Marginal Revolution

The returns to good data are rising

Tyler Cowen — Sun, 31 May 2026 18:55:46 +0000

When we want A.I. to solve real problems for real people, we need to make sure the data exists. That means cleaning up government data sets that are currently in a shambles (a project that the province of Alberta’s government found A.I. could make much faster and easier). It may also mean funding the creation of novel data sets that could eventually give A.I. systems traction on scientific problems that are currently beyond our capability to solve. Those data sets — like the Protein Data Bank — would be public goods, and so would need to be funded by the public.

Here is a longer NYT column on AI from Ezra Klein. And this:

But much of the A.I. capacity will remain in the private sector. So a public agenda for A.I. should also give the private sector reason to work on public problems. Like in Operation Warp Speed, the government could define the outcomes it wants — a drug, a solution — and guarantee a market if it’s found and distributed equitably.

Negativism is not going to win in this sphere.

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A new American exceptionalism?

Tyler Cowen — Sun, 31 May 2026 15:51:11 +0000

From Paul Krugman:

Let me be clear: I am not arguing that European productivity is mismeasured, and never said that. I am, instead, arguing that standard measures of productivity do not have the implications for cross-country comparisons of living standards and economic welfare that many people – including many economists – think they have. To put it a slightly different way: people are using data that is unsuited for the kinds of comparisons that they are trying to make. Thus, the conclusions that they are drawing from the data are misguided. But this is not to say that the data are wrong.

The apparent misunderstanding by Aghion et al of what I am trying to say is also reflected in their discussion. Their presentation mostly centers on arguing that European productivity growth is in fact lower than US productivity growth. This is puzzling, because I am not arguing that European productivity growth matches or exceeds US productivity growth. Like Aghion et al, I am fully aware that European productivity growth is lower than in the U.S. But this is not the actual issue that I am trying to address. My question is whether the standard comparison of European and US productivity growth rates is a good indicator of what is actually going on in the two economies over time.

OK, but if U.S. innovation drives global living standards, is that not a very strong argument for modest capital taxes in the United States, weak labor union privileges, high U.S. pharma prices, and so on? Imagine a mix of the libertarian and corporatist agendas, rather than the social democratic policies Krugman typically has argued for. I doubt however if Krugman sees it that way, but I am no longer sure why not.

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Sunday assorted links

Tyler Cowen — Sun, 31 May 2026 07:29:19 +0000

1. A new theory of galaxy formation?

2. Using AI to sell your house (NYT).

3. Ryan Graves.

4. Henry Oliver on reading Proust and also The Golden Bowl, an excellent essay.

5. On Spotify and Apple Music, are now about half of new song releases done by AI?

6. Is Indian cultural soft power somewhat receding?

7. Grok is this true?

8. Ten EU countries are breaching the fiscal rules (FT).

9. Tracking aircraft from space?

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Lifestyle and living standards arbitrage

Tyler Cowen — Sun, 31 May 2026 05:13:38 +0000

Since the Eisenhower administration, the U.S. hasn’t collected comprehensive statistics on the number of citizens leaving. Yet data on residence permits, foreign home purchases, student enrollments and other metrics from more than 50 countries show that Americans are voting with their feet to an unprecedented degree. A millions-strong diaspora is studying, telecommuting and retiring overseas.

The new American dream, for some of its citizens, is to no longer live there.

In the cobblestoned streets of Lisbon, so many Americans are snapping up apartments that the newest arrivals complain they mostly hear their own language—not Portuguese. One of every 15 residents in Dublin’s trendy Grand Canal Dock district was born in the U.S., according to realtors, higher than the percentage of Americans born in Ireland during the 19th-century influx following the Potato Famine. In Bali, Colombia and Thailand, the strains of housing American remote workers paid in dollars have inspired locals to mount protests against a wave of gentrification.

More than 100,000 young students are enrolled abroad for a more affordable university degree. In nursing homes mushrooming across the Mexican border, elderly Americans are turning up for low-cost care.

On a conference call last month hosted by Expatsi, a relocation company, almost 400 Americans signed up to learn how to move to Albania. The former Stalinist state offers a special visa allowing U.S. citizens to live and work there, with no tax on foreign income for a year, no questions asked.

“Previously, the Americans leaving were super-adventurous and well-credentialed,” said Expatsi founder Jen Barnett, a 54-year-old Alabama native who moved to Yucatán, Mexico, in 2024.

“Now they’re ordinary people, like me,” she said as she ticked through growth numbers.

