rvenkat + via:noahpinion   62

Measuring Technological Innovation over the Long Run
We use textual analysis of high-dimensional data from patent documents to create new indicators of technological innovation. We identify significant patents based on textual similarity of a given patent to previous and subsequent work: these patents are distinct from previous work but are related to subsequent innovations. Our measure of patent significance is predictive of future citations and correlates strongly with measures of market value. We identify breakthrough innovations as the most significant patents – those in the right tail of our measure – to construct indices of technological change at the aggregate, sectoral, and firm level. Our technology indices span two centuries (1840-2010) and cover innovation by private and public firms, as well as non-profit organizations and the US government. These indices capture the evolution of technological waves over a long time span and are strong predictors of productivity at the aggregate, sectoral, and firm level.
text_mining  technology  evolution  econometrics  via:noahpinion 
february 2019 by rvenkat
R. A. Fisher: a faith fit for eugenics. - PubMed - NCBI
In discussions of 'religion-and-science', faith is usually emphasized more than works, scientists' beliefs more than their deeds. By reversing the priority, a lingering puzzle in the life of Ronald Aylmer Fisher (1890-1962), statistician, eugenicist and founder of the neo-Darwinian synthesis, can be solved. Scholars have struggled to find coherence in Fisher's simultaneous commitment to Darwinism, Anglican Christianity and eugenics. The problem is addressed by asking what practical mode of faith or faithful mode of practice lent unity to his life? Families, it is argued, with their myriad practical, emotional and intellectual challenges, rendered a mathematically-based eugenic Darwinian Christianity not just possible for Fisher, but vital.
history_of_ideas  people  statistics  religion  evolutionary_biology  via:noahpinion 
february 2019 by rvenkat
Prediction Machines: The Simple Economics of Artificial Intelligence
"What does AI mean for your business? Read this book to find out." -- Hal Varian, Chief Economist, Google. Artificial intelligence does the seemingly impossible, magically bringing machines to life-driving cars, trading stocks, and teaching children. But facing the sea change that AI will bring can be paralyzing. How should companies set strategies, governments design policies, and people plan their lives for a world so different from what we know? In the face of such uncertainty, many analysts either cower in fear or predict an impossibly sunny future. But in "Prediction Machines," three eminent economists recast the rise of AI as a drop in the cost of prediction. With this single, masterful stroke, they lift the curtain on the AI-is-magic hype and show how basic tools from economics provide clarity about the AI revolution and a basis for action by CEOs, managers, policy makers, investors, and entrepreneurs. When AI is framed as cheap prediction, its extraordinary potential becomes clear: Prediction is at the heart of making decisions under uncertainty. Our businesses and personal lives are riddled with such decisions.; Prediction tools increase productivity--operating machines, handling documents, communicating with customers.; Uncertainty constrains strategy. Better prediction creates opportunities for new business structures and strategies to compete. Penetrating, fun, and always insightful and practical, "Prediction Machines" follows its inescapable logic to explain how to navigate the changes on the horizon. The impact of AI will be profound, but the economic framework for understanding it is surprisingly simple.

