Links of interest

1. Wow. "Americans are pretty ugly when parking their cars"
2. John Kenneth Galbraith (1986) on the uselessness of spies intelligence agents
3. #metoo has turned into a witchhunt and laws against "hate speech" don't work. #metoo may be useful if men are scared (thus less aggressive). Sam B says "fuck you, scared men"
4. Dutch reporters won't have bullshit from Trump's Ambassador to the Netherlands
5. Data! Inequality and upward mobility are worse in the US than most rich countries
6. The Supreme Court is hearing the FL/AL/GA water disputes
7. Global warming is causing these sea turtles to only have female babies #lastgeneration
8. A conversation with the pro-business, pro-worker democratic governor of Rhode Island
9. Lady Chatterly's Lover: The end of taboo and beginning of the swinging 60s (and much of today’s depravity)?
10. The Making of an Opiate Epidemic
11. Fascinating: "The diabolical genius of the baby advice industry"
12. Don't build a wall, Donnie. Legalize drugs if you want to secure the border

An oath for thinking people

I am quick to correct people who call economists "scientists" (we are much more "social" than "scientific"), but I certainly favor this pledge:

An Oath for Scientists (or Academics or anyone who takes thinking seriously)

I swear that I will, according to my ability and judgment, protect the credibility of science by carrying out this oath and this indenture.

To make the grounds for my scientific claims transparent and available for others to scrutinize, to welcome that scrutiny and accept that others will be skeptical of my claims, to help others verify the soundness of my claims; to describe my methods in sufficient detail for others to repeat them, to not obstruct others' attempts to replicate my work; to report all evidence I know of for or against my claim, to not suppress evidence against my conclusions, to correct my past claims if I learn that they were wrong, to support the dissemination of evidence that disconfirms or contradicts my past claims.

I will hold myself and all other scientists to this oath, and I will not exempt any scientist because of her status or reputation. I will judge scientific claims based on the evidence, not the scientist making the claim. Neither will I hold any scientific claim or finding as sacred. Similarly, I will recognize as valuable the work of scientists who aim to correct errors in the scientific record.

In whatever claims I present in my role as scientist, I will not knowingly overstate or exaggerate the evidence, I will not make claims out of interest for advancing my own station, and I will disclose any personal interest that may be perceived as biasing my judgment. I will protect the credibility of my profession by making careful, transparent, calibrated claims.

Now if I carry out this oath, and break it not, may I gain for ever reputation among all scientists for my work; but if I transgress it and forswear myself, may the opposite befall me.

H/T to Enviro-Econ

Monday funnies

(Mathematical) economists are guilty of this (I am too, in this paper)

Friday party!

Don't get rekd if you're getting into crypto...



Trying to decide on which coin to buy? How about PonziCoin? (More seriously, here's how various scammers are running crypto-Ponzi's)

Published! A Multidisciplinary Introduction to Desalination

I'm one of the many authors of this handbook, which was just published.

As the title implies, the book covers desalination from many angles, which are collected into five sections (as described on the publisher's page):

1. An overview of water scarcity, followed by a review of integrated water management and the alternatives to desalination. The fundamentals of desalination are provided, including simple water chemistry;
2. Conventional technologies of today, including thermal and membrane desalination processes. The topics of pre- and post- treatment are given due credit, as no desalination plant can operate without them;
3. The history of how desalination technologies originated, including a review of today's R&D activities and cutting edge research. The processes and engineering applied for membrane manufacturing are also presented;
4. Concerned with energy and environmental issues, including the application of renewable and nuclear energy, minimization of energy usage and the water-energy-nexus, brine management, and environmental impacts;
5. Social and commercial issues, ranging from rural desalination, to the politics of desalination. Desalination costs and feasibility are presented, as well as issues in business development and the future market prospects.

You can download and read the PDF of my chapter -- "Society, politics and desalination" -- but I strongly recommend that anyone interested in this topic buy the book. At $75, it's quite a bargain for a 700-page book with 20 chapters! (It's also available on Amazon.co.uk and from the publisher's site.)

