Marginal Revolution

Shipping to America

Tyler Cowen — Tue, 29 Sep 2026 17:53:09 +0000

The vulnerability of our shipping routes remains underdiscussed, perhaps that is in some ways a good thing:

We study the macroeconomic and trade-policy implications of disruptions to U.S.-bound shipping routes. Standard models treat them as iceberg-cost shocks, conflating the shock with the response to it. Using satellite vessel-tracking data, we construct route-level measures of potential and effective capacity for all U.S.-bound container ships from 2016 to 2025. Utilization losses in recent disruptions ran 20 to 40 percentage points, and began months before port congestion became visible. We embed these measures in a general equilibrium model in which firms reallocate a common fleet without internalizing the congestion they create and price above marginal cost, while importers’ sourcing responds to route profitability. The reallocation triggered by a disruption then has first-order welfare effects, and the route’s Domar weight is not a sufficient statistic for its welfare cost. The 2021 West Coast crisis and the 2023-2024 Red Sea attacks cost 0.69% and 0.35% of output. Naval protection of Red Sea shipping generated benefits of 0.04-0.08% of output at a fiscal cost of 0.02%. Tariffs decongest the routes they tax, offsetting or even reversing their conventional welfare cost.

That is from a new paper by Xiwen Bai, Jesús Fernández-Villaverde, Yiliang Li, Ricardo Marto & Francesco Zanetti.

The post Shipping to America appeared first on Marginal REVOLUTION.

Comments

On the importance of trade to escape local natural resource ... by M
Two handed economists: “Tariffs decongest the routes they ... by rayward
The US relies on international trade, most of it by shipping, ... by Tom Meadowcroft
In reply to mkt42. Logically correct, mkt42. Try to get ... by Dismalist
More places to levy congestion charges, not tariffs. This would ... by Dismalist
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Tuesday assorted links

Tyler Cowen — Tue, 29 Sep 2026 15:47:30 +0000

1. Comment section arbitrage. This is what the AIs do too, right?

2. Claims about New Zealand.

3. Good Bryan Caplan post on Effective Altruism.

4. Reported female bisexuality is in retreat?

5. Sadly, now a fringey view, yes. But not with me.

6. Fewer and fewer are defecting from North Korea.

The post Tuesday assorted links appeared first on Marginal REVOLUTION.

Comments

In reply to dearieme. Perhaps “trained to accept ... by bazza
4. It looks like the bi trend peaked during years of peak woke ... by mikeInThe716
In reply to TMC. Was this students/young adults or mature ... by bazza
#2. “Selection effects all the way down.” Indeed I don't ... by bazza
In reply to mackong. It's the “effectiveness” obviously, ... by MT
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Accounting for Cross-Country Income Differences Revisited

Tyler Cowen — Tue, 29 Sep 2026 06:53:35 +0000

Also known as Why I Do Not Believe in the Housing Theory of Everything:

Development accounting is the search for proximate sources of cross-country income differences. This article describes how knowledge in this field has evolved over the two decades since the influential work of Caselli (2005). There have been large advances in the measurement of production inputs (labor, physical capital, and human capital). These advances have raised the estimated contribution of inputs, mostly human capital, in development accounting. Our preferred estimate is that inputs account for 55–70 percent of gross domestic product (GDP) per worker differences, versus 30 percent using the classic specification. The literature has also made progress in moving away from Cobb-Douglas production functions and measuring factors such as management quality that were previously bundled into total factor productivity (TFP). Our review highlights the new implications of these advances, areas where future research would be beneficial, and the limitations of development accounting.

That is from a new NBER working paper by David Lagakos & Todd Schoellman.

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Comments

In reply to JFA. In one sense, yes, if you don't have any ... by M
In reply to David B. That makes sense to me; the more it is ... by M
In reply to Wayfaring Stranger. And BTW, Britain's primary ... by Wayfaring Stranger
In reply to M. I had to ask Chat. It said (summarizing): ... by David B
In reply to David B. Of course, the relative importance of ... by JFA
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The Macroeconomic Effect of AI through software engineering

Tyler Cowen — Tue, 29 Sep 2026 04:50:01 +0000

We measure how artificial intelligence (AI) affects the economy through its impact on software engineering productivity. We use information from financial markets to develop a forward-looking measure that is available in real time. We estimate the sensitivity of each firm’s stock return to an AI stock market index, and how this sensitivity depends on the share of firm payroll in software engineering. We use a model to map this cross-sectional relationship into software engineering productivity gains. From November 2022 to December 2025, AI increased the market’s expected present value of software engineering productivity by the equivalent of a permanent 32.6% productivity increase. The corresponding effect on the level of GDP is 3.6% in the baseline and 6.5% when higher software engineering productivity also raises R&D productivity. By mid-2026, amid rapid progress in coding agents, the effect of AI on productivity and GDP had more than doubled relative to the end of 2025.

