sharing apps

Here’s an article in Washingtonian about new transportation sharing apps and delivery services, and how they are changing the demand for car-dependent neighborhood design in Washington D.C. It’s a feedback loop that just continues to pick up steam once it starts. And this is before computer-controlled vehicles really come into their own, which is going to change everything.

That process works like this: First, it gets easier not to have a car. In recent years, things such as improved public transit and 69 miles of new bike lanes in the District alone have made Washington an easier place to navigate without driving.

Next, new digital businesses—Uber, Instacart, Car2Go—capitalize on this market. (Google has even made noise with a far-fetched idea to roll out a ride service featuring driverless cars.) One of the things these services collectively do is make up for some of the things you lose—say, access to a wonderfully big, suburban-style grocery store—by not driving.

Then the rate of car ownership tumbles: For the 18-to-34 demographic across the region, the share of people who drove to work fell by 7 percentage points between 2000 and 2013, according to the US Census. The District alone gained 12,612 car-free households between 2010 and 2012.

Finally, as a result, lawmakers and regulators have no choice but to catch up—which means even more bike lanes, liberalized transit rules, and denser neighborhoods whose residents make appealing customer bases for bike sharing, and cars by the hour, and novel delivery options for economy-size packs of toilet paper. It’s a cycle that reinforces itself.

The End Of Plenty: The Race To Feed A Crowded World

Here’s a new entry in the running-out-of-food genre.

I’ve embedded a Fresh Air interview about this book at the bottom of the post. You can find a transcript here. And here’s an excerpt:

And so suddenly, you had an instance where the world began consuming fairly consistently more of these major grains than it was producing, whittling down stockpiles to levels we haven’t seen since the 1970s. So, for example, in the 1970s, we consumed or utilized more grain than we ate only about four years out of the decade. In the drier ’80s, it was about five years. Since 2000, we’ve consumed or utilized more of these feed grains in eight of the first 12 years of the decade. So really, we’re starting to see the demand pressures outstrip our ability to produce food. All this while our yield gains, that have been spectacular since Norman Borlaug introduced the Green Revolution agriculture in the ’50s and ’60s, started to plateau.

So it – just as our demands are starting to rise, we’re starting to plateau in the amount of grain we’re getting per hectare, while things like climate change are really starting to hammer us. So we’re looking at, you know, these major disruptions of our food supply. Now, there was a heat wave in Europe in 2003 that killed, like, 73,000 people in Europe. And yet what – that one made headlines all over the world, but what people didn’t realize was that a third of the wheat and grain and fruit crops were decimated that year.

You know, Russia has had these enormous droughts events where they’ve lost up to a third to half of their crop. Here in the United States, we’ve had 2012-2013, you know, we had the worst drought since the Dust Bowl days – cost us $30 billion. So – and what we’re dealing with is sort of the new normal. You know, the researchers say that now we’re going to have to, because of the increased demand from population growth, increased meat consumption in developing parts of the world, that we’re going to have to double our grain production, our food production, by 2050 to make sure everyone’s reasonably fed. And yet, climate change is just starting to really hammer it down, so we’re in a bit of a pinch.

Mckinsey

McKinsey lists “four powerful forces [that] are disrupting the global economy”.

  • “shift of economic activity to emerging-market cities
  • “acceleration of technological change. While technology has always been transformative, its impact is now ubiquitous, with digital and mobile technologies being adopted at an unprecedented rate. It took more than 50 years after the telephone was invented for half of American homes to have one, but only 20 years for cellphones to spread from less than 3% of the world’s population to more than two-thirds. Facebook had six million users in 2006; today, it has 1.4 billion… The mobile Internet offers the promise of economic progress for billions of emerging-economy citizens at a speed that would otherwise be unimaginable. And it gives entrepreneurial upstarts a greater chance of competing with established firms. But technological change also carries risks, especially for workers who lose their jobs to automation or lack the skills to work in higher-tech fields.
  • demographics – the possibility that world population could plateau or actually start to fall
  • globalization

There are a few more things out there that could disrupt the economy for better or worse – renewable energy? biotechnology? climate change? risks to food and water supplies? ocean collapse? nuclear or biological war?

meeting future food demand

This article in Water Resources Research says we have a shot at meeting future food demand.

