# The Phenomenal World

## NON-ZERO PRICE

### "Digital goods have created large gains in well-being that are missed by conventional measures of GDP and productivity"

A new paper by ERIK BRYNJOLFSSON et al. suggests using massive online choice experiments as a method to find the true impact of digital goods on well-being. The background section gives an example of the impact that is currently unmeasured:

“... [in] a number of sectors ... physical goods and services are being substituted with digital goods and services. An apropos example of such a transition good is an encyclopedia. Since the 2000s, people have increasingly flocked to Wikipedia to get information about a wide variety of topics updated in real time by volunteers. In 2012, Encyclopedia Britannica, which had been one of the most popular encyclopedias, ceased printing books after 244 years (Pepitone 2012). Wikipedia has over 60 times as many articles as Britannica had, and its accuracy has been found to be on par with Britannica (Giles 2005). Far more people use Wikipedia than ever used Britannica—demand and well-being have presumably increased substantially. But while the revenues from Britannica sales were counted in GDP statistics, Wikipedia has virtually no revenues and therefore doesn’t contribute anything to GDP other than a few minimal costs for running servers and related activities and some voluntary contributions to cover these costs…For such transition goods, consumer surplus increases as free access spurs demand, but revenue decreases as prices become zero. Hence GDP and consumer welfare actually move in opposite directions.”

One finding of note: “50% of the Facebook users in our sample would give up all access to Facebook for one month if we paid them about $50 or more.” Link to paper on NBER here. A free draft is available here. ### April 14th, 2018 ## Inventions that Changed the World ### R&D HISTORY | ML AND ECONOMICS | SCANLON ON INEQUALITY ## METARESEARCH AND DEVELOPMENT ### Changes in R & D funding and allocation In a new report on workforce training and technological competitiveness, a task force led by former Commerce Secretary Penny Pritzker describes recent trends in research and development investment. Despite the fact that “total U.S. R&D funding reached an all-time high of nearly$500 billion in 2015, nearly three percent of U.S. gross domestic product,” the balance in funding has shifted dramatically to the private sector: “federal funding for R&D, which goes overwhelmingly to basic scientific research, has declined steadily and is now at the lowest level since the early 1950s.” One section of the report contains this striking chart:

Link to the full report. ht Will

• A deeper dive into the report's sourcing leads to a fascinating repository of data from the American Association for the Advancement of Science on the U.S. government's investments in research since the 1950s. Alongside the shift from majority federal to majority private R&D funding, the proportion of investments across different academic disciplines has also changed significantly. One table shows that the share of federal R&D funding for environmental science, engineering, and math/computer science has grown the most, from a combined 43.2% in 1970 to 54.8% in 2017. Meanwhile, funding for social science research has decreased the most. In 1970, the social sciences received 4.3% of the government's R&D funding; but in 2017, that share had fallen to 1.8%. Much more data on public sector R&D investments is available from the AAAS here.
• A March 2017 article in Science explains some of these shifts.
• A section of a 1995 report commissioned by the U.S. Senate Committee on Appropriations charts and contextualizes the explosion of federal research and development funding in the immediate aftermath of the Second World War.
• A study from the Brookings Institution finds that federal funding for research and development accounts for up to 2.8 percent of GDP in some of the largest metropolitan areas in America. The authors have fifty ideas for how municipalities can capture more of the economic impact generated by that R&D.
• Michael comments: "With the diminishing share (4.3% to 1.8% of total government research) of halved expenditures—and business not naturally inclined to conduct this kind of research (except in, as one would expect, instances of direct business application like surge pricing and Uber)—social science research appears to no longer have a natural home."

## TARGET VARIABLE

### Big data's effect on the credit-scoring industry

A lengthy 2016 article from the Yale Journal of Law and Technology delves into credit-scoring then suggests a new legislative framework.

Since 2008, lenders have only intensified their use of big-data profiling techniques. With increased use of smartphones, social media, and electronic means of payment, every consumer leaves behind a digital trail of data that companies—including lenders and credit scorers—are eagerly scooping up and analyzing as a means to better predict consumer behavior. The credit-scoring industry has experienced a recent explosion of start-ups that take an 'all data is credit data' approach that combines conventional credit information with thousands of data points mined from consumers' offline and online activities. Many companies also use complex algorithms to detect patterns and signals within a vast sea of information about consumers' daily lives. Forecasting credit risk on the basis of a consumer's retail preferences is just the tip of the iceberg; many alternative credit-assessment tools now claim to analyze everything from consumer browsing habits and social media activities to geolocation data.

### Tallying the gains of migration

We recently linked to a paper by LANT PRITCHETT that challenged development orthodoxy by pointing out that the income gains for the subjects of best practice direct development interventions are about 40 times smaller than those from allowing the same people to work in a rich country like the United States.

