Crime’s costs are even higher than we thought

Tuesday, August 16th, 2022

How bad is crime?, Ben Southwood asks:

In the paper, whose calculations were done in 2006, Americans were willing to pay $25,000 to avert a burglary across their society, $70,000 to avoid a serious assault, and nearly $10m to avoid a murder.

A more practical situation comes when juries award money to ‘make people whole’ for physical injury, pain, suffering, mental anguish, shock, and discomfort that they have experienced due to some illegal action. For example, one 68-year old lady was shot through the spine in a drive-by shooting, and left paraplegic — a jury gave her $2.7m in addition to her medical costs.

If you combine these awards, in a large sample, with separate ‘physician impairment ratings’ — basically how bad doctors think the injury is compared to death — then this is another method of estimating the statistical value of a life, something we have hundreds of estimates for, which typically comes out somewhere above $5m, depending on the wealth of the country and the methodology.

[...]

Their central estimate is that crime costs America $2.6 trillion annually, mostly coming from violent crime. This is about 12 percent of US GDP. By this metric, it would be, in GDP terms, one of the US’s biggest problems, on par with housing. For a country like the UK with a murder rate about five times lower, the problem is probably about five times smaller.

I actually think the American problem is considerably bigger than this estimate, because this study only includes the costs of crimes that actually get committed. However, people try their damnedest to avoid being the victims of crime. This leads to many extremely socially costly behaviours.

What are some of these extremely socially costly behaviors?

For example, one study by Julie Cullen and Steven Levitt finds that when crime rates across the city rise ten percent, city centre populations fall one percent — with people generally moving to the suburbs. One crime tends to push one person out of the city centre, on average.

Quantifying this in terms of a real world city, the roughly 400 percent increase in New York City’s murders from 1955 to 1975 (from around 300 to over 1,500 per year) would have been expected to empty the densest parts of the city out by about 40 percent, assuming that other crimes rose in line with murder. And indeed, the population of the centre city — Manhattan — fell about 35 percent over that period, while the population and physical extent of the suburbs grew rapidly.

Murders in New York City peaked in 1990 at over 2,000 per year, roughly as population reached its nadir in the city centre. They have cratered by over three quarters, to about 300. This would have likely driven city centre population up massively, much moreso than it actually did recover, but building restrictions have prevented this happening anywhere near as much as it might, meaning that it has driven up prices instead.

So this story implies that crime in city cores drives people to the suburbs, creating urban sprawl. If so, then crime’s costs are even higher than we thought.

When people arrive at the same policy recommendations but shift to the opposite rationale, it seems fair to doubt their objectivity

Tuesday, August 9th, 2022

There are two carbon calculation problems, Arnold Kling explains, and they are interdependent:

One problem is to figure out the optimal amount of carbon emission reduction. That means making a judgment about how much harm carbon emissions cause (and this relies on unreliable models) and comparing this with the cost of the carbon-emission reduction measures. The other problem is to figure the optimal carbon-emission reduction measures, which will in turn help you to calculate the cost of those measures.

When someone makes a specific proposal, such as changing fertilizer use, I want to say: Show Your Work. That is, show the assumptions and calculations that you made in order to arrive at this proposal. Otherwise, it may not even be true that your proposal would reduce carbon emissions.

In the economy, central planners face a well-known calculation problem. Even when they are sure that the market is getting things wrong, they usually lack a way to measure the degree of correction needed.

To a first approximation, the best way to have a sustainable economy is to let the market work. In order to determine sustainability, markets perform a complex calculation problem. If a firm’s output sells for more than the cost of its inputs, then its production process is sustainable, and it remains in business. If it sells for less, it experiences losses, and it goes out of business. No public official has knowledge that can enable a regulator to outperform the price system.

But there are costs that the market does not count. One cost that is on the minds of most policymakers today is the cost of carbon emissions, which add to greenhouse gases and hence to global warming.

Markets can still help in addressing the carbon emissions calculation problem.

[...]

As an aside, I should point out that animosity toward gasoline-fueled automobiles and “smokestack” industry long preceded the focus on global warming. Fifty years ago, one concern was air pollution. This was a fair concern, and I would say that the regulators who mandated filtering systems probably got it right. Certainly, the air in Los Angeles is cleaner because cars no longer spew as much pollution. And the air in Pittsburgh is cleaner because it no longer is a steel town.