-- interesting pov but does not warrant a book length treatment. What about lowered cost of making mistakes, impact of economic forecasting with model mis-specification,....?
book  economics  prediction  automation  artificial_intelligence  machine_learning  market_microstructure  via:noahpinion  i_remain_skeptical 
november 2018 by rvenkat
[1809.08937] Networks and the Resilience and Fall of Empires: a Macro-Comparison of the Imperium Romanum and Imperial China
This paper proposes to proceed from a rather metaphorical application of network terminology on polities and imperial formations of the past to an actual use of tools and concepts of network science. For this purpose, a well established network model of the route system in the Roman Empire and a newly created network model of the infrastructural web of Imperial China are visualised and analysed with regard to their structural properties. Findings indicate that these systems could be understood as large scale complex networks with pronounced differences in centrality and connectivity among places and a hierarchical sequence of clusters across spatial scales from the overregional to the local level. Such properties in turn would influence the cohesion and robustness of imperial networks, as is demonstrated with two tests on vulnerability to node failure and to the collapse of longdistance connectivity. Tentatively, results can be connected with actual historical dynamics and thus hint at underlying network mechanisms of large scale integration and disintegration of political formations.
networks  history  spatial_statistics  network_data_analysis  geography  for_friends  teaching  via:noahpinion 
september 2018 by rvenkat
Global Distribution of Economic Activity: Nature, History, and the Role of Trade1 | The Quarterly Journal of Economics | Oxford Academic
We explore the role of natural characteristics in determining the worldwide spatial distribution of economic activity, as proxied by lights at night, observed across 240,000 grid cells. A parsimonious set of 24 physical geography attributes explains 47% of worldwide variation and 35% of within-country variation in lights. We divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, and confront a puzzle. In examining within-country variation in lights, among countries that developed early, agricultural variables incrementally explain over 6 times as much variation in lights as do trade variables, while among late developing countries the ratio is only about 1.5, even though the latter group is far more dependent on agriculture. Correspondingly, the marginal effects of agricultural variables as a group on lights are larger in absolute value, and those for trade smaller, for early developers than for late developers. We show that this apparent puzzle is explained by persistence and the differential timing of technological shocks in the two sets of countries. For early developers, structural transformation due to rising agricultural productivity began when transport costs were still high, so cities were localized in agricultural regions. When transport costs fell, these agglomerations persisted. In late-developing countries, transport costs fell before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. Consistent with this explanation, countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers
spatio-temporal_statistics  spatial_statistics  econometrics  economic_geography  economic_history  via:noahpinion 
january 2018 by rvenkat
Deaths of Despair or Drug Problems?
The United States is in the midst of a fatal drug epidemic. This study uses data from the Multiple Cause of Death Files to examine the extent to which increases in county-level drug mortality rates from 1999-2015 are due to “deaths of despair”, measured here by deterioration in medium-run economic conditions, or if they instead are more likely to reflect changes in the “drug environment” in ways that present differential risks to population subgroups. A primary finding is that counties experiencing relative economic decline did experience higher growth in drug mortality than those with more robust growth, but the relationship is weak and mostly explained by confounding factors. In the preferred estimates, changes in economic conditions account for less than one-tenth of the rise in drug and opioid-involved mortality rates. The contribution of economic factors is even less when accounting for plausible selection on unobservables, with even a small amount of remaining confounding factors being sufficient to entirely eliminate the relationship. These results suggest that the “deaths of despair” framing, while provocative, is unlikely to explain the main sources of the fatal drug epidemic and that efforts to improve economic conditions in distressed locations, while desirable for other reasons, are not likely to yield significant reductions in drug mortality. Conversely, the risk of drug deaths varies systematically over time across population subgroups in ways that are consistent with an important role for the public health environment related to the availability and cost of drugs. Put succinctly, the fatal overdose epidemic is likely to primarily reflect drug problems rather than deaths of despair.
epidemiology  economic_sociology  causal_inference  public_policy  united_states_of_america  via:noahpinion 
january 2018 by rvenkat
The effectiveness of government bureaucracy: A study of the Ghanaian civil service - IGC
-- comparable findings from Indian civil service exist. By far, the biggest hurdle faced in India are intrusions and influence by the political class on projects big and small.
africa  bureaucracy  management  governance  via:noahpinion 
january 2018 by rvenkat
Is It Merely A Labor Supply Shock? Impacts of Syrian Migrants on Local Economies in Turkey
We use a large and geographically varying inflow of over 2.5 million Syrian migrants in Turkey between 2012 and 2015 to study the effect of migration on local economies. Using recently available province-level residence data of Syrian population in Turkey, we do not find adverse employment or wage effects for native-born Turkish workers overall, or those without a high school degree. These results are robust to a range of strategies to construct reliable control groups. On the other hand, we find evidence for a number of channels indicating demand side effects of migration that helped offset the impact of a labor supply shock. Turkish workers’ participation in the formal sector rose in response to the migration, consistent with complementarity of migrants and native born workers. In addition, migration led to an increase in residential building construction, with the number of new dwelling units increasing by more than 33%. Finally, Syrian migration brought in capital and entrepreneurs to the host regions, spurring new business creation: the migration led to a more than 24% increase in new companies, reflecting an increase in both Syrian-founded and non-Syrian founded companies. Our findings suggest that migration-induced increases in regional demand and capital supply enable local labor markets to absorb inflow of migrant labor, and prevent sizable wage decline or job loss for native workers.
immigration  labor  comparative  microeconomics  via:noahpinion 
january 2018 by rvenkat
Price of Prejudice
