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Abstract:

This paper investigates how status affects health by comparing mortality between Gold medalists in Olympic Track and Field and other finalists. Due to the nature of Olympic competition, analyzing performance on a single day provides a way to cut through potential endogeneity between status and health. I first document that an athlete’s longevity is affected by whether he wins or loses and then detail mechanisms driving the results. Winning on a team confers a survival advantage, with evidence that higher mortality among losers may be due to poor performance relative to one’s teammates. However, winning an individual event is associated with an earlier death. By analyzing the best performances of each athlete before the Olympics, I demonstrate that an athlete’s performance relative to his expectations partly explains the earlier death of winners in individual events: on average, Olympic Gold medalists expected to win, but losers exceeded their expectations. Conversely, athletes considered “favorites” but who fail to win die earlier than other athletes who also lost. My results are robust to estimating a range of parametric and semi-parametric survival models that make different assumptions about unobserved heterogeneity. My central estimates imply lifespan differentials of a year or more between winners and losers. The findings point to the importance of expectations, relative performance, surprise, and disappointment in affecting health, which are not highlighted by standard models of health capital, but are consistent with reference-dependent utility. I also discuss potential implications for employment contracts in terms of a trade-off between ex post health and ex ante incentives for productivity.

WHERE do the most successful Americans come from? I was curious. So I downloaded Wikipedia…

Why do some parts of the country appear to be so much better at churning out American movers and shakers? I closely examined the top counties. It turns out that nearly all of them fit into one of two categories.

First, and this surprised me, many of these counties consisted largely of a sizable college town. Just about every time I saw a county that I had not heard of near the top of the list, like Washtenaw, Mich., I found out that it was dominated by a classic college town, in this case Ann Arbor, Mich. The counties graced by Madison, Wis.; Athens, Ga.; Columbia, Mo.; Berkeley, Calif.; Chapel Hill, N.C.; Gainesville, Fla.; Lexington, Ky.; and Ithaca, N.Y., are all in the top 3 percent.

Why is this? Some of it is probably the gene pool: Sons and daughters of professors and graduate students tend to be smart. And, indeed, having more college graduates in an area is a strong predictor of the success of the people born there.

But there is most likely something more going on: early exposure to innovation. One of the fields where college towns are most successful in producing top dogs is music. A kid in a college town will be exposed to unique concerts, unusual radio stations and even record stores. College towns also incubate more than their expected share of notable businesspeople.

The success of college towns does not just cross regions. It crosses race. African-Americans were noticeably underrepresented on Wikipedia in nonathletic fields, especially business and science. This undoubtedly has a lot to do with discrimination. But one small county, where the 1950 population was 84 percent black, produced notable baby boomers at a rate near those of the highest counties.

Of fewer than 13,000 boomers born in Macon, Ala., 15 made it to Wikipedia — or one in 852. Every single one is black. Fourteen of them were from the town of Tuskegee, home of Tuskegee University, a historically black college founded by Booker T. Washington. The list included judges, writers and scientists. In fact, a black kid born in Tuskegee had the same probability of becoming a notable nonathlete as a white kid born in some of the highest-scoring, majority-white college towns.

More here, fascinating. Including an implicit criticism of my own personal migration pattern (having a kid in NYC then moving out to Bergen County, NJ). Apparently being a child of an immigrant is a big plus. Got that covered for my kids.

A few thoughts. Why does a university simultaneously borrow $3.6 billion but have $6.7 billion Invested? If borrowing is such a big deal, why not just spend the endowment on new buildings?

Answer: universities can borrow at municipal rates, free of federal tax, if they are building something. Borrowing tax-free makes financial sense, even you just stuff the marginal dollar into endowment. Of course the endowment is not invested in Treasuries — universities don’t do simple tax arbitrage. So the model is more that of a leveraged hedge fund — borrow at low tax-free rates, up to the limit imposed by tax law, and invest in high risk, (hopefully) high-return projects like hedge funds, private equity, real estate etc. The fact that investment returns are also not taxed makes this a doubly advantageous strategy. Donors: if you give now, your gift grows tax-free, while if you earn the rate of return and then give the money to the university, you pay taxes.