Also fifty years ago, there was a concern that we would soon run out of fossil fuels. This motivated President Carter and Congress to create the Department of Energy, tasked with developing alternative energy sources in what Mr. Carter called a “moral equivalent of war.”

The global warming issue shifted the rationale for opposing gasoline and “smokestack” industries. The concern that fossil fuels were subject to scarcity was replaced by a worry that they are too abundant. When people arrive at the same policy recommendations but shift to the opposite rationale, it seems fair to doubt their objectivity.

Diamonds are forever

Friday, August 5th, 2022

Back in 1982, Edward Jay Epstein asked, Have you ever tried to sell a diamond?

Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly, the market was deluged with diamonds. The British financiers who had organized the South African mines quickly realized that their investment was endangered; diamonds had little intrinsic value — and their price depended almost entirely on their scarcity. The financiers feared that when new mines were developed in South Africa, diamonds would become at best only semiprecious gems.

The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds. The instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated in South Africa. As De Beers took control of all aspects of the world diamond trade, it assumed many forms. In London, it operated under the innocuous name of the Diamond Trading Company. In Israel, it was known as “The Syndicate.” In Europe, it was called the “C.S.O.” — initials referring to the Central Selling Organization, which was an arm of the Diamond Trading Company. And in black Africa, it disguised its South African origins under subsidiaries with names like Diamond Development Corporation and Mining Services, Inc. At its height — for most of this century — it not only either directly owned or controlled all the diamond mines in southern Africa but also owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland.

De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices — and unassailable — that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession.

[…]

To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. The illusion had to be created that diamonds were forever — “forever” in the sense that they should never be resold.

[…]

Movie idols, the paragons of romance for the mass audience, would be given diamonds to use as their symbols of indestructible love. In addition, the agency suggested offering stories and society photographs to selected magazines and newspapers which would reinforce the link between diamonds and romance. Stories would stress the size of diamonds that celebrities presented to their loved ones, and photographs would conspicuously show the glittering stone on the hand of a well-known woman. Fashion designers would talk on radio programs about the “trend towards diamonds” that Ayer planned to start. The Ayer plan also envisioned using the British royal family to help foster the romantic allure of diamonds. An Ayer memo said, “Since Great Britain has such an important interest in the diamond industry, the royal couple could be of tremendous assistance to this British industry by wearing diamonds rather than other jewels.” Queen Elizabeth later went on a well-publicized trip to several South African diamond mines, and she accepted a diamond from Oppenheimer.

Their bloated administrations are the shock troops of the culture war

Monday, July 25th, 2022

There are two kinds of revolutionaries, Balaji Srinivasan argues, technological and political, and there are two kinds of backers, venture capitalists and philanthropists. There aren’t term sheets between philanthropists and political revolutionaries, with “exits” to the tune of billions of dollars, but impact certificates could fix that, Scott Alexander suggests.

Arnold Kling doesn’t want that “fixed”:

Profit-seeking investment is driven ultimately by what consumers want. Philanthropy is driven ultimately by what donors want. Unless you think that donors are morally superior to the rest of us, you should not be rooting for more philanthropy.

One can speculate that one of the causes of increased social tension is the rise in philanthropy. Our “cold civil war” is funded by George Soros, Peter Thiel, Tom Steyer, and the like. Universities are among the most popular “charitable causes,” and their bloated administrations are the shock troops of the culture war.

We are better off with Soros speculating on currencies and Thiel trying to take businesses from zero to one. We are better off when university alumni invest their money in search of profit.

[…]

A lot of philanthropy goes to colleges and universities. Much of this goes to fancy new buildings. I think that Scott would agree that this does not help poor people. But were the donors who funded buildings trying to help the poor but lacking skills at effective altruism? Obviously not.

The challenge is not to make philanthropists more efficient at getting performing-arts centers and sports complexes built on campus. The challenge is to change the focus of donors toward something more worthwhile.

On the other hand, over the years Wal-Mart has hired many low-skilled workers and lowered the cost of living in many poor rural areas. Wal-Mart did not set out to help poor people, but that was the result.

More generally, markets have been shown over time and across countries to reduce poverty. The market does not produce the results of a benevolent omniscient quasi-deity. But donors themselves are neither benevolent, omniscient, nor quasi-deities.

I think that there is too much money to be made nowadays in non-profits dedicated to causes. Think of people making money as “activists.” I worry that “impact markets” could lead to even greater investment in arms races between opposing advocacy groups.