We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but highly responsive to the "price of prejudice," i.e., to the opportunity cost of choosing a less productive worker on ethnic grounds. Discriminators are on average willing to forego 8 percent of their earnings to avoid a coworker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior.
labor  race  discrimination  experiments  behavioral_economic_sociology  via:noahpinion 
january 2018 by rvenkat
How Do Individuals Repay Their Debt? The Balance-Matching Heuristic
We study how individuals repay their debt using linked data on multiple credit cards from five major issuers. We find that individuals do not allocate repayments to the higher interest rate card, which would minimize the cost of borrowing. Instead, individuals allocate repayments using a balance-matching heuristic under which the share of repayments on each card is matched to the share of balances on each card. We show that balance matching captures more than half of the predictable variation in repayments, performs substantially better than other models, and is highly persistent within individuals over time. Consistent with these findings, we show that machine learning algorithms attribute the greatest variable importance to balances and the least variable importance to interest rates in predicting repayment behavior.
behavioral_economics  dmce  teaching  via:noahpinion 
january 2018 by rvenkat
Unity in Diversity: The Nascent Political Identity of Indian-Americans | Harvard Political Review
-- if you've ever lived in India among us, the observations are no-brainers; the article hits the nail on the head. It is interesting how the Indian-American immigrants have managed to retain their socio-economic identities as they re-rooted themselves in this continent but then again, it is not surprising.
political_economy  immigration  us_politics  civic_engagement  political_sociology  india  united_states_of_america  via:noahpinion 
december 2017 by rvenkat
The Geography of Poverty and Nutrition: Food Deserts and Food Choices Across the United States
We study the causes of “nutritional inequality”: why the wealthy tend to eat more healthfully than the poor in the U.S. Using two event study designs exploiting entry of new supermarkets and households' moves to healthier neighborhoods, we reject that neighborhood environments have economically meaningful effects on healthy eating. Using a structural demand model, we find that exposing low-income households to the same food availability and prices experienced by high-income households would reduce nutritional inequality by only 9%, while the remaining 91% is driven by differences in demand. In turn, these income-related demand differences are partially explained by education, nutrition knowledge, and regional preferences. These findings contrast with discussions of nutritional inequality that emphasize supply-side issues such as food deserts.
geography  poverty  health  development_economics  united_states_of_america  via:noahpinion 
december 2017 by rvenkat
The Economics of Scale-Up
Most randomized controlled trials (RCT) of social programs test interventions at modest scale. While the hope is that promising programs will be scaled up, we have few successful examples of this scale-up process in practice. Ideally we would like to know which programs will work at large scale before we invest the resources to take them to scale. But it would seem that the only way to tell whether a program works at scale is to test it at scale. Our goal in this paper is to propose a way out of this Catch-22. We first develop a simple model that helps clarify the type of scale-up challenge for which our method is most relevant. Most social programs rely on labor as a key input (teachers, nurses, social workers, etc.). We know people vary greatly in their skill at these jobs. So social programs, like firms, confront a search problem in the labor market that can lead to inelastically-supplied human capital. The result is that as programs scale, either average costs must increase if program quality is to be held constant, or else program quality will decline if average costs are held fixed. Our proposed method for reducing the costs of estimating program impacts at large scale combines the fact that hiring inherently involves ranking inputs with the most powerful element of the social science toolkit: randomization. We show that it is possible to operate a program at modest scale n but learn about the input supply curves facing the firm at much larger scale (S × n) by randomly sampling the inputs the provider would have hired if they operated at scale (S × n). We build a simple two-period model of social-program decision making and use a model of Bayesian learning to develop heuristics for when scale-up experiments of the sort we propose are likely to be particularly valuable. We also present a series of results to illustrate the method, including one application to a real-world tutoring program that highlights an interesting observation: The noisier the program provider’s prediction of input quality, the less pronounced is the scale-up problem.
experimental_sociology  economics  policy  intervention  via:noahpinion 
november 2017 by rvenkat
The rise and future of progressive redistribution | VOX, CEPR’s Policy Portal
-- interesting claim that it[inequality] is not a result of stagnation or regression in progressive redisributive policies but rather the emphasis on social insurance for aging population.
income  wealth  inequality  world_trends  demographics  policy  economic_history  via:noahpinion 
november 2017 by rvenkat
Types of Contact: A Field Experiment on Collaborative and Adversarial Caste Integration
Integration is one policy response to tackle prejudice between groups, but little is known about how the type of integration might moderate its impact. This paper estimates the effects of two types of contact: collaborative and adversarial. I recruited 1,261 young Indian men from different castes, and randomly assigned them to either participate in month-long cricket leagues involving 640 matches or to serve as a control group. Players faced variation in collaborative contact, through random assignment to same-caste or mixed-caste teams, and adversarial contact, through random assignment of opponents. I present three sets of findings. First, each type of contact affects participants’ willingness to interact with other castes. Collaborative contact increases post-league cross-caste friendships,whereas adversarial contact reduces them. In contrast, both types of contact increase the number of other castes chosen as teammates for a future match, consistent with the two types of contact driving opposite inferences about the friendliness of outgroups, but similar inferences about outgroup ability. Second, these effects generalize to the outgroup as a whole, particularly for collaborative contact,which reduces caste bias in a voting exercise by up to 33%. This suggests that participants are not just changing their minds about those they directly interact with, but also about the caste group in general. Third, collaborative contact increases efficiency: by increasing the predicted win probability of the chosen team by 4 percentage points, and by increasing cross-caste trade by 11 percentage points in an exercise with cross-caste gains from trade. Adversarial contact has no impact on either. Together these findings show that different types of contact promote different inferences about outgroups, which mediate the economic impact of contact.