Ah, yes, but some donate to universities to raise status and put their names on walls. That requires big nominal (as opposed to Present Value) checks.

Here is what I think is happening: The U of C’s leaders think there will be about 5 big, global, high-prestige, science-oriented, big-idea-generating research universities left in 20 years. The gap between those and second-rate schools will grow, especially as the top 5 educational content goes online. Who wants to take an online class from the #11 university? We want to be one of the big 5. We’re behind, especially on the transition from arts and humanities to science and engineering. And if research funding moves from government to billionaires, scale and rank will be even more important. This is the “ambitious program to improve campus life while bolstering highly regarded academic programs.” Harvard (5.7) and Stanford (4.8) have more debt than us (3.6) and Yale (3.6) the same, an indication of who is in this race, and that they’re ahead of us.

Lots more to read here

First, the idea that the fed might issue FedCoins, which would be exchangeable for USD. It would make QE much easier to pull off. Amazing thought:

It is interesting to think about why this is so implausible.  There are a few reasons:

1. YellenCoin would be a means of payment but not the medium of account.  This would move the economy into a currency substitution model, a’la Girton and Roper, but would not have the effects of a straightforward monetary expansion.

2. Cryptocurrencies are much more likely to be used for some kinds of transactions than others.  So this act of “monetary policy” would be very much non-neutral.

3. Central banks are not supposed to be seen as taking major risks or overturning the established order of things.  They are highly risk-averse when it comes to their public reputations, and their very much prefer sins of omission to sins of commission.  If the Fed established Fedcoin and something went wrong with the idea, they would be subject to especially heavy blame.  In the meantime, few people (are there exceptions?) are blaming them for not establishing a cryptocurrency.

Next, a cas podcast where the idea is floated that P&C actuaries are more like technical stock analysts than fundamental stock analysts. Actuaries are a scientific bunch and no double would freak out at being lumped in with the ‘stupid’ stock pickers, though there is some merit to the comparison. We don’t even an attempt to analyze the fundamental drivers of claims activity when valuing insurance liabilities: we mostly do voodoo extrapolation of recent trends.

I can imagine a world where the cure to such a problem is even less comprehensible than the disease. We’d need data sources too immense to understand and apply to them tools that we can’t comprehend.

The day isn’t far off…

A remarkable set of nested blog posts. I’ll quote one piece but it really is worth reading it all:

It’s usually obvious when you’re talking to somebody a level above you, because they see lots of things instantly when those things take considerable work for you to figure out. These are good people to learn from, because they remember what it’s like to struggle in the place where you’re struggling, but the things they do still make sense from your perspective (you just couldn’t do them yourself).

Talking to somebody two or levels above you is a different story. They’re barely speaking the same language, and it’s almost impossible to imagine that you could ever know what they know. You can still learn from them, if you don’t get discouraged, but the things they want to teach you seem really philosophical, and you don’t think they’ll help you—but for some reason, they do.

Somebody three levels above is actually speaking a different language. They probably seem less impressive to you than the person two levels above, because most of what they’re thinking about is completely invisible to you. From where you are, it is not possible to imagine what they think about, or why. You might think you can, but this is only because they know how to tell entertaining stories. Any one of these stories probably contains enough wisdom to get you halfway to your next level if you put in enough time thinking about it.

Some research says:

What they found from the fMRI scans was that when mathematicians looked at the beautiful equations, the same part of the brain was activated as when people are looking at beautiful art or listening to beautiful music.

I know that feeling. I’d bet that a great turn of phrase or a great joke lights up the same regions.

Here is how:

Importantly, teachers also broadly share an authoritative vernacular or “folk pedagogy” that shapes understandings across the system regarding the nature of teaching and learning. These include that “teaching is talking and learning is listening”, authority is “hierarchical and bureaucratic”, assessment is “summative”, knowledge is “factual and procedural,” and classroom talk is teacher-dominated and “performative”.