That is a new NBER working paper by Alex Blumenfeld, Jonathon Hazell, Chen Lian & Andreas Schaab. This is also a simple way of showing that markets do indeed price in the effects of AI.

The post The Macroeconomic Effect of AI through software engineering appeared first on Marginal REVOLUTION.

Comments

In reply to Ted. “More software engineers, not less.” ... by Roger Zimmerman
In reply to MikeP. As an independent, displaced software ... by Nathan Braun
In reply to Newton Robinson. Programming languages have ... by Tom Meadowcroft
In reply to rsm. “why can I not predict when a comment will ... by Wayfaring Stranger
In reply to ila. >and if yes to the other $32 trillion ... by Gilligan
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Man’s best friend?

Tyler Cowen — Mon, 28 Sep 2026 17:53:27 +0000

When it comes to bear encounters in or near the wild, dogs are the aggressors in 54 percent of incidents, according to a recent study conducted by bear experts at Brigham Young University and other institutions, and published in the Journal of Wildlife Management. In approximately 36 percent of the encounters, dogs did not come to their owners’ defense. And they only successfully alerted their owners to the presence of a bear in about 9 percent of cases.

Here is more from the NYT.

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Comments

In reply to Mark Bahner. Maybe barking is a plan B strategy ... by ohwilleke
In reply to mikeInThe716. Greatly depends on the dog- I had a ... by Mm
In reply to Pshrnk. Nowadays people have weird attachments to ... by Mm
In reply to Your Husband's Cane. I have a 50 pound female pit ... by Mark Bahner
In reply to Biggles f'Tang. By people humping dogs?? by Anonymous
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Monday assorted links

Tyler Cowen — Mon, 28 Sep 2026 16:36:21 +0000

1. Should more men move to Alaska?

2. The world’s oldest known peace treaty found.

3. In praise of Joyce, Whitman, and Crane.

4. Background explainer on the Chinese AI ecosystem.

5. YIMBY working in Portland (WSJ).

6. Profile of Helen DeWitt.

7. Human frailty.

The post Monday assorted links appeared first on Marginal REVOLUTION.

Comments

In reply to Logan. Yes. Neither Tyler nor the WSJ are going ... by mkt42
In reply to Ted. I coincidentally just read TLS on a flight ... by Josh M
In reply to Ted. > DeWitt understands and depicts like no one ... by JDR
In reply to Dismalist. It's 2026. You fly in, work hard, then ... by JK Brown
In reply to Gilligan. Nonsense. Think of all the smart ... by JK Brown
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Mighty Sparrow, RIP

Tyler Cowen — Mon, 28 Sep 2026 13:56:32 +0000

Here is the NYT obituary.

The post Mighty Sparrow, RIP appeared first on Marginal REVOLUTION.

Comments

During my first visit to St Thomas and St John (USVI) in 1974, ... by Nick

Defining the Unemployment Rate

Alex Tabarrok — Mon, 28 Sep 2026 11:18:03 +0000

An updated version of our Marginal Revolution University (MRU) video on defining the unemployment rate. Free to use for anyone but goes best, of course, with Modern Principles of Economics, the best principles of economics textbook.

The post Defining the Unemployment Rate appeared first on Marginal REVOLUTION.

Comments

In reply to Wayfaring Stranger. Yep, and you can live in one ... by Mitchell
Timely posting – was explaining to my kids over the weekend ... by Patrick
In reply to Peter. “So if you’re a $200,000 per year ... by Wayfaring Stranger
In reply to Peter. But, Patrick and Ed Zitron have told us ... by Joe Fird
So if you’re a $200,000 per year software engineer, and ... by Peter
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Bundesrepublik Deutschland

Tyler Cowen — Mon, 28 Sep 2026 04:34:12 +0000

At times we forget what an amazing wonder the Bundesrepublik Deutschland was. At the end of the World War II, Germany was one of the sickest and cruelest human societies in history, ever. Not too many years later, it was one of the best and most successful societies ever.