Links of interest

1. What will "Peak pharma" (rising costs for falling benefits) mean for us?
2. Why Is My Life So Hard? (Freakonmics on gratitude and headwinds)
3. The dark side of free markets: private garbage collection in NYC (NB: Many workers cannot get jobs elsewhere because they have criminal records.)
4. A fascinating profile of Putin's real master plan (there isn't one, except hold power)
5. Innovation is neither automatic nor easy
6. Floating houses might help people in Louisiana, but the government won't support them
7. Jakarta is sinking (and will drown) from overpumping groundwater
8. Worth a read: Elinor Ostrom et al. (2003) on managing water in the commons [pdf] (Hint: be flexible)
9. Decoding Chinese politics
10. 50 psychological terms we often misuse (e.g., "bystander apathy" or "antidepressant")
11. Does Puerto Rico's corrupt energy utility need more, less or better regulation?
12. Oprah Winfrey Helped Create Our [Credulous] American Fantasyland

Review: Brokerage and closure

This 2005 book by sociologist Ronald S. Burt is important in its subject (the subtitle is "an introduction to social capital"), but academic in its presentation, meaning that the book is thorough and well documented but also sometimes verbose, dense or repetitive.

Social capital (SC) is "the advantage created by a person's location in a structure of relationships" (page 4), and one's advantage is directly proportional to one's ability to share ideas across or link individuals from different groups. For example: I have SC when it comes to bringing American ideas on water management to the Netherlands (and vice versa), while my girlfriend has SC when it comes to connecting Romanian, Canadian and Dutch urbanists and transport experts. By the same logic, one's SC advantage would be weaker if one only communicates the same ideas within a small group of people. (Back in the 1960s, this situation was associated with group think. These days it's associated with echo chambers.)

NB on terminology: Strong and weak SC map directly onto bridging and bonding capital, respectively, but (confusingly) also to weak and strong networks.

Assuming these ideas make sense and that you understand their value, why read the next 280 pages of the book? The short answer is that you may not need to (I skipped some sections). The longer answer is that you should, if only to appreciate the value of SC (Burt provides many examples), the difficulty of strengthening it, and the need for you to act if you're going to build it for yourself. This book is not a self-help guide and there's no like button, so anyone interested in this topic needs to see this book as a set of ideas and goals that will only create value for people who put in effort.

Speaking of ideas, here are a few that I appreciated from the book:

SC is the "invisible glue" that conveys trust, norms and coordination. Bedroom communities may have weaker SC because residents do not see each other regularly, leading to insecurity, excessive capitalization (buying your own tools instead of sharing with a neighbor), and so on. Flat hierarchies will have weaker SC because they have removed middle managers, which can lead to mis-communication, poor coordination, and costly mistakes. (These ideas should be familiar to the readers of Bowling Alone and The Death and Life of Great American Cities.)

When you move from one organization to the next, then you lose some (or much) SC. A senior manager may take a massive paycut for shifting to "the same job" because they need time to build relationships and understand workflows in their new job.

Even commodity traders can benefit from SC as it's not always easy to understand the quality of goods on offer and deal terms can vary by a lot. SC is essential for trade and exchange of multidimensional goods and services, which is why we don't change dentists, car mechanics or romantic partners so easily. It takes time to get used to someone (and vice versa).

Someone with high SC has access to a greater diversity of information, early access to that information and (more) control over how information diffuses. Together, these characteristics describe one's "information arbitrage" advantage. Given these factors, we can understand the existence and role of "network entrepreneurs" (or bridge builders) who use their SC to create value by helping diverse people and ideas find each other. (Burt later links his discussion of the network entrepreneur to the Austrian School, i.e., Hayek's appreciation of local knowledge and Schumpeter's definition of the entrepreneur as someone who combines old ideas into new hybrids.)

In the business world, network entrepreneurs are the brokers and power players. In the academic world, these are the interdisciplinary types who borrow basic ideas from one discipline to "revolutionize" another (e.g., importing loss aversion from psychology to create the new field of behavioral economics). These bridging roles are not always appreciated and may be attacked by those who prefer bonding among their peers, with all the jargon, circular-appreciation, and arcane uselessness that tribalism implies.