-- the Indian in me wants to ignore these studies given my experience with the caste system but I appreciate the effort. If the goal was to score one for the _contact hypothesis_, they have got one.
experimental_sociology  econometrics  caste_system  india  homophily  networks  teaching  via:noahpinion 
november 2017 by rvenkat
An expressive voting model of anger, hatred, harm and shame | SpringerLink
To consider some political implications of angry voters, we alter the standard expressive model in a fundamental way. One result is that an angry voter with a strong sense of shame at the thought of voting to harm others, may still do so, even when the harm is brutal. Indeed, his willingness to vote for harming others may increase if the proposed harm becomes more severe, even though the angry voter is more “decent” (less willing to harm others) than most of us sometimes are. Several examples are given that are consistent with the most troubling implications of the model. An empirical appendix follows the concluding section which tests the implications of the model indirectly.

--classic rational voter :), class discussion, hw,...?
rational_choice  behavioral_economics  voting  political_science  dmce  teaching  via:noahpinion 
november 2017 by rvenkat
Immigrants Assimilate into the Political Mainstream | Cato Institute
-- somebody ought to do automated text analysis to look for systematic differences between reports produced by think tanks, newspaper reports and all their ilk and compare them with corresponding academic publications.
report  think_tank  us_politics  immigration  political_sociology  via:noahpinion 
november 2017 by rvenkat
Natural Experiments in Macroeconomics
A growing literature relies on natural experiments to establish causal effects in macroeconomics. In diverse applications, natural experiments have been used to verify underlying assumptions of conventional models, quantify specific model parameters, and identify mechanisms that have major effects on macroeconomic quantities but are absent from conventional models. We discuss and compare the use of natural experiments across these different applications and summarize what they have taught us about such diverse subjects as the validity of the Permanent Income Hypothesis, the size of the fiscal multiplier, and about the effects of institutions, social structure, and culture on economic growth. We also outline challenges for future work in each of these fields, give guidance for identifying useful natural experiments, and discuss the strengths and weaknesses of the approach.