Sustainable options for decreasing food demand and for increasing production include reduction of food losses on both the producer and consumer ends, elimination of unsustainable practices such as prolonged groundwater overdraft, closing of yield gaps with controlled expansions of nutrient application and irrigation, increases in crop yield and pest resistance through advances in biotechnology, and moderate expansion of rain fed cropland. Calculations based on reasonable assumptions suggest that such measures could meet the food needs of an increasing global population while protecting the environment.

coal industry collapse

The stocks of U.S. coal companies have almost completely collapsed.

But times have changed, and the market value of coal companies has collapsed. The four largest coal companies were worth a combined $21.7 billion dollars in June 2010. Now they’re worth $1.2 billion. Two other large coal concerns, Patriot and James River, have both filed for bankruptcy in recent years. And one market analyst told the Financial Times in February to expect “multiple bankruptcies in US coal over the next 12-18 months.”

They blame it on a combination of low natural gas prices and government regulation. I think it has more to do with the former – natural gas is cleaner and newly cheap, so there is just no reason to stay with coal. The regulators have probably been emboldened because they see that there are clear alternatives. There is no mention of renewables in this article, but I suspect they play a role.

 

May 2015 in Review

Negative stories:

  • MIT says there is a critical long term decline in U.S. research and development spending, while spending is increasing in many other parts of the world.
  • Lake Mead, water supply for Las Vegas and several other major western U.S. cities, is continuing to dry up. The normal snowpack in Washington State is almost completely absent, while much of Oregon has declared a state of emergency. As the drought grinds on, recycled water (sometimes derided as “toilet to tap”) is becoming more common in Calfornia. This is not bad in itself – on the contrary it is an example of technological adaptation and closing the loop. It does have a cost in money and energy though, which are resources that are then not available for other things like education or infrastructure or whatever people need. In other words, drought makes us all a little bit poorer.
  • We’ve hit 400 ppm carbon dioxide in the atmosphere, not just some places sometimes but pretty much everywhere, all the time.
  • There may be a “global shortage of aggregate demand“, and most countries are not dealing with it well. In many developed countries, increases in average longevity could lead to a trend of long-term deflation. This could eventually happen in almost all countries.
  • Climate change is going to make extreme weather more frequent and more damaging in U.S. cities. The 2015 El Nino could break records.
  • There just isn’t a lot of positivity or hope for better passenger rail service in the U.S.
  • Human chemical use to combat diseases, bugs, and weeds is causing the diseases, bugs and weeds to evolve fast.
  • Unfortunately there is no foolproof formula to make education work.

Positive stories:

  • Less leisure time could mean less sustainable outcomes, because people just have less time to think and act on their good intentions. I’m putting this in the positive column because although people in the U.S. and many other countries still work long hours, the trend so far is less work and more wealth for human population as a whole over very long periods of time. Obviously the transition is not smooth or painless for all workers all of the time.
  • I found a nice example of meta-analysis, which aggregates findings of a large number of scientific and not-so-scientific studies in a useful form, in this case in the urban planning field.
  • May is time to pull on the urban gardening gloves.
  • Melbourne’s climate change adaptation plan focuses on green open space and urban tree canopy.
  • Painless vaccines may be on the way.
  • The rhetoric on renewable energy is really changing as it starts to seriously challenge fossil fuels on economic grounds. Following the Fukushima disaster, when all Japan’s nuclear reactors were shut down, the gap was made up largely with liquid natural gas and with almost no disruption of consumer service. But renewables also grew explosively. Some are suggesting Saudi Arabia is supporting lower oil prices in part to stay competitive with renewables. Wind and solar capacity are growing quickly in many parts of the world. Lester Brown says the tide has turned and renewables are now unstoppable.
  • Commercial autonomous trucks are here.
  • The UK may have hit “peak car“.
  • Seattle is allowing developers to provide car share memberships and transit passes in lieu of parking spaces.

