Pur Autre Vie

I'm not wrong, I'm just an asshole

Tuesday, November 13, 2018

Basic Model of Belief Formation

I've been thinking a bit about how people form beliefs. I'll spell out my model here and then look at a few implications. For the time being I'm using "belief" to mean beliefs about factual matters, but I think values can be added in without changing the basic logic. Also please bear in mind that this post is just meant to lay out a basic model. In future posts I will or now I just want to frame my thoughts.

The idea is that people form beliefs in a kind of Bayesian process, incorporating new information as they absorb it. Ideally they modulate their level of confidence to match the amount of information available to them. I've included a numerical example below, but I think the intuition is pretty easy without bogging down in the numbers. When you come to a topic you are unfamiliar with, the initial facts that are presented to you will give you a general sense of what the issue is. But you should recognize that there are other facts out there that may change your view, and so at first your beliefs are highly provisional. As you become more confident that you've gathered enough relevant information, you shift toward a higher degree of confidence in your conclusions. This is clearly visible in the numerical example below.

Another key aspect of this is its path dependency. There are a lot of relevant facts that might bear on a particular issue, and at various points in the learning process you might be leaning pretty far in one direction or another. (In my numerical example below, you can see that after round 2, Player A sees a 33% chance that x is 3 and a 0% chance that x is 8, while Player B sees a 0% chance that x is 3 and a 50% chance that x is 8.) So although fully formed individuals should come to the same conclusion, they get there by different paths, and at any given moment partially-informed individuals may have very different outlooks.

Finally, note that the pieces of information could be categorized by the conclusions they tend to promote. This is not necessarily easy—for instance, the fact that x is greater than 6 boosts the probability that x = 8 for Player B but not for Player A, as a result of the information they had already learned—but in theory it's possible to select facts that tend to support a desired conclusion (whether or not it is true), and in practice it seems likely this is a feasible thing to do.

That's enough for now, I'll write another post later applying this model in a somewhat less theoretical way.



Here's the illustration. Let's say there are two "players" in a game where the point is to guess x, where x is an integer between 1 and 10 (inclusive). Each player learns a new piece of information each round. Note that I am making an implicit assumption about the way the information is generated, but I'm going to ignore that nuance. Here are Player A's thoughts:

Round 1
information: x is odd
conclusion:

20% chance x is 1
20% chance x is 3
20% chance x is 5
20% chance x is 7
20% chance x is 9

Round 2
information: x is a factor of 72
conclusion:

33.3% chance x is 1
33.3% chance x is 3
33.3% chance x is 9

Round 3
information: x is greater than 6
conclusion:

100% chance x is 9



Now here are Player B's thoughts:

Round 1
information: x is a factor of 72
conclusion:
14.3% chance x is 1
14.3% chance x is 2
14.3% chance x is 3
14.3% chance x is 4
14.3% chance x is 6
14.3% chance x is 8
14.3% chance x is 9

Round 2
information: x is greater than 6
conclusion:
50% chance x is 8
50% chance x is 9

Round 3
information: x is odd
conclusion:
100% chance x is 9

Tuesday, September 25, 2018

Are Political Incentives Congenial to Upzoning?

Are the politics of upzoning easy or hard? I got into a debate with a friend about this, and I was surprised by his insistence that the politics are easy or, to be more precise, that the politics would be easy if politicians could accurately predict the political consequences of passing legislation calling for massive upzoning. (Throughout the post I use the term "upzoning" to refer not just to a literal upzoning, but also to eliminating historical districts, overuse of landmark status, and other barriers to development.)

This post will explain why I think the politics are hard. I'll use New York City as my example, though I think most of my arguments would apply equally to other jurisdictions. To be clear, I support a certain amount of upzoning. I just don't think the politics are easy.

Briefly, the argument that enacting a big upzoning would be popular rests on the idea that people reward incumbents when things are good and they punish incumbents when things are bad. Incumbents, the theory goes, should do everything in their power to make circumstances better, regardless of what voters purport to want. Since upzoning will make a lot of people better off, politicians should vote for it, and the reason they don't is that they are bad at predicting the consequences of their actions.