review  natural_experiment  econometrics  causal_inference  via:noahpinion 
november 2017 by rvenkat
Why there aren't more women in STEM fields | VOX, CEPR’s Policy Portal
-- interesting but not sure if a highly subjective variable _masculinity_ can be predictive or useful

this is much better... does anecdotal(personal) evidence count.

gender  education  labor  economic_sociology  discrimination  sociology_of_science  sociology_of_tecchnology  via:noahpinion 
november 2017 by rvenkat
The Technological Origins of Protestantism, or the Martin Luther Tech Myth | L.M. Sacasas
-- mentions of new books on the reformation
-- McLuhan-ian take on Protestant faith (embodied theology?)
media_studies  history  religion  theology  16th_century  via:noahpinion 
november 2017 by rvenkat
Yale Law Journal - Stuck! The Law and Economics of Residential Stagnation
America has become a nation of homebodies. Rates of interstate mobility, by most estimates, have been falling for decades. Interstate mobility rates are particularly low and stagnant among disadvantaged groups—despite a growing connection between mobility and economic opportunity. Perhaps most importantly, mobility is declining in regions where it is needed most. Americans are not leaving places hit by economic crises, resulting in unemployment rates and low wages that linger in these areas for decades. And people are not moving to rich regions where the highest wages are available.

This Article advances two central claims. First, declining interstate mobility rates create problems for federal macroeconomic policymaking. Low rates of interstate mobility make it harder for the Federal Reserve to meet both sides of its “dual mandate”: ensuring both stable prices and maximum employment. Low interstate mobility rates also impair the efficacy and affordability of federal safety net programs that rely on state and local participation, and reduce wealth and growth by inhibiting agglomeration economies. While determining an optimal rate of interstate mobility is difficult, policies that unnaturally inhibit interstate moves worsen national economic problems.

Second, the Article argues that governments, mostly at the state and local levels, have created a huge number of legal barriers to interstate mobility. Land-use laws and occupational licensing regimes limit entry into local and state labor markets. Different eligibility standards for public benefits, public employee pension policies, homeownership subsidies, state and local tax regimes, and even basic property law rules inhibit exit from low-opportunity states and cities. Furthermore, building codes, mobile home bans, federal location-based subsidies, legal constraints on knocking down houses, and the problematic structure of Chapter 9 municipal bankruptcy all limit the capacity of failing cities to “shrink” gracefully, directly reducing exit among some populations and increasing the economic and social costs of entry limits elsewhere.

Combining these two insights, the Article shows that big questions of macroeconomic policy and performance turn on the content of state and local policies usually analyzed using microeconomic tools. Many of the legal barriers to interstate mobility emerged or became stricter during the period in which interstate mobility declined. While causation is difficult to determine, public policies developed by state and local governments more interested in guaranteeing local population stability than ensuring successful macroeconomic conditions either generated or failed to stymie falling mobility rates. The Article concludes by suggesting how the federal government could address stagnation in interstate mobility.
migration  cities  economic_geography  bureaucracy  law  regulation  labor  policy  critique  political_economy  via:noahpinion 
october 2017 by rvenkat
Risk Attitudes Across The Life Course - Dohmen - 2017 - The Economic Journal - Wiley Online Library
This article investigates how risk attitudes change over the life course. We study the age trajectory of risk attitudes all the way from early adulthood until old age, in large representative panel data sets from the Netherlands and Germany. Age patterns are generally difficult to identify separately from cohort or calendar period effects. We achieve identification by replacing calendar period indicators with controls for the specific underlying factors that may change risk attitudes across periods. The main result is that willingness to take risks decreases over the life course, linearly until approximately age 65 after which the slope becomes flatter.