Here is more from the WSJ. And we are not yet into the era of “AI-savvy Americans being paid lots to help foreign countries manage their own transitions.”

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Saturday assorted links

Tyler Cowen — Sat, 30 May 2026 16:21:20 +0000

1. Which foreign food chains have made it in NYC?

2. Testing products on AI-generated buyers.

3. Are Vatican pronouncements rising in status?

4. A saner Argentina take. I notice that PTDS is spreading.

5. Yupsy-dupsy.

6. Japan lost three million people over the last five years (NYT).

7. The most 2020s art ever?

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80,000 Hours: The Book

Alex Tabarrok — Sat, 30 May 2026 11:16:52 +0000

Forty hours a week, fifty weeks a year, forty years: a career is about 80,000 hours. Yet it’s striking how little serious thought goes into career decisions relative to, say, choosing a mortgage. Indeed, you are almost supposed to tell a story about how a random incident changed your life. One summer a circus came to town—and that’s the whole reason I became an economist! (True story!). Career advice, when it exists, often amounts to the platitude of “follow your passions!” Ugh. If you ask people what their passions are, music, arts and sports top the list but guess what? There aren’t enough jobs in those categories to go around.

Benjamin Todd’s newly updated book, 80,000 Hours is a unique examination of careers that runs the numbers in a serious way. The book is framed along Effective Altruism lines and it has some good public policy material. Pandemics, for example,

The world has plenty of religious cults, despots and would-be school shooters who might decide they want to take everyone else down with them…. The world [c]ould be one lab leak away from catastrophe.

Given what we know about the pace and accessibility of bioengineering tools, the chance that there will be a pandemic that kills over 100 million people during the next century seems high, plausibly similar or greater than the risk of large-scale nuclear war or climate change above six degrees. An engineered pandemic could also kill over 90% of the population,suggesting its overall scale is significantly larger.

But risks from pandemics are, even now, far more neglected than either of these. In comparison to $6bn–$10bn of philanthropic funding for climate change, and $1.6 trillion of total climate finance, pandemic prevention only receives $1bn of philanthropic funding, and total spending aimed at reducing the chance of worst-case pandemics is probably under $10bn.

See also my paper Pandemic Preparation Without Romance on what to do about it.

The opening chapters present the EA framing but most of the book has good advice even for the purely selfish–advice on building skills, networking and how to actually get a job. From what I have said so far, one might get the impression that the idea is to rationally choose your career at age 16 and then optimize your life around that plan. Not so! Todd rightly divides career paths into explore, build and deploy categories. Most people under-explore. It’s ok to jump around jobs and places, especially when you are young, so long as you are building skills and not just accumulating items for the CV. There’s evidence, for example, that scientists’ best work tends to follow periods of exploration with exploitation.

I also appreciate that Todd specifically warns about about armchair theorizing. Pro-and-con lists, for example, are ok but far less useful than getting out of the chair and actively exploring. Go talk with people, try something for a week, go somewhere. Look for cheap tests.

Start with what’s easiest. We often find people who want to, say, try out economics, who then apply for a master’s degree. That’s a huge investment of time. Instead, think about how you can learn This could mean first reading an economics textbook, or taking a single course.

You can think about creating a ‘ladder’ of tests. Start with the cheapest ways to test your options, then after each step, re-evaluate. A ladder might look like this:
a. Read our relevant career reviews, all our research on a given topic, and talk to LLMs about what the jobs are like (two to five hours).
b. Speak to someone in the area (two hours).
c. Speak to a friend to get an outside perspective on what’s best (two hours).
d. Speak to three more people who work in the area and read one or two books (twenty hours).
e. Given your findings, look for a relevant project that might take one to four weeks of work – like applying to jobs, volunteering in a related role, or doing a side project in the area – to see what it’s like and how you perform.
f. Only then consider taking on a two- to twenty-four month commitment – like a work placement, internship or graduate study. Being offered a trial position with an organization for a couple of months can be ideal because both you and the organization want to quickly assess your fit.

80000 Hours is The Random Walk Down Wall Street of career advice, the one book that really matters.

Explore, build rare and valuable skills, point them at a meaningful problem, and passion will follow rather than lead. And for those who don’t want to read a book, speak to an 80,000 Hours advisor. It’s a very cheap test.

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How to improve British procurement

Tyler Cowen — Sat, 30 May 2026 07:33:59 +0000

Until two years ago, West London’s Greenford Tube station used to flood whenever it rained heavily. The train tracks are aboveground, but the ticket office would often get inundated. Sandbags still line the corridor.