I'm sure there's a case for bonding, but the academic world suffers from an excess that could be reduced to give more space for interdisciplinary bridging, a thought that Burt captures on page 77:

Weick (1996) makes a chilling analogy between jargon-bound academics and firefighters burned to death because they did not discard the heavy tools they were carrying. The analogy works, and generalizes to other kinds of people, because people so often identify themselves with the tools they employ in their work. People who cannot see clearly an alternative way to do their work are unlikely to give up the tools they have, and are likely to insist that others use the same tools. Recall the Planck quote... on people blinded by the paradigm in which they rose to prominence: “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die.”

Bridging can be useful when it brings new ideas or personnel to solve problems (especially ambiguous problems), but it can also be a distraction that wastes time by misleading or diverting attention to exotic non-solutions. This caveat explains the difference between a iconoclast and dilettante. It also explains why we should be suspicious of any academic, manager or citizen whose knowledge is based on a single area of study, work or living. Monocultures are simple yet limited, efficient yet fragile.

Burt contrasts brokers as entrepreneurs thriving on advocacy and change with team players who thrive on security and stability. There's clearly a place for both types, but it's hard to get those types to respect each other, let alone cooperate. On page 61, Burt quotes Thoreau saying "beware of all enterprises that require new clothes" to provide an example of conservative thinking that excludes outside beliefs. In my experience, such a perspective ("our situation is different") explains why water managers (most of them engineers) want to ignore economists with ideas of how to manage scarcity, risk and customer satisfaction. That want, combined with monopoly power, explains how they are able to ignore new ideas and continue to pursue failing business-as-usual policies. (Here's a blog post on that theme and another and another.)

Bottom Line: I give this book THREE STARS for discussing an important topic but taking far too many pages to do so. If you want to benefit from these ideas on leveraging social capital, then follow Burt's "simple moral: when you have the opportunity to learn how someone in another group does what you do differently -- go" [page 245].

Monday funnies

Want a sharp pencil? Get a pro!

Friday party!

Good to see more people speaking out in favor of beneficial use of marijuana.

My talks tomorrow at UC Davis and UC Berkeley

I'm presenting my paper tomorrow (Friday) at these times and places:

11:00 @ 1017 Wickson (ESP), UC Davis

16:30 @ Blum B100 (info), UC Berkeley

The evolution of the Dutch drinking water sector (with Bene Colenbrander)

Abstract: Dutch drinking water companies now deliver safe affordable water to the entire population, but this result was not planned. It emerged, rather, from an evolutionary process in which various pressures on the commons resulted in changes to drinking water systems that addressed old concerns but uncovered new problems. Our analytical narrative traces this problem-solution-new problem pattern through four eras in which a common-pool dilemma is addressed by a private-good solution (1850-1880), a club-good solution (1880-1910) and public good solution (1910-1950) before returning to a private-good solution in the last 1950-1990 era. Actions, like the dates just given, were not always exact or effective, as the process was shaped by changing social norms regarding the distribution of costs and benefits from improved water services. This Dutch history, while unique, supplies insights for improving drinking water services elsewhere.

Published! 2047 Short Stories from Our Common Future

I got involved in this project when Tanja Rohini Bisgaard, its founder, answered my call for authors for Life Plus 2 Meters with a call of her own:

Thirty years ago, the United Nations created a vision for our common future: one Earth, where we could all live together without damaging the planet for future generations.

In this short-fiction anthology, ten authors look another thirty years into the future, giving their perspectives regarding how we might—or might not—adapt to the changes around us in the year 2047.

I was pleased to write a short story about the origins, rise and eventual fall of the Sisson family of Visalia, California -- a family that worked hard but was finally beaten by falling ground water levels.

You can read my chapter directly here, but I recommend that you buy the book: It's $8 paperback/$4 Kindle (go here for UK site and other buying options) and has another nine chapters!