I think this is the wrong way to think about politics. I also think it's wrong on its own terms.

I think voting behavior is a function of a lot of different things, many of which are unpredictable enough that from a politician's perspective they might as well be random. There is nevertheless a strong incumbency bias, but I don't think that's because incumbents are rewarded much for people's lives improving. I think incumbents tend to get knocked off when voters are susceptible to being mobilized around a particularly salient issue. So my political advice to an incumbent would not be to maximize the rate of improvement in voters' lives, but rather to be risk-averse, and particularly risk-averse in areas where voters can be mobilized because of their strong sentiments.

I am not talking about executive performance. So for instance, Bilandic definitely paid a price for Chicago's disastrous response to the snowstorms of 1979. And in extreme cases, the same logic can certainly apply to legislators. You don't want a depression to happen while you are an incumbent (although the politics of Obama's stimulus package are not encouraging). But at the margin, I don't think it's often politically smart to vote for policy X, which will improve many lives by some small amount, but will be offensive to a small but vocal group of voters.

That brings us to the improvements to be expected from upzoning. Unfortunately, I don't think those benefits would be large enough to be differentiated from overall noise, and the benefits would be distributed in such a way that incumbents are unlikely to benefit.

First, who benefits from upzoning? Primarily market-price renters. Market renters are a minority in New York City. About half of people live in rent-stabilized apartments, many are homeowners, and of course some live in public housing. Market renters are still an important constituency, but a relatively small one. A majority of New Yorkers would see no direct benefit from falling rents. And of course plenty of New Yorkers would experience a loss proportional to the drop in rents.

Second, a lot of the beneficiaries of upzoning would be people who are "priced in" to the city, that is, new residents. Although in principle they should be grateful to the incumbent legislators for opening this opportunity, in practice new residents are actually among the most anti-incumbent voters. (This was clearly visible in recent wins by Alexandria Ocasio-Cortez and Julia Salazar.) A smart incumbent should almost never want a flood of new residents in his or her district, particularly where the incumbent enjoys an advantage from the existing ethnic/racial mix (not uncommon in New York City).

Finally, I think it's unrealistic to expect upzoning to lead to very many people having the subjective experience of paying less in rent. I'll note that when rents fell during the financial crisis, they mostly seemed to fall for new leases. I am unaware of any landlord who lowered rent when renewing an existing lease. This is admittedly anecdotal, but I am pretty sure most renters would get a rent decrease either (A) when they move, or (B) over time as inflation reduces their real rental expenses. In neither case would I expect the renter to experience the lower rent as a life improvement significant enough to call for rewarding the incumbent legislature.

Also, demand for New York real estate seems very inelastic to me. There are a lot of people who want to move to the city but are priced out. When the land is upzoned, those people will start moving into the city, blunting the fall in rents. The same thing goes for people leaving the city for cheaper cities—more of them will stay if rents are lower, boosting demand and again blunting the fall in rents. (I admit that in this case incumbents would benefit by keeping voters where they are.)

So in other words I would expect upzoning to be experienced as a small fall in rents and a large increase in population. That is probably a very good thing, but it is not subjectively experienced as a particularly good thing by existing voters. I'll note that it's conceivable that in the medium run rents would actually go up, since a denser, larger city is likely to be a more attractive place to live. (Admittedly, cutting against this, the destruction of beautiful old buildings and the elimination of large street trees will make some neighborhoods a lot less attractive.)

Meanwhile the opponents of upzoning are certain to mobilize against anyone who voted for it. The downsides of the policy (the destruction of beautiful old trees and buildings, the loss of sunlight, construction noise) are highly visible, and the benefits are both diffuse (slightly lower rent) and confined to a minority of voters, as described above. Affluent homeowners are highly active in local politics, and it is trivially easy to make anti-development politics seem egalitarian. (For instance the DSA generally opposes upzoning on the grounds that it would involve allocating scarce resources through the market system.) The developers would be used as scapegoats and the new developments would be derided as "luxury" buildings benefiting only their affluent residents. (I am not straining my imagination to come up with these arguments, by the way. This rhetoric is highly visible in present-day New York.)