But in October 2023, a new family moved in nearby, determined to halt the water. The family members built their house from scratch with local wood and kept odd hours, sleeping all day and working only at dawn and dusk. They even put their young children to work.

The new neighbors were beavers.

In West London, conservationists got a government license to resettle a family of five beavers in a 20-acre urban park near the Greenford Tube station. It used to be a golf course, with a creek running through it. Within weeks, the beavers dammed up the creek, creating a pond that holds water and stops it from spilling into the city. They also diverted the creek’s flow into smaller tributaries, creating a wetland that better absorbs heavy rainfall — mitigating the risk of flooding downstream…

The beavers have also allowed the city to scrap expensive plans to dig a reservoir and levee.

Here is the full story, via Mike Doherty. Should you need a government license to resettle beavers?

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Supply is elastic, installment #1637

Tyler Cowen — Sat, 30 May 2026 05:18:59 +0000

With deadly precision, the Trump administration has launched dozens of attacks on small boats in the waters off South America, killing nearly 200 people in a campaign U.S. officials say is meant to curb the flow of illicit drugs to the United States.

But almost nine months into the operation, epidemiologists, addiction scientists and public health experts say cocaine, by far the top drug smuggled out of South America, is as easy to get in much of the United States as it was before the strikes began.

The findings — based on evaluations of street prices, lethal overdoses, purity of samples and drug seizures at U.S. borders — raise questions about the effectiveness of the largest U.S. military deployment in Latin America in decades.

Here is more from the NYT. And here is another report on supply elasticity, note that European airlines are still flying.

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Friday assorted links

Tyler Cowen — Fri, 29 May 2026 18:08:16 +0000

1. Where are the economies of scale in homebuilding?

2. Peter Thiel and Argentina (NYT).

3. Discourse on classical guitar.

4. How many dissertations are AI-written?

5. NYT talks with Macca.

6. New algorithm for ranking VCs.

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What I have been learning doing New Aesthetics

Tyler Cowen — Fri, 29 May 2026 15:45:41 +0000

Patrick offered his observations here, I will add a few points of my own.

I very often think in terms of regions and geographic places. Currently, artistic movements (of most sorts, not just “New Aesthetics”) seem to lack a centrality of place. New York City is no longer the center of the art world, high rents being one reason for that but not the only one. It is simply no longer the city’s essence. The rebellious spirit is largely gone. Los Angeles has good galleries and plenty of creativity, but never quite stepped up as a number one city for the visual arts. The Bay Area, in spite of all of its money, remains quite behind. Berlin in some ways feels like it could be an art center, but it is not one. Germany is too complacent. Central Europe more generally has the heritage and still the potential, but I do not see “the engine of growth” there. Paris and London are for certain high-end artistic activities, but they too are not centers of creative ferment at the ground level. The visual arts scene in China has declined precipitously with restrictions on freedom of speech and creation.

Overall, looking through the applications my opinions of Spain and Mexico went up. My opinion of parts of Africa, including South Africa, is relatively high, though that was not reflected in the applications I read. Rather it is from my travel. But I fear that none of those locales have the global oomph to lead the way more generally.

So currently I am still looking for a regional center or centers for the next set of artistic revolutions. I see the contemporary world as failing at that.

I also would say that “Asian women” — from all over — put in a pretty impressive showing. I take that to be a marked reason for optimism. Perhaps future artistic revolutions will be less geographically centered than the past ones?

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Why are Murders Down in Baltimore?

Alex Tabarrok — Fri, 29 May 2026 11:19:44 +0000

In 2015 I wrote Baltimore Arrests are Down and Crime is Way Up and, as I predicted, Baltimore tipped into an high crime equilibrium. After the Freddie Gray riots, arrests declined and crime shot up but crime stayed high even after arrests rebounded. In my view, the surge fed on itself: higher crime strained police resources, and that strain—in and of itself—reduced the probability of punishment, sustaining the high-crime equilibrium, as in my crime wave paper.

Yet, beginning around 2022 crime in Baltimore—most especially murders—began to fall.

In April, Baltimore had four homicides, the lowest total for any single month since at least 1970. So far this year, there were 38, compared with 51 in the same period last year. At the current rate, Baltimore would end 2026 with fewer than 100 homicides. There were 323 just four years ago.

How did we get from a city in which the question was how high can crime rise, to one where the question is how low can it go? The answer might be linked to the nationwide decline in murder, spurred by a restoration of policing as the excesses of the George Floyd years recede. But that raises the question of what cities across the country are doing right.

