably harvested ivory–from elephants that died from natural causes, for example–were regularly offered for sale.
The proceeds would give communities in Africa an incentive to better protect wildlife, and the steady supply would dissuade speculators in China from stockpiling, as she says they are doing now. A kilo of raw ivory can sell for up to $3,000. “We’re losing an elephant every 16 minutes,” she said. “We should look really hard at legal trade.”

For the full story, see:
ANA CAMPOY. “Crushing Illegal Ivory Trade; In Move to Combat Elephant Poaching, U.S. Destroys Six Tons of ‘White Gold’.” The Wall Street Journal (Fri., Nov. 15, 2013): A3.
(Note: ellipses added.)
(Note: the online version of the review has the date Nov. 14, 2013, and has the title “Crushing Illegal Ivory Trade; In Move to Combat Elephant Poaching, Government Agency Destroys Six Tons of ‘White Gold’.”)

“Ivory on display before the U.S. crushed it in Commerce City, Colo., Thursday. On Thursday the government destroyed nearly six tons of seized contraband ivory tusks and trinkets.” Source of caption and photo: online version of the WSJ article quoted and cited above.