social network theory and research

Here is a long paper with a lot of references on social network theory and empirical evidence, including learning and diffusion of innovations. For example,

A nice example of this using field data is a study of social learning by Conley and Udry (2001, 2004). They examine the use of fertilizer by pineapple farmers. In particular, they show that changes in the amount of fertilizer used by a given farmer are related to the success or failure of similar past changes in fertilizer use by other farmers. Having controlled experiments can substantially narrow down the range of explanations for observed peer correlations. For example, Hesselius, Johansson, and Nilsson (2009) examine absences in the workplace based on a randomized rule affecting about 3000 workplaces in G oteborg Sweden. Randomly
assigned agents were allowed to have longer spells of absence from work (14 days) without having to produce a doctor’s certificate than was the rule for the general population (8 days). This resulted not only in an increase in absences for the treated individuals (those allowed the extra time before producing a doctor’s certificate), but also for non-treated individuals conditional on being in a workplace with many treated individuals. Interestingly, the affect of how many other treated individuals there were in the workplace did not significantly influence treated individuals’ behavior. This allows them to distinguish between various ways in which the peer effects might work, ruling out things like enjoying time together and being more consistent with a fairness effect or related peer effect on preferences. This sort of study shows the power of (field) experiments in identifying peer effects…
The list of settings where peer effects, or network effects more generally, have been found to be important is a long and varied one. It includes a range of things from criminal behavior (Reiss (1980), Glaeser, Sacerdote and Scheinkman (1996), Kling, Ludwig and Katz (2005), Patacchini and Zenou (2008)), to education (e.g., Calvo-Armengol, Patacchini and Zenou (2008)), to risk-sharing and loan behavior (Fafchamps and Lund (2003), De Weerdt (2004), Karlan, Mobius, Rosenblatt, Szeidl (2009)), to obesity (Christakis and Fowler (2008), Fowler and Christakis (2008), and Halladay and Kwak (2009)). (See Fafchamps (This volume), Ioannides (This volume), Jackson and Yariv (This volume), Munshi (This volume), Sacerdote (This volume), and Topa (This volume), for more examples and background on empirical evidence.)

Paul Romer and “mathiness”

Paul Romer has attacked a number of fellow economists for relying on what he calls “mathiness” rather than mathematical theory. He believes the study of economic growth and its practical applications have suffered because of this.

Academic politics, like any other type of politics, is better served by words that are evocative and ambiguous, but if an argument is transparently political, economists interested in science will simply ignore it. The style that I am calling mathiness lets academic politics masquerade as science. Like mathematical theory, mathiness uses a mixture of words and symbols, but instead of making tight links, it leaves ample room for slippage between statements in natural versus formal language and between statements with theoretical as opposed to empirical content.

Solow’s (1956) mathematical theory of growth mapped the word “capital” onto a variable in his mathematical equations, and onto both data from national income accounts and objects like machines or structures that someone could observe directly. The tight connection between the word and the equations gave the word a precise meaning that facilitated equally tight connections between theoretical and empirical claims. Gary Becker’s (1962) mathematical theory of wages gave the words “human capital” the same precision and established the same two types of tight connection—between words and math and between theory and evidence. In this case as well, the relevant evidence ranged from aggregate data to formal microeconomic data to direct observation…

The market for mathematical theory can survive a few lemon articles filled with mathiness. Readers will put a small discount on any article with mathematical symbols, but will still find it worth their while to work through and verify that the formal arguments are correct, that the connection between the symbols and the words is tight, and that the theoretical concepts have implications for measurement and observation. But after readers have been disappointed too often by mathiness that wastes their time, they will stop taking seriously any paper that contains mathematical symbols. In response, authors will stop doing the hard work that it takes to supply real mathematical theory. If no one is putting in the work to distinguish between mathiness and mathematical theory, why not cut a few corners and take advantage of the slippage that mathiness allows? The market for mathematical theory will collapse. Only mathiness will be left. It will be worth little, but cheap to produce, so it might survive as entertainment.