Links of interest

1. In the age of Trump: The EPA's water fountains spew sewage and the Cajun Navy rescues people abandoned by FEMA
2. California can learn how to manage water from Australia (conventional advice bears repeating)
3. A philosopher discovers negative externalities and common-pooled goods
4. Want to find a river-preservation non-profit in your (US) state? Here's a list
5. "Everything I consume in the States is of a vastly, abysmally lower quality"
6. How China is using "social credit" to control its people (and soon you?)
7. Retail marijuana has reached California. Where to buy.
8. Training crows to pick up cigarette butts (second only to dogshit as the last frontier of littering)
9. An Algorithmic Solution to Insomnia
10. Monopolies are destroying American markets, innovation and quality of life

H/T to SS

Published! Group cooperation and public goods

Back in grad school, I was doing experimental economics in the lab to test whether water managers who worked together were more cooperative than random students. The experiments were based on a "public goods game" in which each player in a random group of four decided to help themselves or help others in the group. Players were anonymous to each other because they were hidden behind computer screens, but there was a clear benefit to all from cooperation, just as there was a clear benefit to the individual "freerider" who took advantage of others' cooperation.

My results were surprising to anyone who believes that "public servants" focus on the group rather than themselves, as the water managers were no more cooperative than the students. Economists would not be surprised, as they would assume public servants behave just like other people. Skeptics would laugh at the idea of cooperation, of course, as they tend to think as follows:

SOCIAL scientists tell a story about a peasant called Vladimir. One day God comes down to him and says: “I will give you one wish. You can name anything you want and I will grant it to you.”
Vladimir starts to celebrate, but then God lays down a condition. “Whatever you choose,” He says, “I will give to your neighbour twice over.”
Vladimir frowns and thinks. And then he clicks his fingers. “I have it,” he says. “Lord, please take out one of my eyes!”

Taking such a diversity of opinions into account, I was glad to add some data to the discussion.

These experimental results were central to my dissertation ("Conflict and cooperation inside an organization"), and the chapter on the experiment ("Water managers are selfish like us") was improved and published as a chapter [pdf] in a handbook on experimental environmental economics.

After doing those experiments, I got excited about testing other questions regarding cooperation within and across groups. I was mostly interested to try to find the line where people acted strategically regarding their cooperation decisions in a group, i.e., when did it make sense to freeride and when did it make sense to cooperate. In a small group, for example, it may be harder to freeride because others could observe your actions more easily than they could in a larger group. (These ideas date back to Olson's 1965 Logic of Collective Action, so I wasn't innovating on hypothesis as much as testing one.)

In the end, I decided to test a few ideas:

1. Would students in groups of 20 cooperate less if their grades were "curved" such that grades depended on relative performance, as opposed to depending on absolute performance? My hypothesis is that group size would be too large to induce strategic (more defection) behavior.
2. Would students cooperate more if their earnings depended on how well they did compared to everyone else not in their group? My hypothesis was that such "in group" cooperation incentives would have a positive impact.
3. How would my four treatments compare on impacts? My hypothesis is that the four could be separately ranked, thus providing some empirical advice.

I conducted most of the experiments in 2007 and got useful responses but never got 'round to sending the paper into a journal. Fast forward to 2016, and I got a call for papers on strategic behavior and cooperation. I sent in the paper, made lots of very significant and useful changes in response to referee comments (yay peer review!) and got published.

You can download the paper here until 19 Jan, along with all the other papers in the special issue. After that point, you should email me if you want a copy or download it from here.

Oh, and what about the hypotheses? On #1, there was no real difference in cooperation, so "curve grading" will probably not reduce cooperation, efficiency or output among students or workers. If you have experience for or against, then please comment!

On #2, there was a big difference when students were rewarded to relative performance compared to everyone outside their group/team. This "in-group" result is no shocker, but it's important in reference to any firms or bureaucracies that might want to set up teams. The other part goes with #3.

For question #3, there was a clear ranking of "in group" cooperating the most, followed by curve grading/absolute grading, with the fourth treatment (how well you do compared to members in your group) having the lowest cooperation. This ranking is useful -- as the paper discusses -- in thinking of ways to structure regulatory, pollution or collective action incentives.