That argument was built upon previous scholarship that attempted to put rigorous numbers to the obvious intuition that migration is beneficial for those drawn to wealthy countries by labor markets. From a 2016 paper by Pritchett and co-authors MICHAEL CLEMENS and CLAUDIO MONTENEGRO:

"We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally-representative microdata on both US immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting, for low-skill males, is greater than $13,700 per worker per year." ### March 31st, 2018 ## White Out ### URBAN WEALTH FUNDS | OWNERSHIP OF SOVEREIGN WEALTH | FILTER BUBBLE EFFECTS ## URBAN WEALTH FUNDS ### Social wealth funds on the municipal level Matt Bruenig, Roger Farmer and Miles Kimball, and Sam Altman have all pushed for versions of a US sovereign wealth fund for social good. Their work focuses on funds at the national level. But another version of the idea comes from Dag Detter and Stefan Fölster, whose 2017 book advocates for “urban wealth funds,” funded via better management of government land and other nonfinancial assets. A few such funds have already had success. Using Boston as an example of a city that could profit from an urban wealth fund, Detter writes for the World Economic Forum in February: “…Like many other cities, Boston does not assess the market value of its economic assets. Unlocking the public value of poorly utilized real estate or monetizing its transportation and utility assets – smarter asset management, in other words – would yield a return that would enable it to more than double its infrastructure investments. Through smarter asset management, Boston could improve its public transport system and other services without needing to opt for privatization, raise taxes or cut spending elsewhere. “What’s the catch? Actually, there isn’t one.” Link to the full post. A 2017 Brookings report showed how Copenhagen successfully implemented urban wealth fund policy: “This paper explores how the Copenhagen model can revitalize cities and finance large-scale infrastructure by increasing the commercial yield of publicly owned land and buildings without raising taxes. The approach deploys an innovative institutional vehicle—a publicly owned, privately run corporation—to achieve the high-level management and value appreciation of assets more commonly found in the private sector while retaining development profits for public use.” • Another successful version of urban value capture: Hong Kong’s metro (the MTR). “Hong Kong is one of the world’s densest cities, and businesses depend on the metro to ferry customers from one side of the territory to another. As a result, the MTR strikes a bargain with shop owners: In exchange for transporting customers, the transit agency receives a cut of the mall’s profit, signs a co-ownership agreement, or accepts a percentage of property development fees. In many cases, the MTR owns the entire mall itself.” Link. • Detter and Fölster’s previous book envisions better management of government assets on the national level. ### March 24th, 2018 ## Do I See Right? ### FAIRNESS IN MACHINE LEARNING | METARESEARCH | MICROSTRUCTURE OF VIOLENCE ## DISTINCT FUSION ### Tracking the convergence of terms across disciplines In a new paper, CHRISTIAN VINCENOT looks at the process by which two synonymous concepts developed independently in separate disciplines, and how they were brought together. “I analyzed research citations between the two communities devoted to ACS research, namely agent-based (ABM) and individual-based modelling (IBM). Both terms refer to the same approach, yet the former is preferred in engineering and social sciences, while the latter prevails in natural sciences. This situation provided a unique case study for grasping how a new concept evolves distinctly across scientific domains and how to foster convergence into a universal scientific approach. The present analysis based on novel hetero-citation metrics revealed the historical development of ABM and IBM, confirmed their past disjointedness, and detected their progressive merger. The separation between these synonymous disciplines had silently opposed the free flow of knowledge among ACS practitioners and thereby hindered the transfer of methodological advances and the emergence of general systems theories. A surprisingly small number of key publications sparked the ongoing fusion between ABM and IBM research.” Link to a summary and context. Link to the abstract. ht Margarita • Elsewhere in metaresearch, a new paper from James Evans’s Knowledge Lab examines influence by other means than citations: “Using a computational method known as topic modeling—invented by co-author David Blei of Columbia University—the model tracks ‘discursive influence,’ or recurring words and phrases through historical texts that measure how scholars actually talk about a field, instead of just their attributions. To determine a given paper’s influence, the researchers could statistically remove it from history and see how scientific discourse would have unfolded without its contribution.” Link to a summary. Link to the full paper. ### March 17th, 2018 ## Natatorium Undine ### STATE SCHOOL RECRUITMENT | JOB GUARANTEE | BLOCKCHAIN ## DEPENDENCE EXTERIOR ### State universities' reliance on out-of-state enrollment Research on enrollment patterns finds that shrinking state funds leads admissions departments to look for out-of-state tuition financing. "Fixed effects panel models revealed a strong negative relationship between state appropriations and nonresident freshman enrollment. This negative relationship was stronger at research universities than master’s or baccalaureate institutions. These results provide empirical support for assertions by scholars that state disinvestment in public higher education compels public universities to behave like private universities by focusing on attracting paying customers. We