a dilute version here

-- any comments, historians?
risk_assessment  behavioral_economics  macroeconomics  demographics  dmce  teaching  via:noahpinion 
october 2017 by rvenkat
The Power of Bias in Economics Research - Ioannidis - 2017 - The Economic Journal - Wiley Online Library
We investigate two critical dimensions of the credibility of empirical economics research: statistical power and bias. We survey 159 empirical economics literatures that draw upon 64,076 estimates of economic parameters reported in more than 6,700 empirical studies. Half of the research areas have nearly 90% of their results under-powered. The median statistical power is 18%, or less. A simple weighted average of those reported results that are adequately powered (power ≥ 80%) reveals that nearly 80% of the reported effects in these empirical economics literatures are exaggerated; typically, by a factor of two and with one-third inflated by a factor of four or more.
econometrics  methods  statistics  meta-analysis  critique  via:noahpinion 
october 2017 by rvenkat
Political Theory of the Firm
The revenues of large companies often rival those of national governments, and some companies have annual revenues higher than many national governments. Among the largest corporations in 2015, some had private security forces that rivaled the best secret services, public relations offices that dwarfed a US presidential campaign headquarters, more lawyers than the US Justice Department, and enough money to capture (through campaign donations, lobbying, and even explicit bribes) a majority of the elected representatives. The only powers these large corporations missed were the power to wage war and the legal power of detaining people, although their political influence was sufficiently large that many would argue that, at least in certain settings, large corporations can exercise those powers by proxy. Yet in economics, the commonly prevailing view of the firm ignores all these elements of politics and power. We must recognize that large firms have considerable power to influence the rules of the game. I call attention to the risk of a "Medici vicious circle," in which economic and political power reinforce each other. The possibility and extent of a "Medici vicious circle" depends upon several nonmarket factors. I discuss how they should be incorporated in a broader "Political Theory" of the firm.
political_economy  review  microeconomics  ?  via:noahpinion 
august 2017 by rvenkat
The Quest for Parsimony in Behavioral Economics: New Methods and Evidence on Three Fronts
Behavioral economics identifies myriad deviations from classical economic assumptions about consumer decision-making, but lacks evidence on how its diverse phenomena fit together and whether they are amenable to modeling as low-dimensional constructs. We pursue such parsimony on three fronts, with success on two and instructive failure on the third. Elicitation parsimony reduces impediments to data collection by streamlining standard methods for directly measuring a person’s behavioral tendencies. We do so for 17 potentially behavioral factors per individual in a large, nationally representative sample, and several sets of results indicate that our streamlined elicitations yield low-cost, high-quality data. Behavioral sufficient statistic parsimony aggregates information across behavioral factors, within-person, to create two new lower-dimensional, consumer-level measures of behavioral tendencies. These statistics usefully capture cross-sectional variation in behavioral tendencies, strongly and negatively correlating with a rich index of financial condition even after (over-)controlling for demographics, classical risk attitudes and patience, cognitive skills including financial literacy, and survey effort. Our quest for common factor parsimony largely fails: within-consumer correlations between behavioral factors tend to be low, and the common factor contributing to all 17 behavioral factors within-individual is weakly identified and does not help explain outcomes conditional on the other covariates. Altogether our results provide many new insights into behavioral factors: their distributions, inter-relationships, distinctions from classical factors, and links to outcomes. Our findings also support the two leading approaches to modeling behavioral factors—considering them in relative isolation, and summarizing them with reduced-form sufficient statistics—and provide data and methods for honing both approaches
behavioral_economics  methods  econmetrics  to_read  via:noahpinion 
january 2017 by rvenkat
The Writing That Shaped Economic Thinking in 2016 - Bloomberg View
-- feeling a sense of accomplishment this year because I managed to read a few of them. A first for me since my foray into being a professional dilettante in yet another discipline :)
via:noahpinion  economics  macroeconomics  policy  book  review 
december 2016 by rvenkat
Secrets and agents | The Economist
George Akerlof’s 1970 paper, “The Market for Lemons”, is a foundation stone of information economics. The first in our series on seminal economic idea
the_economist  information  economics  game_theory  teaching  classic  via:noahpinion 
july 2016 by rvenkat
All that Glitters Is Not Gold: Comparing Backtest and Out-of-Sample Performance on a Large Cohort of Trading Algorithms by Thomas Wiecki, Andrew Campbell, Justin Lent, Jessica Stauth :: SSRN
When automated trading strategies are developed and evaluated using backtests on historical pricing data, there exists a tendency to overfit to the past. Using a unique dataset of 888 algorithmic trading strategies developed and backtested on the Quantopian platform with at least 6 months of out-of-sample performance, we study the prevalence and impact of backtest overfitting. Specifically, we find that commonly reported backtest evaluation metrics like the Sharpe ratio offer little value in predicting out of sample performance (R² < 0.025). In contrast, higher order moments, like volatility and maximum drawdown, as well as portfolio construction features, like hedging, show significant predictive value of relevance to quantitative finance practitioners. Moreover, in line with prior theoretical considerations, we find empirical evidence of overfitting – the more backtesting a quant has done for a strategy, the larger the discrepancy between backtest and out-of-sample performance. Finally, we show that by training non-linear machine learning classifiers on a variety of features that describe backtest behavior, out-of-sample performance can be predicted at a much higher accuracy (R² = 0.17) on hold-out data compared to using linear, univariate features. A portfolio constructed on predictions on hold-out data performed significantly better out-of-sample than one constructed from algorithms with the highest backtest Sharpe ratios.
algorithms  finance  machine_learning  evaluation  for_friends  via:noahpinion 
june 2016 by rvenkat
How predictable is technological progress?
Recently it has become clear that many technologies follow a generalized version of Moore's law, i.e. costs tend to drop exponentially, at different rates that depend on the technology. Here we formulate Moore's law as a correlated geometric random walk with drift, and apply it to historical data on 53 technologies. We derive a closed form expression approximating the distribution of forecast errors as a function of time. Based on hind-casting experiments we show that this works well, making it possible to collapse the forecast errors for many different technologies at different time horizons onto the same universal distribution. This is valuable because it allows us to make forecasts for any given technology with a clear understanding of the quality of the forecasts. As a practical demonstration we make distributional forecasts at different time horizons for solar photovoltaic modules, and show how our method can be used to estimate the probability that a given technology will outperform another technology at a given point in the future