Bottom line: Read my paper if you want to think more about how people do (not) cooperate in small groups, organizations or bureaucracies.

Monday funnies

Kids these days...

Shoveling the deck

Friday party

Tim Minchin nails it (especially the teacher bit ;)

Environmental and Natural Resource Experiments -- free downloads for one week

Strategic Behavior and the Environment has published a special issue on Experiments on Environmental and Natural Resource Policies, and all articles are free to download until 19 Jan.

(You need to register to download from that URL or any of the links below...)

I'll discuss my paper next week here, as there's some interesting background and context to add.

SBE 7:1-2 - Table of Contents

Stephan Kroll and Jordan Suter, Introduction to the Special Issue: Experiments on Environmental and Natural Resource Policies
http://dx.doi.org/10.1561/102.00000082

Todd L. Cherry and David M. McEvoy, Refundable Deposits as Enforcement Mechanisms in Cooperative Agreements: Experimental Evidence with Uncertainty and Non-deterrent Sanctions

http://dx.doi.org/10.1561/102.00000072

Joshua M. Duke, Kent D. Messer, Lori Lynch and Tongzhe Li, The Effect of Information on Discriminatory-Price and Uniform-Price Reverse Auction Efficiency: An Experimental Economics Study of the Purchase of Ecosystem Services

http://dx.doi.org/10.1561/102.00000073

Orsolya Perger, Curtis Rollins, Marian Weber, Wiktor Adamowicz and Peter Boxall, Tradable Disturbance Permits for Old-growth Forest Conservation: Experimental Evaluation of Implementation Options
http://dx.doi.org/10.1561/102.00000074

David Zetland, Exploring Group Cooperation in the Provision of Public Goods
http://dx.doi.org/10.1561/102.00000076

Julian Jamison, David Owens and Glenn Woroch, Social Learning about Environmental Innovations: Experimental Analysis of Adoption Timing

http://dx.doi.org/10.1561/102.00000075

Rohit Jindal, Joe Arvai, Delia Catacutan and Dam Viet Bac, To Cheat or Not? Results from Behavioral Experiments on Self-monitoring in Vietnam

http://dx.doi.org/10.1561/102.00000080

For other issues or for subscription information, please visit www.nowpublishers.com/sbe.

Review: Digital Gold: Bitcoin, the Inside Story

I've been following bitcoin since I first tried to mine coins in 2010 (alas, I gave up when I couldn't get the software to work. Newbie mistake). Since then, I have been tracking the idea as an economist interested in how an entrepreneurial ecosystem develops through excess, crash and recovery. (I have a few bitcoins, but "hodl" as trading in and out is a fool's game.)

Bitcoin and the blockchain protocol are fascinating creations. Bitcoins are merely sets of digits. The blockchain makes them valuable by limiting their number (no copy and paste) and assigning their ownership (creating property rights). Satoshi Nakamoto (a person, I think) explained how to mine bitcoin and assign their ownership via the blockchain in a nine-page 2009 whitepaper [pdf] that anyone interested in the technology should read.

Many people have heard of bitcoin and many new crypto currencies (e.g., ether, litecoin, bitcoin cash, monero, etc.) due to the astronomical increase in their prices and the volatility of those prices. Yesterday, the price was $15,000 per BTC; now (22 Dec) it's around $12,000, down 40 percent from a few days ago. It may be up or down by the time you read this. Crypto is the new widowmaker...

So if you're curious about crypto, then you might want to read Natheniel Popper's 2015 book, Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

I don't actually have much analysis or comment on this book, nor will I summarize the plot, as the entire thing is a fast-paced read that begins in 2010 and covers the major events (the crash of MtGox and takedown of Silk Road among them) with lots of personal details on the people who supported bitcoin to change the world as well as those who just wanted to make a fast buck. I enjoyed the book for its insights into the complexities of "making a new market" out of thin air computer code and all of the ways that people guessed right or wrong on the way.