Status anxiety keeps earnings flatter across employees than they would otherwise be

Sunday, July 3rd, 2022

Robert Henderson has been reading Choosing the Right Pond: Human Behavior and the Quest for Status, by the Cornell economist Robert Frank, which addresses the question, Why are the least productive workers in an organization typically paid more than what they produce, while the most productive workers are paid less?

In most organizations, productivity varies more across employees doing similar jobs than wages.

In other words, if you take a selection of workers in an office who are all earning $80k/year, what is the likelihood they are all producing the same amount of value for the firm?

Basically zero.

Moreover, the highest-ranked employees are typically paid less than what they contribute. And the bottom-ranked workers are paid more.

[…]

Robert Frank suggests the reason for this is that workers would generally prefer to occupy higher-ranked positions in their work groups than lower-ranked ones. They’re forgoing more earnings to hold a higher-status position in their organization.

[…]

The low-ranked workers are giving up status for money. The high-ranked workers are giving up money for status.

[…]

Status anxiety keeps earnings flatter across employees than they would otherwise be.

What couldn’t von Neumann do?

Tuesday, April 26th, 2022

Reading The Man From the Future, Steve Sailer notes, it’s hard not to acknowledge mathematics as the king of the disciplines:

Von Neumann was first and foremost a mathematician, a protégé of David Hilbert, the most influential mathematician of the early 20th century. He delighted Hilbert by offering, as a teenager, a response to Bertrand Russell’s Paradox that was undermining confidence in Hilbert’s program for mathematical progress.

From von Neumann’s position of strength on the intellectual high ground of math, the adult prodigy then conducted a series of lightning raids on lesser fields:

Physics (helping reconcile the seemingly conflicting quantum-mechanics approaches of Heisenberg and Schrödinger).

Engineering (leading the design of the implosion device for triggering the first-ever atomic bomb, which was exploded at Trinity, New Mexico, in July 1945).

Economics (more or less inventing the subject of game theory and coining the useful term “zero-sum game”).

Computer science (articulating in 1945 the von Neumann architecture that instantly became the standard way to design general-purpose computers; note that he didn’t invent the computer, but his clarity of mind and prestige helped get the American computer industry off to a quick start on the right foot).

Nuclear war strategy (hanging out at the early RAND Corporation in Santa Monica, von Neumann offered ideas for dealing with the Soviets that tended to be less Dr. Strangelove than Gen. Buck Turgidson. Like the leftist pacifist Russell in the late 1940s, von Neumann kicked around the idea of nuking the Soviets before they got the Bomb and could retaliate).

Psychology (writing a book on the subject while dying of cancer).

What couldn’t von Neumann do? Bhattacharya lists a few of the great man’s shortcomings: He hated sports and anything else you couldn’t do in a well-tailored business suit, was a bad driver, had little musical ability, was not terribly interested in hearing about the feelings of the women in his life, and was an enthusiastic but mediocre chess player. Fascinatingly, an endnote mentions that the inventor of game theory was a notoriously poor poker player.

China also lives in a G7 world

Thursday, April 14th, 2022

But by the second day of the Ukraine war, Beijing realised that China also lives in a G7 world, Edward Luttwak notes, with its economy utterly dependent on the daily arrival of bulk carriers loaded with animal and human food:

China’s economy was self-sufficient if miserably poor in 1976 when I first visited, with a population on the edge of malnutrition. But today’s citizens will not grin and bear it without their meat, eggs, or milk. Last year, Xi Jinping’s naval groupies, including the jovial retired Admiral Luo Yuan, suggested that the US could be scared off from defending Taiwan against a Chinese invasion by sinking a US warship or two, perhaps even an aircraft carrier. Now Xi must realise that if a US warship is sunk, the supply of animal feed would end.

Zoom and Amazon fed on the carcasses of mom-and-pop businesses

Monday, April 11th, 2022

When COVID hit, the stock market took a deep dive, but it subsequently recovered:

Why did it recover? Because we used the Internet as a substitute for activities that were curtailed by COVID. And the Internet services we used were provided by corporations with shares traded on Wall Street. The economy shifted in the direction of bits, and this redistributed profits toward shareholder-owned companies. Zoom and Amazon fed on the carcasses of mom-and-pop businesses, so to speak. So even though overall wealth declined, the share of wealth accounted for by large corporations increased, and this buoyed stock prices.