contribute to a growing body of evidence that showing that university revenue seeking behaviors are associated with a strong Matthew Effect. Cheslock and Gianneschi showed that only flagship research universities could generate substantial revenues from voluntary support. Therefore, increasing reliance on voluntary support increases the differences between ‘have’ and ‘have-not’ universities. Similarly, our results suggest that relying on nonresident enrollment growth to compensate for declines in state appropriations also increases the difference between the haves and the have-nots. Many public universities may desire tuition revenue from nonresident students. However, descriptive statistics suggest that only research universities are capable of generating substantial nonresident enrollment." Link to the full paper, by OZAN JAQUETTE and BRADLEY CURS. • An NBER working paper, from 2016, produces similar findings in the case of international student enrollment: "Our analysis focuses on the interaction between the type of university experience demanded by students from abroad and the supply-side of the U.S. market. For the period between 1996 and 2012, we estimate that a 10% reduction in state appropriations is associated with an increase in foreign enrollment of 12% at public research universities and about 17% at the most resource-intensive public universities." Link to the paper, link to a summary. ### March 10th, 2018 ## The One With Nothing On It ### CRIMINALIZATION OF DEBT | INTERNET CENSORSHIP | EQUALITY ## BRUTAL ATTACHMENTS ### A new report on the criminalization of debt Last week, the ACLU published a report entitled "A Pound of Flesh: The Criminalization of Private Debt." It details the widespread use of the criminal justice system in the collection of debts—including medical, credit card, auto, education and household—in many cases resulting in de facto debtor's jails. "In 44 states, judges—including district court civil judges, small-claims court judges, clerk-magistrates, and justices of the peace—are allowed to issue arrest warrants for failure to appear at post-judgment proceedings or for failure to provide information about finances. These warrants, usually called 'body attachments' or 'capias warrants,' are issued on the charge of contempt of court. At the request of a collection company, a court can enter a judgment against a debtor, authorize a sheriff to seize a debtor's property, and order an employer to garnish the debtor's wages.… In most of the country, an unpaid car loan or a utility bill that's in arrears can result in incarceration." Link to the full report. • The report was given a lengthy write-up at The Intercept. "Federal law outlawed debt prisons in 1833, but lenders, landlords and even gyms and other businesses have found a way to resurrect the Dickensian practice. With the aid of private collection agencies, they file millions of lawsuits in state and local courts each year, winning 95 percent of the time." Link. • A brief overview of the history of debtors' prisons, leading to the upward trend of collectors' leveraging criminal consequences against debtors. Link. • A 2011 paper titled "Creditor's Contempt" describes the procedural and doctrinal mechanisms linking collectors and courts, and the "difficult balance between the state's and creditors' interest in rigorous judgment enforcement and debtors' interest in imposing reasonable limitations on the coerciveness of debt collection." Link. And documentation of a Duke Law conference covers the criminalization of debt alongside discussions of credit scoring and consumer bankruptcy. Link. • The criminalization of private debt dovetails with the more widely discussed issue of criminal justice debt resulting from fines and fees, which also leads to de facto debtor incarceration. Often called "legal financial obligations" (LFOs), these revenue-raising fees are levied for everything from warrants and case processing to parole check-ins and electronic monitoring devices. For more, see this 2010 report from the Brennan Center for Justice, this 2015 investigation from NPR, and this 2016 reform guide from Harvard's Criminal Justice Policy Program. (Also from CJPP, an interactive criminal justice debt policy mapping tool. Link.) • In a 2014 post on their now-defunct blog House of Debt, Atif Mian and Amir Sufi (authors of a book by the same name) on the history of debt forgiveness. Link. (For attempts at exploiting the imperfections of debt markets to cancel various kinds of debt, see the Rolling Jubilee project, and its relative the Debt Collective.) ### March 3rd, 2018 ## New Fables ### UNIVERSITIES AND RESEARCH | OVERSIGHT FOR ALGORITHMS | UNEMPLOYMENT ## IVORY MECHANICS ### Regional parochialism and the production of knowledge in universities "Scholarly understanding of how universities transform money and intellect into knowledge remains limited. At present we have only rudimentary measures of knowledge production's inputs: tuition and fees, government subsidies, philanthropic gifts, and the academic credentials of students and faculty. Output measures are equally coarse: counts of degrees conferred; dissertations, articles and books completed; patents secured; dollars returned on particular inventions. As for the black box of knowledge production in between: very little." From the introduction to a new book on American social science research that aims to uncover the institutional pathways that produce (and favor) certain areas of research. It continues: "The rise of 'global' discourse in the US academy has coevolved with fundamental changes in academic patronage, university prestige systems, and the international political economy. America's great research institutions are now only partly servants of the US nation-state. This fact has very large implications for those who make their careers producing scholarly knowledge." Link to the introduction. • A short interview with co-authors Mitchell L. Stevens and Cynthia Miller-Idris. "Sociology department chairs said frankly that they deliberately steer graduate students away from international study because such projects on non-U.S. topics are less likely to have purchase on the tenure-line job market.