For all these reasons, while I think upzoning would be good (in moderation), I don't think the politics are easy, and I certainly don't think incumbents are foolish or self-defeating when they choose to oppose upzoning. In fact I think they are self-serving in a way that suggests the problem is nearly intractable as a political matter.

Monday, September 17, 2018

IO

An example of something that is simply too complicated for an ordinary person to be expected to understand is industrial organization, which is a sub-field of economics. IO, as it is called, relaxes some unrealistic assumptions that introductory microeconomics makes and explores the effect on competition among firms. A good example of IO is cell phone service, which tends to be "sticky" (once a consumer signs up with one provider, she is unlikely to switch to a new provider even if it offers somewhat better pricing). What this means is that each customer can be overcharged somewhat relative to a market with no stickiness. Since providers must compete for new customers, they will tend to offer up-front rewards for signing up, which they then recoup over time thanks to their ability to over-charge.

Anyway in a lot of industries you have to do some IO before you can figure out what the right policy is. A lot of policies that on their face seem anti-competitive can be justified on IO grounds (although of course economists will often disagree about how IO applies to a given situation).

This is all by way of saying that I think a city with a bike-share program should strive to achieve one of two things. Either the bike-share program should be run by a regulated monopoly or the competing bike-share providers should be forced to make their systems compatible with each other, so that consumers can pick up a bike from one provider's docking station and turn it in at another's. If you allow a patchwork of systems, you will end up with artificial barriers to biking between some neighborhoods.

The problem is that the second solution is extremely tricky to implement. After all, how do the providers get their bikes back to each other? To the extent they end up with, effectively, a shared pool of commonly owned bicycles, so that they are sharing a lot of their costs and operations on a collective basis, then how do they compete?

And the first solution, a regulated monopoly, is almost universally unpopular. Everyone understands (wrongly) on an intuitive level that monopolies are bad. No one trusts the regulators. The Taxi and Limousine Commission is no comfort in this regard. When I argued that it was unfair to yellow cabs to regulate them while permitting Uber to operate as an unregulated competitor, no one seemed to find this compelling. Fuck the medallion owners! Very well, but medallion ownership was the mechanism by which the TLC's regulations were enforced.

I guess my point is simply that the politics of competition policy are extremely tricky and we are likely to end up with severely suboptimal outcomes (for instance there are multiple incompatible bike-share providers in New York City). I guess I think the solution is limited transparent technocracy, but the thing about technocracy is that it's in the eye of the beholder (one man's technocrat is another man's neoliberal sellout—why else would you do something as corporation-friendly as licensing a monopoly provider of an important service?).

This reminds me that I shall write a defense of capitalism.

[Udate: A commenter argues, "I mean, yeah there are details; but big picture you just look at the ratio of fixed costs to variable costs and when it starts getting really high you want a regulated monopoly."

I think this understates the complexity of regulating these kinds of businesses, but the main observation I'd make is that I think the city should not just tolerate a monopoly, it should probably ban bike-share programs other than Citi Bike, or at least refuse to give them any concessions (along the lines of the parking spaces turned over to Citi Bike for its docking stations). Just because an economic sector is a natural monopoly does not mean that a monopoly will emerge. You often want to prohibit competition in order to bring about the best results. Needless to say you better make sure you're right before going down this path, and I doubt the public will ever understand it.]

Sunday, September 16, 2018

Life Is Taxing

A quick note about how hard it is to think about tax policy.

I am a Citi Bike member, meaning that I can check out a bike from a dock, ride it wherever I want, and check it in at another dock. I pay something like $180/year for this privilege, but beyond that each ride is free (as long as it lasts under 45 minutes). I love it.