As with COVID, the Russia-Ukraine war and the responses to that war are disrupting the economy. As I write this, though, the stock market seems to be relatively unconcerned. It is as if speculators are saying, “Corporate America thrived on the virus. It can thrive on the war, too.”

But the economic adaptation to the virus was to substitute bits for other means of getting goods and services. You used Amazon to get stuff delivered to you instead of going to the store to get it. You used Zoom to meet with work colleagues or out-of-town friends and relatives instead of going to the office or engaging in travel.

Instead, Zeihan predicts that the war will result in a scarcity of food. It’s not easy to see how we substitute bits for food. I cannot point to a corporation that is positioned to profit from mass starvation the way that Zoom or Amazon were positioned to profit from social distancing.

An economy is a system for generating and trading solutions to problems

Sunday, April 10th, 2022

Robin Hanson once wrote about how intelligent people tend to overestimate how smart everyone else is, and Anatoly Karlin elaborates on this, with support from PISA test scores:

Fortunately, the PISA website has sample math questions from the 2012 assessment, corresponding to each of the six different levels of difficulty, as well as statistics on the percentage of 15-16 year old students from each of the participating countries that is capable of correctly answering it.

Here is the sample question from Level 6, the hardest level:

Helen rode her bike from home to the river, which is 4 km away. It took her 9 minutes. She rode home using a shorter route of 3 km. This only took her 6 minutes.

What was Helen’s average speed, in km/h, for the trip to the river and back?

Karlin notes how few people get this right:

This problem requires a multi-step approach, an understanding of rates, and the intelligence to complete it in the correct order.

Though not especially hard, even at this level. I suspect that many of you can do it in your heads within a minute.

But a majority of all the tested teens begged to differ.

OECD average: 3% (!!). Korea: 12%, Japan: 8%, Germany: 5%. The US, Italy, Sweden, and Russia were all at 2%; the Mediterranean was at 1%.

Some countries where a big fat 100% (rounded up) were unable to do this problem: Argentina, Brazil, Chile, Colombia, Indonesia, Jordan, Kazakhstan, Malaysia, Mexico, Peru, Qatar, Tunisia, Uruguay.

The number of people at this level, the highest measured by PISA, is dwindling away into insignificance in Latin America and the Middle East.

And yet this only translates to an IQ of 120-125. We’re nowhere even near genius level yet.

This matters:

The classical definition of an economy is a system for the production and exchange of goods and services. However, I will argue that you can view it even more fundamentally as a system for generating and trading solutions to problems.

[…]

Some of these problems, such as subsistence farming and trucking, are pretty simple and can be accomplished with reasonable efficiency even by relatively dull workers. This is because problems in this “Foolproof sector” (as Garett Jones calls it) require few steps and have only a minimal threshold difficulty, so production in this sector is governed by the standard Cobb-Douglas equation. More highly skilled workers are only modestly more productive, and are thus awarded with modestly higher salaries. Labor differs by productivity, but is substitutable — one experienced waiter is worth two novice ones.

Other problems are very complex and require teams of competent workers to perform multiple complicated steps to create a successful solution. The best are paired with the best for maximum productivity. Moreover, many O-Ring problems might have a threshold limit for IQ, below which no productive work can be done on them in principle (as per the Ushakov-Kulivets model). To be commercially viable, the risk of failure on any one link of a long production chain needs to be kept low. Examples of these “O-Ring” tasks may include: Aircraft manufacturing; corporate merger planning; computer chip design; machine building; open-heart surgeries.

Is financial innovation a good thing?

Wednesday, April 6th, 2022

Is financial innovation a good thing?

In the context of a free market, innovation is a positive-sum game. The innovations that survive — most don’t — are the ones that conserve resources and improve quality. In the case of financial innovation, improving quality could mean better risk management.

But financial innovation does not take place in the context of a free market. Our financial system is permeated with government guarantees. Some guarantees, like deposit insurance or pension guarantees, are explicit. Other guarantees, like “too big to fail,” are implicit.

These guarantees can be exploited by firms that take on excessive risk. If a gamble pays off, the gains go to owners and managers of the firm. If the gamble turns out badly, some of the losses go to taxpayers. Even though managers might not consciously be searching for ways to game the system, the competition for returns will push them in the direction of doing so.