… The tenure process is largely mediated by disciplines, and because those disciplines prioritize their own theoretical abstractions, contextual knowledge loses out." Link. • A paper examines previous attempts to map the parochialism of a discipline, finding that “conventional measures based on nation-state affiliation capture only part of the spatial structures of inequality.” Employed therein: novel visualizations and mapping the social network structures of authorship and citation. Link. Relatedly, a September 2017 post by Samuel Moyn on parochialism in international law. Link. • And a link we sent last fall, by Michael Kennedy, on interdisciplinarity and global knowledge cultures. Link. ### February 24th, 2018 ## The Conquest of Space ### DACA | LAND VALUE TAX | SURVEILLANCE ## DEFERRED ACTION ### On the effects of DACA Last week we linked to a paper that outlines the effects of DACA status on educational attainment and productivity: "High school graduation rates increased by 15 percent while teenage births declined by 45 percent.… College attendance increased by 25 percent among women, suggesting that DACA raised aspirations for education above and beyond qualifying for legal status." Given reader interest in that paper, we've compiled an overview, inspired by current events, of DACA-related studies across a range of domains. • On the economic effects of legal status for DREAMers, including the modeled impact of the DREAM Act: “We estimate DACA increased GDP by almost 0.02% (about$3.5 billion), or $7,454 per legalized worker. Passing the DREAM Act would increase GDP by around 0.08% (or$15.2 billion), which amounts to an average of \$15,371 for each legalized worker.” Link.
• The Cato Institute estimates the fiscal impact of the elimination of DACA, inclusive of projected productivity declines and enforcement costs: “The United States economy would be poorer by more than a quarter of a trillion dollars.” Link.
• A study finds DACA moved 50 to 75 thousand unauthorized immigrants into the labor force while increasing incomes for immigrants at the bottom of the income distribution. Using these estimates, the author contends that the (now defunct) DAPA, which targeted unauthorized parents of US citizens and LPRs for legalization, would move over 250 thousand unauthorized individuals into employment. Link. Another finds a 38% reduction in the likelihood of poverty for DACA-eligible immigrants. Link.
• As a complement to the above linked paper on education investment, more fine-grained results on education outcomes for DACA recipients: “the effect of DACA on educational investments depends on how easily colleges accommodate working students.” Link.
• On the mental health outcomes of children of DACA recipients. Link. On the health outcomes for DACA recipients versus their unqualified DREAMer counterparts. Link. On Medicaid use in mixed-status families, and the effects of deportation risk thereon. Link.
• Again from Cato, a report on the IRCA (alias "Reagan amnesty") reviews several studies of the economic effects of that 1986 law, which paired legalization for close to three million unauthorized immigrants with increased border security and employer verification. Alongside specific takeaways regarding wages and tax revenues for/from the population that gained legal status (increases in both), a larger claim emerges: legalization programs are most sensible "within the context of comprehensive immigration reform." Link. For more on the Reagan Amnesty and its legacy, see this report from the DHS and this post from the Migration Policy Institute.
• Vox’s Dara Lind, one of the few reliably accurate mainstream reporters on immigration law and policy, gives an overview of the DREAMer generation: “It’s the combination of settledness and the difficulty of getting legal that make DREAMers generationally unique in the history of US immigration policy.” Link. An idea discussed in that post—that increased border enforcement paradoxically kept migrants in the U.S.—is given depth by Princeton sociologist Douglas Massey here and here. For more on the relationship between immigration law, increased enforcement, and the growth of the unauthorized population, see this paper, this book, and this article.

## BASIC OPPORTUNITY

### Considerations on funding UBI in Britain

The RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) published a discussion paper on UBI. ANTHONY PAINTER outlines some key points here, including some thoughts on funding:

“To fund the ‘Universal Basic Opportunity Fund’ (UBOF), the Government would finance an endowment to cover the fund for 14 years from a public debt issue (at current low interest rates). This endowment would be invested to both fund asset growth and public benefit. The fund could be invested in housing, transport, energy and digital infrastructure and invested for high growth in global assets such as equity and real estate. This seems radical but actually, similar mechanisms have been established in Norway, Singapore and Alaska. In the latter case, Basic Income style dividends are paid to all Alaskans. Essentially, the UBOF is a low-interest mortgage to invest in infrastructure and human growth that brings forward the benefits of a sovereign wealth fund to the present rather than waiting for it to accumulate over time.”

Full paper is available here. And here is the longer section on “The technicalities of a Universal Basic Opportunity Fund,” including building and administering the fund. ht Lauren

• A new working paper on the Alaska Permanent Fund: "Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment." Link.