I also participate in the Citi Bike Angel program, meaning that I earn points by checking out bikes from stations with excess bikes and/or checking bikes in to stations with bike shortages. The points can be redeemed for free weeks of membership and other prizes. (I have already earned a sweet-ass pin, and at 500 points I will earn the coveted white Citi Bike key. Normal Citi Bike keys are blue. I scarcely want to mention it, but at the 2,500 point level I will qualify for a Citi Bike key made of steel. Steel!)

Anyway in some sense I'm doing work for the bike-share company. In fact they pay people to move bikes from crowded stations to uncrowded ones. When they do, those people earn income that is taxable at the city, state, and federal level.

I am also getting something of value for doing the same thing, albeit on a smaller scale. But my compensation isn't taxed at all. In fact it's negatively taxed, because whereas my initial year-long subscription was subject to sales tax, the additional weeks I've earned as a Citi Bike Angel are not.

Should I have to pay income tax on my Angel rewards? Maybe. But shouldn't a business be able to price its product differently depending on how costly different customers are, without being deemed to have given some of its customers taxable income? Lots of travel companies (airlines, bus lines, etc.) will charge you less if you buy a non-refundable ticket, since it helps them anticipate demand, etc. They will also charge you less if you don't bring any luggage, or any extra luggage beyond a specified number of free bags. But surely those lower prices shouldn't count as taxable income. It's the same thing with Citi Bike. People who use the system in the way I do are less costly to serve than average system users.

And yet! Without the Angel program, Citi Bike would have to employ more people and pay more income tax, and so by making the Angel rewards tax-free we are (at least in a small way) inducing Citi Bike to change its behavior.

What I think this shows is that if you think about anything too hard, you will identify conceptual difficulties that make you think the current arrangements, however sensible, are in some sense arbitrary.

The Entertainment Nexus

There's something I've written about before that I think explains a pretty good percentage of our current political situation.

The concept here is simple. (1) We crave entertainment. (2) Although news media markets itself as being informative, and some people consume it for that reason, in fact entertainment is woven through it. (3) Donald Trump is highly entertaining.

These factors interacted in a really gross way in 2015 and 2016. CNN would cover Trump rallies live because that's what a certain audience wanted, and also because he was bound to "make news" in the sense of saying something that everyone would be talking about the next day. Of course in some sense it's not actually news that Trump is willing to say buffoonish things that get people riled up. But in a sense it is, both because news is partly defined by what consumers want and because you can make a straight-faced argument that it's newsworthy for a major politician to be such an idiot. (You can imagine an alternate universe where liberals are angry at the media for covering up Trump's idiocy rather than blaring it out. However, in that universe it's hard to imagine him making much headway in the Republican primaries.)

Contrast this to a Clinton campaign speech where she "makes news" by, I don't know, proposing block grants to states to fight climate change on a local level. (I'm making this up, but you get the idea.) In a sense this is more "news-like" than some incoherent garbage from Trump. But in another sense it's not, because it's an anodyne proposal of the sort that any generic Democratic campaign will churn out, and it has no real chance of becoming law. More importantly, it's not news because it's not something that entertains news consumers. It will get dutifully written up in a few publications, but it will make no splash.

(I give credit to David Foster Wallace for identifying this dynamic and incorporating it into Infinite Jest, where the president is a professional entertainer and where addiction to entertainment is one of the defining themes.)

I've got no good answers here. "Be more entertaining!" is not particularly useful advice. I certainly don't want the Democratic Party to go full Avenatti. Also, while I think it's definitely true that Trump's tweets and the indignation they generate have been  good for him on the whole, I don't think not responding is a real option, and I think luckily he's largely used up whatever political potential his Twitter strategy provided. (To put it another way, I think in the current political climate his tweets are probably actively harmful to his political fortunes, but that was not the case in 2016.)

Anyway. It's a shitty situation and I honestly don't know how to address it.

Friday, September 14, 2018

Tribal Passions

We live in a world of immense specialization, which leaves us mostly reliant on others to navigate any area other than our own. A major aspect of our current political situation—maybe the major aspect—is that a lot of people are easily led astray. This is very easy to see on the right, but it is visible everywhere.