Innovative financial instruments and practices can facilitate gaming the system, without regulators realizing it. Clever innovations can enable a bank to comply with the letter of a regulation while violating its spirit. Sometimes, even the executives of the bank are fooled. They do not realize that their profits are coming from this “regulatory arbitrage,” rather than from real business skill.

This insurance was supposed to pay off in case those bonds lost value

Tuesday, March 22nd, 2022

Many money managers who had bought Russian bonds in the past had purchased credit insurance from other companies:

This insurance was supposed to pay off in case those bonds lost value, which they clearly have as a result of sanctions.

Under terms of some of these contracts, some money managers have been able to collect insurance claims. But other insurance contracts stated that in order to be paid, the money manager had to transfer the bonds to the insurer. But the sanctions will not allow the bonds to be transferred! Once again, innovative financial instruments proved to be fragile in ways that were not anticipated.

They want to solve poverty with sacrifice and without math

Wednesday, March 16th, 2022

Why is Bryan Caplan’s perspective on poverty so unpopular?

The obvious answer is that Effective Altruism is usually unpopular. Soft hearts and soft heads go together. Most people are instinctive Ineffective Altruists. They want to solve poverty with sacrifice and without math.

People perceive government bonds as wealth

Tuesday, March 15th, 2022

Arnold Kling thinks that people perceive government bonds as if they were wealth:

The government borrows $1 from me and spends it on you. You have a new dollar. And I think I still have a dollar, because the government owes me a dollar. Neither of us thinks that we will have our taxes raised next year, when the government has to pay me the dollar.

[…]

I assume that people are myopic and just look around and say “I got paid $x by the government” or “I lent $y to the government and got a $y bond in return” without thinking about what comes next.

Scary countries are deeply vulnerable to paid desertion

Thursday, March 3rd, 2022

Ukraine is offering amnesty plus five million rubles (about $48,000) to anyone who deserts from the Russian army and agrees to go to a Ukrainian prison, and Bryan Caplan suggests some improvements to this deal:

On the surface, this sounds like a sweet deal, but on reflection, it’s anything but. Put yourself in the shoes of a Russian soldier. First, you have to elude the Red Army, knowing you could be shot for desertion. Then, you have to surrender without getting killed by Ukrainians. After that, you’re stuck in prison; maybe they’ll deposit you in a regular POW camp, complete with Russian loyalists ready to kill you when the guard’s not looking. Wherever you languish, you know your fate hinges on the outcome of the war.

[…]

But let me propose a Version 2.0 to better fulfill the intent of the original offer.

Version 2.0: The EU, in cooperation with Ukraine, offers $100,000 plus EU citizenship to any Russian deserter. Russians can either go directly to the EU, or surrender to Ukrainian forces for speedy transport to the EU border.

The key gain: Deserters no longer have to gamble on Ukrainian success. As long as they escape from the Red Army’s zone of control, they survive. A much better gamble.

Extra benefits: Instead of going to a Ukrainian prison or POW camp, you get to enjoy freedom in the EU. And the EU is far more likely to swiftly hand over the promised monetary bounty.

How much of a burden is this on the EU? Chump change, really. Even in a magical scenario where all of the roughly 200,000 Russian troops in the vicinity take the deal, $100,000 per soldier is a mere $20 billion. That’s less than one-fifth of what Germany now plans to spend on defense in 2022 alone. It wouldn’t be crazy to go up to $1,000,000 per deserter. You could even do a classic multi-tier offer, where the first 10,000 deserters get a million bucks each to compensate for the high initial risk, followed by lower payments for late-leavers who get to desert in comparative safety.

[…]

Scary countries are deeply vulnerable to paid desertion, while the nicest countries are almost immune. How much would Russia have to offer Germans to desert to Russia? Nein, danke!

Working in business is the activity most likely to achieve positive social change

Monday, February 28th, 2022

It is tempting to think that working at a think tank is a way to encourage possible social change, but Arnold Kling found that working in business is the activity most likely to achieve positive social change:

In 1980, I completed my Ph.D dissertation. My goal was to solve a theoretical problem in Keynesian economics, hoping to steer the profession away from the “rational expectations neoclassical” macroeconomics that was all the rage within top economics departments. The idea was to explain price stickiness as based on information problems.

Trying to solve an important theoretical problem is a terrible strategy for a dissertation. Instead, you should figure out what the departments that are hiring are looking for. What they were looking for at the time were dissertations that were based on the rational expectations approach.