By the 1980s, living standards had caught up to the United States, with the provision of public goods sometimes superior. The country was fully democratic, pro-Western, and largely pro-American.

Their rail system and postal service were amongst the best ever created.

For thinkers of note there were Hans Blumenberg, Habermas, Peter Weiss, Gadamer, late Heidegger and late Carl Schmitt, Reinhart Koselleck, the underrated Klaus Theweleit, Niklas Luhmann, and perhaps you value some of the other members of the Frankfurt School.

The visual arts were very strong, with Richter, Polke, Baselitz, Beuys, Penck, Palermo, and much more.

Music produced Stockhausen, Henze, Lachenmann, Rihm, Zimmerman, Kraftwerk, Can, and all of Krautrock, later techno, though right at the time of unification rather than during the BRD per se. The list of vocalists, instrumentalists, and conductors is strong. Was there anywhere better for hearing opera?

Perhaps I prefer the fiction from Austria and Switzerland, but at the very least Germany provided a major market for those authors and it was an extraordinarily literate country with amazing bookstores. For domestic authors there were Böll, Patrick Süskind, Siegfried Lenz, Wolfgang Koeppen, can I count Uwe Johnson?, and Arno Schmidt maybe? I do not like Grass, but it seems wrong not to list him.

The food could be very good, especially in the southwest. There were Michelin star restaurants all over the country (still are, to be clear on this point). So many well-functioning cities, with many of the world’s best transit systems. Lots of nuclear power and a strong industrial base. West Berlin was an exciting city with an air of mystery. Some might say no speed limit on the Autobahn, though I am less sure that was a virtue. Plenty of beautiful women and reasonable attitudes toward sex.

If you had to choose, what was the worst thing about the country? No shopping on Sundays? Workplace and shopping hours discrimination against women? Too much smoking? Obsession with Waldsterben?

Are there features of post-unification Germany that can compare to this earlier era? So much seems not to work well. So many policy mistakes have been made. So much leadership lost in the areas mentioned above. So much pessimism, sadly a lot of it seems to be justified.

Where did all the good performance go? And why did it leave? Lack of a communist enemy? Absorption of East Germany? The simple accretion of distance from pre-WWII German creativity?

The wonder that was the Bundesrepublik Deutschland. Johannes, we hardly knew ye.

The post Bundesrepublik Deutschland appeared first on Marginal REVOLUTION.

Comments

In reply to Florian Bailey. West Germany in the '80s enjoyed ... by John Hamilton
In reply to rsm. Germany suffered an existential threat from ... by Brian Donohue
Darryl Cooper just dropped his third installment of 20th ... by Brian Donohue
“At the end of the World War II, Germany was one of the ... by B.B.
In reply to Florian Bailey. This, unlike most of the above, ... by JWatts
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AI in science

Tyler Cowen — Sun, 27 Sep 2026 19:03:12 +0000

Scientific progress is a key driver of economic growth and prosperity. There is great excitement- but also concerns- about the impacts of AI on science, but so far little data. We provide early insights on this from three data sources: a sample of 15 million Gemini interactions, an inventory of over 2,600 specialized AI models across disciplines, and a survey of over 600 scientists. We map these data to a new taxonomy of scientific tasks to study how scientists are using AI. Four main findings emerge. First, we find broad adoption and coverage: scientists use AI more than most other occupations. Specialized AI models have broad disciplinary coverage and are highly cited. Nearly half of the scientists surveyed report using some form of AI every day. Second, we document evidence that LLMs (proxied through Gemini usage) and specialized models act as complements—LLMs are used for general analysis, coding, and manuscript preparation, while specialized models provide domain-specific predictions, data generation and classification. Third, scientists report large productivity gains from using AI: a saving of nearly 7 hours per week, time which is primarily re-invested in more research. Finally, we show that AI is already changing the scientific process. As some stages of scientific research become easier, bottlenecks shift downstream. Scientists report an increased backlog of untested hypotheses and substantial demand for output verification. Our findings suggest that AI holds significant potential to increase scientific productivity. However, as with other sectors, its ultimate impact will be governed by complex task interdependencies and investment into the elimination of emerging bottlenecks.

That is from a new paper by Mihai Codreanu, et.al.