The most obvious way to avoid being misled, the one that we all wish were more widely practiced, is to rely on experts who are, well, reliable. No institution is perfect, but the mainstream news organizations are very good, and they are particularly good when it comes to basic facts (they are less reliable when it comes to sweeping concepts like the consequences of running a budget deficit or the merits of fighting a war).

So... what about Laurence Tribe?

Sigh. This came to my attention because Ken White responded:

Here's that link in case you can't click through from White's tweet. It is a decision written by Kavanaugh when he sat on the Circuit Court of Appeals for the District of Columbia. At issue is, to simplify somewhat, whether a state (or, in this case, the District of Columbia) can, without violating the Constitution, enact and enforce a law under which medical decisions can be made for mentally incompetent people without taking their wishes into account. Kavanaugh wrote that such a law passes constitutional muster.

Tribe's tweet is wrong in almost every respect. I don't want to get too bogged down in the merits of the opinion, but I'll note a few salient points. Most importantly, before any medical decision can be made by the District of Columbia, it must be determined by two physicians that the patient "lacks sufficient mental capacity to appreciate the nature and implications of a health-care decision, make a choice regarding the alternatives presented or communicate that choice in an unambiguous manner." The mere fact that someone has been determined to be intellectually disabled is not enough. Also, the state never has decision-making power where the patient has a relative or guardian to make the decision. (The exception is where the state has appointed a guardian for the patient, in which case that guardian can override the family's wishes. This happens sometimes when parents deny their children necessary medical procedures, for instance because of religious objections. That situation is not at issue in the legal case Kavanaugh considered, but I'll say that I think it is a good thing that the state can do this. Oh, another exception is that someone who was previously competent, but who has become incompetent, is entitled to have his/her wishes carried out even over the family's objections. That's not really the state making a medical decision, though, it's the state honoring a medical decision made by the patient at a previous time.)

The key point here is that the law only applies to the people described above—people who lack the capacity to make medical decisions for themselves or to communicate those decisions. By assumption, then, deferring to these people's wishes could be catastrophic. You can easily imagine a mentally incompetent person who is scared of needles and who therefore expresses a desire not to undergo a life-saving surgery. If a patient expresses a desire for a course of treatment, and gives good reasons for preferring that course of treatment, then by definition that patient is not in the category of people who are subject to the medical decisions of the state. (Of course people may be mistakenly put into that category, but again that was not at issue in the case before Kavanaugh.)

Moreover, DC regulations require that the patient be given an explanation of the contemplated medical procedure "at the level of [patient] comprehension." Although the law doesn't require the decision-maker to take the patient's expressed wishes into account, obviously the decision-maker is permitted to do so.

Of course Tribe added a little cherry on top, the specter of forced abortion. He could scarcely have picked a worse example—DC law forbids any involuntary abortion absent a court order.

This doesn't mean Kavanaugh's decision was necessarily correct. Maybe DC and the 50 states have all gone down a bad path by not letting people incapable of making medical decisions for themselves make medical decisions for themselves. Or to be less sarcastic, there genuinely may be some issue of jurisprudence here that Kavanaugh didn't sufficiently address. Although I find the decision compelling, you don't have to.

But Tribe's characterization of the decision is simply bonkers. And I kind of don't know what to say. I guess part of my point is that it's truly difficult to figure out who can be trusted in terms of understanding complicated issues. If you're just a random liberal on Twitter, do you believe the prominent Harvard law professor or the popular Los Angeles defense attorney? You can read the decision for yourself, of course, but that is time-consuming and difficult, particularly if you lack the context (or the confidence) to form your own opinion about a legal decision. (I guess, humorously enough, I'm suggesting that people who are incapable of understanding legal issues for themselves should not have legal determinations made for them by experts.)