If there is any lesson in the book, it's "don't be greedy" as many of the men in the book (not a single woman plays an important role) were unable to see their weakness or listen to others advising caution. That perspective is as true today, when there are hundreds of new crypto business models vying for our attention, money and future.

Bottom line: I give this book FIVE STARS. Crypto (digital currencies and blockchain ledgers) are here to stay. You don't need to get rich off them to benefit from their value, so don't kill yourself trying. Just try to understand how they work, and use them if they make sense to you.

---

I'll add essays of interest here:

• Krawitz (2014): "The interplay of these three defenses makes Bitcoin into a kind of wave that rewards those who ride it and drowns those who resist it."
• NYT (2018): "Everyone Is Getting Hilariously Rich and You’re Not"
• von Minckwitz (2018): The Revolution is just starting
• Diary of an IPO captures the uncertainty of setting a "fair" price -- a problem that's 10x worse with bitcoin and other crypto.
• A lot of smart, futuristic, libertarian types know about bitcoin @ $1 but didn't buy

Links of interest

1. Eating for your health is better for the environment (by my colleagues)
2. "Home alone: Why people believe others' social lives are richer than their own"
3. Amsterdam's Night Mayor tells LA how to get cool
4. Rem Koolhaas: "The future is in the countryside"
5. The problem with American health care, demonstrated
6. Cards against Humanity does their bit to save America(ns)
7. California price/use data from 11 utilities available for researchers
8. Buddha brings peace to an Oakland neighborhood?
9. How to read mathematics (and words!)
10. Want to learn Spanish? Go to prison. There you'll also meet humans.

Published! Life Plus 2 Meters, Volume 2

This second book in the series offers 34 "visions" of how we might (not) adapt to life in a climate-changed world.

You can download the PDF for free or pay for the Kindle ($1) or Paperback ($4) versions. (You can get Volume 1 for roughly the same costs.)

This non-profit project has been very fun but also a lot of work, so I am going to stop here.

I am very grateful for the project's kickstarter supporters, Leiden University College for subsidizing some of the costs, and the 33 other authors who were so creative at thinking about the future.

Please enjoy the book, think about the stories and recommend it to your friends and family. Climate change is coming here and we need to cooperate to reduce our risks and protect our quality of life.

Monday funnies

Hippies are selling "natural [untreated, unfiltered] water" for $$$ to tech-types. The joke's on them, as that water can kill. (Amsterdam's water, OTOH, is "natural" but filtered and monitored for safety.)

Certified that it's sacred enough to kill you.

H/T to CD

Friday party!

Kid power!

Innovations for a better world

There's a contest to select the best idea, out of nine, for "The Hague Innovator's Challenge"

These ideas are from local people, but they can be implemented anywhere in the world.

Here are the ideas:

• The Healing Pod
• Very Important Electric Transport Services
• Cheaper driving lessons, less pollution and fewer traffic jams
• A trust-based network of disaster responders
• A game that quickly generates ideas
• The Open Insect Farm
• Connecting Africans to local and western health professionals
• Fungi for smart building panels
• Co-operative sustainable urban logistics

You can vote here until 15 January.

The robotic future

I don't see any barrier to this slaughterbot scenario coming to pass, which is terrifying.

Links of interest

1. Over 15,000 scientists plea for sustainability, 25 years after their first ignored warning
2. The best (and worst) economics textbooks on climate change
3. Women are better at learning most subjects, and now comes maps (and spacial visualization)
4. Is GoFundMe hiding fraud? GoFraudMe thinks so.
5. Cinema's greatest scene: Casablanca and La Marseillaise
6. America's mistake continues to immiserate Laotians 50 years later
7. Silicon Valley wants to help with water problems (they'll do fine on tech, not governance)
8. The Canadians defend international cooperation, replacing America as a moral leader
9. Cost-benefit analysis for flood risk management in the Netherlands
10. Spotify's algorithms don't care about musical creativity and Alpha Zero takes over chess

H/T to SC

Internalize the externalities!

A good example from Amsterdam