So what caused the decline? We can’t be entirely sure as national trends confound but Charles Fain Lehman has a good piece in the FP arguing plausibly that the answer boils down to carrots, sticks and the non-random nature of murder. Begin with the latter. A significant subset of murders are highly predictable. A gang member gets gunned down today. Next week, you can expect retaliation. Moreover, you know who is going to do the murder even more than you know who is going to be murdered. Namely, a close associate—a fellow gang or family member—will be the one to do the killing. Sometimes pre-Cog is not so hard.

So with this in mind, Baltimore, under a new mayor and tough on crime prosecutor, began to intervene in the murder cycle before it happened, i.e. a focused deterrence program based on Boston’s Operation Ceasefire.

The approach involves a detailed investigation of every shooting that happens in the city. Every week, the Baltimore Police Department and its partners review the week’s incidents….For every shooting, GVRS prescribes reaching out to known associates of the victim.

…At one recent coordination meeting, about 20 people gathered around the table of the conference room at Baltimore’s Doxa Ministries Church Without Walls. Under the direction of Reginald Williams from the Mayor’s Office of Neighborhood Safety and Engagement, they talked through two new “referrals” associated with the victim of a recent shooting. One had a long criminal history and was on house arrest. Another, barely an adult, was himself a victim a few years earlier.

Both men will have their doors knocked on by several of the meeting’s attendees. They will be offered services—job training, tattoo removal, relocation, whatever they need to get out of the “life.” But they will also get a clear message, delivered verbally and in the form of a letter from Mayor Scott: Baltimore is watching them—and will come after them.

Carrots, sticks, and a little Pre-Cog. Together they appear to be working.

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Are we undermeasuring inflation for lower earners?

Tyler Cowen — Fri, 29 May 2026 06:50:42 +0000

We document a new source of fluctuations in inflation inequality. When the cost of upstream inputs rises, varieties within a product category tend to have similar absolute price increases. However, the same absolute price increase constitutes a larger percentage change for low-price products, resulting in excess inflation at the low end (“cheapflation”). Since low-income households tend to buy lower-priced varieties, the inflation rates they face are disproportionately sensitive to upstream costs. Using data on food-at-home purchases, we show that this mechanism generates cycles in inflation inequality and excessive volatility in inflation for low-income households relative to high-income households. This channel parsimoniously accounts for observed fluctuations in inflation inequality over time, including surges in cheapflation and inflation inequality during both the Great Recession and the 2021–2023 post-pandemic inflation. Official statistics mask these within-category differences in inflation and thus understate the differences in inflation experienced by low- and high-income households by 70–90 percent. We provide evidence that this mechanism applies to a range of consumption categories beyond food at home. The same mechanism also leads to systematic differences in inflation across cities and import price inflation across countries in response to nationwide and global cost shocks.

That is from a new NBER working paper by Kunal Sangani.

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How Much Has Shale Gas Saved U.S. Consumers?

Tyler Cowen — Fri, 29 May 2026 04:46:21 +0000

It may seem like a distant memory now, but as of the mid-2000s, U.S. natural gas production had been flat for a decade, and the U.S. was importing liquefied natural gas (LNG), with plans to import much more. Then shale gas happened. Advances in hydraulic fracturing and horizontal drilling caused U.S. natural gas production to increase significantly, and the U.S. went from being a net importer of natural gas to being the world’s largest exporter. This paper calculates how much shale gas has saved U.S. natural gas consumers. Using price differences between the United States, Europe and Japan, we calculate that U.S. natural gas consumers have saved $3.1-$4.3 trillion between 2007 and 2025, equivalent to $164-$227 billion annually. Access to low-price U.S. natural gas has been particularly valuable during major supply shocks such as the war in Ukraine, and the benefits of shale gas have been experienced broadly across sectors and states.

That is from a new NBER working paper by Lucas W. Davis.

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AI in gdp

Tyler Cowen — Thu, 28 May 2026 17:19:16 +0000

Quality-adjusted AI production in the United States grew at over 2,000 percent per year in 2024 and 2025, driven by three compounding forces: expanding data-center capacity, hardware efficiency gains, and—the largest of the three—algorithmic progress.
Treating the AI sector as a coherent economic entity yields preliminary estimates of nominal AI GDP at approximately $250 billion in 2025, growing at roughly 2,600 percent per year in quality-adjusted real terms.
National economic statistics accounts were not designed to track this kind of activity. Statistics agencies should begin developing AI-focused satellite accounts now, before the measurement gap becomes a policy gap.

Here is much more from Anton Korinek and Patrick McKelvey. Via the excellent Samir Varma.

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