Anyway it's depressing and terrible, all the more so because I don't think Kavanaugh should be approved and I think there are vastly more meritorious lines of attack. I guess I'll just conclude, fuck Tribe, thank God for Ken White, you should be skeptical, but not so skeptical that you don't trust the mainstream media, but skeptical enough that you don't trust legal experts from Harvard Law School. Sigh.

Thursday, September 13, 2018

Linda Tripp

I have been listening to the Slow Burn podcast. I don't really recommend it, it is surprisingly shallow and uninformative (or maybe a better way to put it is narrowly informative, see below), but I have some small personal connection to this season's topic, the Lewinsky scandal, having grown up in Arkansas, and I find it somewhat entertaining.

Anyway I listened to the episode on Linda Tripp last night. Tripp, you will recall, was a... I guess you would have to say friend of Monica Lewinsky at a time when both women worked at the Pentagon.

There are two key things to know about Tripp, beyond the fact (which everyone knows) that she taped her phone conversations with Lewinsky in an attempt to collect dirt on Bill Clinton. First, before any of that happened, before she even knew Lewinsky, Tripp went to Tony Snow, a Fox News pundit who had worked with her in the Bush White House, expressing a desire to spill the beans on Bill Clinton. He in turn directed Tripp to a conservative publisher.

But of course she had no beans to spill at first, since she hadn't even met Lewinsky. That's the context for her cultivation of the friendship. Tripp was in the market for something that would bring Clinton down.

The other thing about Tripp is that she claims that she was afraid that the Clintons would have her and Lewinsky murdered. In other words, she was in the deep end of the pool in terms of right-wing nuttiness and paranoia. I say deep end, but this kind of shit was actually pretty mainstream in the Republican Party.

I don't have much of a point here beyond observing that paranoid lunacy has been a mainstay of Republican politics for a long time, pre-dating Trump's political career, and it not infrequently delivers huge gifts to the conservatives (obviously there's the Lewinsky scandal, but fascination with Benghazi ultimately led to investigations that morphed into the Hillary Clinton email scandal). This doesn't mean I want a mirror image of it on the left... that is the opposite of what I want. But it's galling to see it pay such handsome dividends for its cynical purveyors.

Thursday, August 30, 2018

A More Robust Conception of Truth

Nate Silver tweeted this today:

This is similar to the point I was trying to make in an earlier post. We (rightly) expect that news stories will be factually accurate. A news organization that reports false stories deserves opprobrium. (This is to be distinguished from human error, which inevitably leads to some mistakes requiring corrections.) But what about a news organization that scrupulously reports the facts, but does so in a way designed to mislead its audience?

To state what should be obvious, the epistemological status of that kind of reporting is highly suspect. It is analogous to "publication bias" in science, in which positive results are widely broadcast while negative results get little attention. This is what I think Nate Silver was getting at with his tweet. "Literal" honesty is necessary but not sufficient. This is why, for instance, Rule 10b-5 under the Securities Exchange Act is phrased this way (emphasis added):

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.


The problem is that "literal" truth is much easier to police than a more robust version. On top of that, the more robust version often isn't measurable at the level of a single story. If there's a brutal murder of a white person by a black person, it's not inherently wrong to report it. It's just wrong to report nothing but black-on-white crime. That has to be measured over time, and that's nearly impossible to do in a rigorous or objective way. (It's easier for the SEC because the securities markets are held to a fairly high standard of honesty, and also because investors care about a much smaller set of facts than news consumers do.)

I should also point out, as I did in my earlier post, that I think cherry-picking can be done honorably as long as it is clear what is going on. Advocacy organizations are there to push a narrative. Humans may be poorly equipped to discount reporting sufficiently when it comes from a known biased source, but it's hard to blame the advocacy groups for doing what they do (as long as they are transparent about it).

The other point I would make about this is that there is no clear line to be drawn between responsible news organizations and partisan ones, unless it is based on something like subjective intent. You can think of each person as struggling to accumulate information, with each news source presenting its own biases, conscious and unconscious, that the individual has to navigate to come to a satisfactory idea of the world. Maybe this needs to wait for another blog post.