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Comments

In reply to JSK. How about relative to human efficiency in ... by Joseph Ferguson
As a PhD student in physics, all my smartest colleagues are ... by Ben S
In reply to Joseph Ferguson. “Also surely a bottleneck will ... by JSK
In reply to Tom T.. I'll pay that. 😂 by Joseph Ferguson
In reply to bazza. Now that's interesting about Astra getting ... by Joseph Ferguson
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Sunday assorted links

Tyler Cowen — Sun, 27 Sep 2026 15:52:50 +0000

2. Intelligence explosions are social.

3. The speech-processing skills of dogs.

4. Kalshi market in economics Nobel.

5. Why are Indian weddings with dancing gorillas going viral? Pakistan too.

6. Eminem, and some German guy.

7. On the UAP council.

8. On higher interest rates.

The post Sunday assorted links appeared first on Marginal REVOLUTION.

Comments

In reply to SpeculativeDiction. Yes, I think that's the case; ... by M
Seeing Stefan Raab on Marginal Revolution wasn't on my bingo ... by Marrot
In reply to JMM. No, this is a blogger whose pseudonym is ... by Hazel Meade
In reply to RAD. Tangential: I kind of love reading blog ... by Hazel Meade
“5. Why are Indian weddings with dancing gorillas going ... by mkt42
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Earth fact of the day, #2

Tyler Cowen — Sun, 27 Sep 2026 06:56:56 +0000

The shortages have gone on for so long that they are aggressively driving down how much carbon is being released into the atmosphere, a Washington Post analysis of data from the International Energy Agency shows. People worldwide are using significantly less oil and gas, which means less climate pollution…

Such an annual decline has not happened since the height of the coronavirus pandemic. Fossil fuel consumption dropped significantly more then, and consumption was lower in absolute terms, too. Crude oil demand averaged 91 million barrels per day in 2020, compared with 102 million barrels per day under the latest IEA forecast.

But this year’s drop — especially given the sharp increase that was initially forecast — is substantial.

Here is the full story. Not a good thing overall, but there is a lesson in that to…

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Comments

In reply to Tom Meadowcroft. I'd say $60 is a safer guess in ... by Crikey
In reply to dearieme. “lockdown” was generally just 2 ... by Agorabum
In reply to Guy. Maybe, but an alternative is that the Gulf ... by Tom Meadowcroft
In reply to Mark Bahner. My point with this question was that ... by Mark Bahner
If you're not talking about coal in China and India you're not ... by diz
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The Federal Lands: An Economic Property Rights Perspective

Tyler Cowen — Sun, 27 Sep 2026 04:27:05 +0000

The US federal government owns and administers 472,892,659 acres or 21% of the land area of the lower 48 states, the country’s largest landowner. The resource is held and managed as a collective resource, the Federal Lands, through political and bureaucratic interpretation of the Multiple Use principle and generally, the biological aim of maximum sustained-yield. By contrast, access, exchange, and investment for most other US natural resources are through private property rights and markets. Despite the magnitude of the resource, economists have devoted relatively limited attention to the economic and welfare impact. The objective is to suggest economic implications and to encourage additional economic analyses. The discussion summarizes federal lands privatization through 1891, when withholding of federal lands began. The literature reveals no demonstratable market failure or increased resource scarcity from private exploitation between 1870 and 1957 when most lands were withheld. Because land was nonmobile and observable private property rights could have been assigned and any externalities addressed via Pigouvian restrictions or Coasean exchange. Federal ownership was not obviously required. Progressive Era reformers, driven by concerns of impending resource depletion, called for scientific, sustained-yield management by government officials. The institutional change is economically important. As outlined by Dixit and others, private rights holders have high powered incentives for efficient resource use that are lacking in decision making by agency officials who do not hold exchangeable property rights and do not directly bear the economic costs and benefits of their actions. Consequential public goods delivery could be an offset, but these are not measured for tradeoff calculations. Following Krueger, a rent-seeking framework is presented for comparing outcomes with economic property rights and political management. The analysis suggests that a.) federal lands will have lower production value than comparable private, all else equal; (b). federal lands management will be less responsive to shifts in economic costs and benefits. Public goods may be provided for high amenity, recreation, and ecological areas, but the dominant Multiple Use management principle provides no objective criteria for allocation or for periodic outcome assessment and adjustment. A literature review and data for contemporary federal forests, range, and oil and gas lands are provided.

That is from a new paper by Gary D. Libecap.

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