My impression is that the marginal changes in the education systems in North America are away from this kind of “old school” approach and not towards. That probably means we won’t be climbing the rankings internationally.

Here is something I agree with:

But I actually think the United States–I’m a bigger believer in the U.S. education system than many people are…

And I think the parents in Bedford got out of their school system exactly what they wanted out of it. And they wanted football teams. And my wife teachers choir, and they wanted choir. And they wanted the school to put on a musical; and they wanted the school to provide their children with a range of athletic and artistic experiences. And engagement in a variety of other activities; and that’s what the school system delivered. Because it was quite carefully and closely controlled, both formally and informally by the parents. And that produces kind of not world-beating math scores. I don’t think that’s what the parents of Bedford thought was the totality of their educational system. So, I’m a very big fan of the local control by parents of educational systems. And if that doesn’t produce scores of 600, I am actually pretty happy with that. Because I’ve seen what it takes in Korea to produce scores of 600, and no American parent is willing to put their kid through that. Nor should they be, in my opinion.

I’ve been enjoyed Marc Andreessen’s twitter feed immensely.

Best approach to strategy is think like 100% owner with long-term time horizon, and then work backward. Versus what we have now forward.

— Marc Andreessen (@pmarca) February 11, 2014

I find it very difficult to think of my own business in this way. As intermediaries we get paid to think about other people’s businesses and strategy. We all have lots of opinions on the various forces that shape our clients’ and markets’ businesses but what about us, their service providers?

What is the future outcome that a 100% owner of a business like mine should target? Be bigger? Weak.

Stand in awe of the nuance:

Words for sex and prostitution move easily from language to language. Consider the peregrinations of bordel all over the Romance-speaking world (the noun became “international,” though surely the introduction of the “thing” did not need help from the neighbors), the etymology of ribald (from French, where it is from Germanic: the root (h)rib- meant “copulate”), and the unhealthy popularity of our F-word in the remotest countries of the planet. The OED provides evidence that bordel made its way into Middle English, and in light of this circumstance I would risk defending and developing an etymology offered in The Century Dictionary but disregarded by all later authorities. Unlike breþel, broþel from breoþan — I suspect — never existed. Much more likely, when bordel surfaced in Middle English, it was associated with broþen (the participle). The variation ro ~ or and the like (that is, r preceding a vowel versus r following it: metathesis) is common; thus, the German for board is Brett. Given this scenario, brothel will emerge as a trivial folk etymological alternation of a foreign word. Probably no one noticed that bordel reminded one of board. People needed a vivid picture of a house of sin, not an exercise in historical linguistics.

Much more at the link.

Review here (pdf)

I am generally a free markets, don’t tell me what to do and don’t take my stuff kind of guy, but I’ve been stopped dead in my tracks considering whether I agree or not with this sentence (I’m less sure than I was):

Piketty sees a role for high (“confiscatory”) taxation.

Piketty himself is no doubt more nuanced but this will become a hymnbook for the left-wing choir, who will use it to frame all economic activity as a tradeoff between evil return on capital (r) and good overall growth of the economy (g). In eras where growth is higher than the return on capital, prosperity brings about a golden age (there’s been only one). The rest of the time?

But far from making this high r a good thing for the economy, he regards it, unless checked by higher taxation, as a portender of disaster.

So the point of high taxation isn’t even to raise revenue so much, it’s to reduce the return on capital while preserving the growth.

Does it make sense to try to engineer another golden era through deliberate effort? The thought of humans trying to recreate an entire economic equilibrium through globally coordinated policy changes makes me nauseous. Remember, this golden era was a short-lived exception to history, not the rule.

This seems to be a work of morality and politics, despite the scientific sheen. In that realm it could well be successful. But luckily no entity has the power to give an honest test to the hubris of brilliant economists.