-- I have no expertise to comment on it. I need to follow-up on what other more knowledgeable people think of this.
technology  economics  econophysics  via:noahpinion 
may 2016 by rvenkat
The Political Legacy of American Slavery
We show that contemporary differences in political attitudes across counties in the American South in part trace their origins to slavery’s prevalence more than 150 years ago. Whites who currently live in Southern counties that had high shares of slaves in 1860 are more likely to identify as a Republican, oppose affirmative action, and express racial resentment and colder feelings toward blacks. These results cannot be explained by existing theories, including the theory of contemporary racial threat. To explain these results, we offer evidence for a new theory involving the historical persistence of political and racial attitudes. Following the Civil War, Southern whites faced political and economic incentives to reinforce existing racist norms and institutions to maintain control over the newly free African-American population. This amplified local differences in racially conservative political attitudes, which in turn have been passed down locally across generations. Our results challenge the interpretation of a vast literature on racial attitudes in the American South.
institutions  economics  slavery  political_psychology  political_science  via:noahpinion 
may 2016 by rvenkat
How the West (and the Rest) Got Rich - WSJ
Her homepage here (http://deirdremccloskey.com/). Interesting take on global human progress. Her 'Bourgeois era' trilogy seems interesting.....

Critiques of North and Institutional Economics aside, her contrarian ideas are worth thinking about.
economics  human_progress  history_of_ideas  economist  historian  book  via:noahpinion 
may 2016 by rvenkat

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