For me, the result was particularly bad. A professor who interviewed me on the job market stole my idea and published it before I did, without acknowledgment. The idea had no impact on the profession. In fact, it has been periodically rediscovered since (with no credit either to me or to the man who stole it), but again with no impact. This experience has left me less than excited about the academic research process in economics as a way to generate social change through ideas.

My first job out of grad school was at the Fed. I do not recall coming up with any significant ideas when I was there.

In 1986, I started working at Freddie Mac, the mortgage giant. At the time, I thought of it as a profit-seeking enterprise, albeit with some peculiar features. One feature was that it was supposed to “serve” upward mobility in the housing market.

Another feature was that with its government guarantee, its debt costs were low, and this gave it an advantage in undertaking certain forms of financial arbitrage. I was appalled when an economist told me excitedly about an anomaly in the Eurodollar market that he thought that Freddie could and should exploit. To me, that seemed like an abuse of Freddie’s Congressional charter.

In the 2000s, long after I had left, Freddie and Fannie took on riskier borrowers in a (misguided) attempt to serve upward mobility in the housing market. They also engaged in more of what I thought of as abuses of their low-cost debt status. I ended up happy to see them shut down during the financial crisis of 2008. I think that profit-seeking and a tight relationship with the government were ultimately a bad combination.

But working at Freddie gave me the best opportunity I have ever had to produce social change. My most significant idea there was to change the underwriting process to reduce judgment and rely more on data. Instead of trying to use AI to imitate human underwriters, I pushed for using credit scores. I also promoted using the Case-Shiller method for estimating home prices in an attempt to reduce the reliance on appraisals. The goal was to reduce the cost of obtaining a mortgage loan, to reject fewer good loans, and to accept fewer bad loans.

Freddie Mac adopted the credit scoring approach in 1994. For me personally, this was more bitter than sweet. Just as the idea I was pushing for was adopted, I was treated to a humiliating demotion, and I soon left the company.

As far as social change is concerned, the move toward credit scoring dramatically changed the mortgage industry. Yes, underwriting costs fell, and decisions became more accurate, with fewer good borrowers turned down and fewer bad borrowers accepted. But it also allowed new players to enter the mortgage lending market. Some of these players developed the so-called subprime mortgage market, with mortgage securities provided by Wall Street. These new players were central actors in the financial crisis of 2008.

I am not saying that I personally brought down mortgage lending costs, or that I personally caused the financial crisis. My guess is that the move toward credit scoring was going to happen at some point, anyway, and so that my efforts accelerated the process by at most a few years. And the financial crisis had many causal elements, mostly involving the political economy of mortgage lending in the U.S. I still think that introducing credit scoring into mortgage lending was socially beneficial, at least directly. But in a complicated world, the indirect effects of actions are difficult to assess.

When I left Freddie Mac in April of 1994, I created The Homebuyer’s Fair, one of the first commercial sites on the World Wide Web. The goal was to use the Internet to disintermediate in real estate and mortgage lending. For me personally, it worked out well. But apart from any role that the site played in stimulating interest in the Web (we got tons of press in 1994-1997), I would not say that it came anywhere close to achieving any major social goals. As any number of people who have tried to get rid of the excessive costs in real estate can tell you, institutional resistance to change is strong. In principle, the Internet could have eliminated real estate commissions 25 years ago. In practice, not so much. In principle, a digital property database could eliminate the title insurance industry. In practice, the title industry’s grip on Congress is too strong.

After our web site was sold in 1999 (to a subsidiary of the National Association of Realtors(tm), ironically enough), I “retired” to a career of teaching and writing. I taught on a volunteer basis for 15 years at a local high school. I mostly taught AP economics and AP statistics. I hated the AP econ curriculum, because my experience in business had led me to believe that a lot of mainstream economics is poorly conceived. I really liked the statistics curriculum, although one of my students, an autodidact who was a follower of the rationalist community, chided me for teaching a “frequentist” rather than a Bayesian approach.

My goal was to have some long-run influence with at least a few students. I think I was somewhat successful, although by 2015 or so I was struggling with what appeared to me to be the reduced maturity of the students.

I also taught for a few years at George Mason University, at the ridiculous adjunct salary of about $1500 for a class of 100 students. And, as my wife is fond of pointing out, GMU even made me pay for parking. Again, I would have been happy to reach a small number of students with a long-term impact, but I don’t think that I did.