The Institutional Revolution

Posted by Peter on March 9, 2012
Posted in: Book Reviews, Economics. Tagged: .

Book review: The Institutional Revolution: Measurement and the Economic Emergence of the Modern World, by Douglas W. Allen.

What do honor duels, purchases of commissions in the army, and privately managed lighthouses have in common?

According to Allen, they were institutions which made sense in the pre-modern age, but were abandoned when improvements in measurement (of labor quality, product quality, time, location, etc) made them obsolete in the nineteenth century.

Allen presents a grand theory of how large variations in job performance, product quality, etc, before 1800-1850 created large transaction costs which caused widespread differences from modern life, and which explain a wide variety of institutions which seem strange enough to people with a presentist bias that most have dismissed many pre-modern institutions as obviously foolish.

What starts out as an inquiry into some apparently quirky and unusual practices finishes as an ambitious attempt to explain the industrial revolution as a revolution whose institutional changes were more pervasive and valuable than the technological advances which triggered them.

The book convinced me that it explains the timing of some important and often forgotten social changes. But the frequent implication that the institutions in question were the most rational way to deal with limitations of pre-industrial life seem overdone. I suspect that there was often a mixture of reasons behind those institutions that included some foolishness and some catering to special interests.

For example, his theory requires that honor duels be designed so that skill at dueling is fairly unimportant compared to random luck. He provides some evidence that people tried to introduce randomness into the dueling process, but leaves me doubting that it made skill unimportant.

The book provides a framework that might be valuable in predicting future institutional changes as technological change further reduces transaction costs, and does a valuable job of offsetting the tendencies of economists other than Coase to downplay the importance of transaction costs.

This was the first book I’ve read in several years that seems too short.

Inside Jokes

Posted by Peter on February 25, 2012
Posted in: Book Reviews, Humor, The Human Mind.

Book review: Inside Jokes – Using Humor to Reverse-Engineer the Mind, by Matthew M. Hurley, Daniel C. Dennett and Reginald B. Adams, Jr.

This book has the best explanation I’ve seen so far of why we experience humor. The simplistic summary is that it is a reward for detecting certain kinds of false assumptions. And after it initially evolved it has been adapted to additional purposes (signaling one’s wit), and exploited by professional comedians in the way that emotions which reward reproductive functions are exploited by pornography.

Some of the details of which false beliefs qualify as a source of humor and how diagnosing them to be false qualifies as a source of humor seem arbitrary enough that the theory falls well short of the kind of insight that tempts me to say “that’s obvious, why didn’t I think of that?”. And a few details seem suspicious – the claims that people are averse to being tickled and that one sensation tickling creates is that of being attacked don’t seem consistent with my experience.

They provide some clues about the precursors of humor in other species (including laughter, which apparently originated independently from humor as a “false alarm” signal), and give some hints about why the greater complexity of the human mind triggered a more complex version of humor than the poorly understood versions that probably exist in some other species.

The book has some entertaining sections, but the parts that dissect individual jokes are rather tedious. Also, don’t expect this book to be of much help at generating new and better humor – it does a good job of clarifying how to ruin a joke, but it also explains why we should expect creating good jokes to be hard.

Manias, Panics and Crashes

Posted by Peter on February 12, 2012
Posted in: Book Reviews, Investing, Politics. Tagged: , .

Book review: Manias, Panics and Crashes: A History of Financial Crises 6th ed., by Charles P. Kindleberger and Robert Aliber.

The book starts with a good overview of how a typical bubble develops and bursts. But I found the rest of the book poorly organized. I often wondered whether the book was reporting a particular historical fact as an example of some broad pattern – if not, why weren’t they organized in something closer to chronological order? It has lots of information that is potentially valuable, but not organized into a useful story or set of references.

1493

Posted by Peter on January 29, 2012
Posted in: Book Reviews. Tagged: , , , , .

Book review: 1493: Uncovering the New World Columbus Created, by Charles C. Mann.

This book is about the globalization triggered by Columbus. The book’s jacket describes this set of changes as “the most momentous biological event since the death of the dinosaurs”. But that was probably written by a poorly informed marketing person. The contents of the book promote a more plausible claim that the effects were bigger than most realize.

Some of the ideas that this book reports are surprising, potentially important, but also somewhat speculative. E.g. large-scale reforestation resulting from smallpox killing existing inhabitants apparently contributed to the little ice age by sequestering carbon.

Much of the book is devoted to the spread of non-human species, but there are long sections on slavery, including speculation about how cheap land might have made slavery more important, and how the differences between Algonkian and Mississippian Indian cultures may have affected attitudes toward slavery in northern and southern U.S.

The first quarter of the book seemed well written, but the remainder of the book wanders through anecdotes of unclear importance. If I’m trying to focus on long-term effects of the globalization that Columbus triggered, why should I care about the details of numerous battles?

The book might come closer to living up to the jacket’s hype if it argued that Columbus caused the industrial revolution. But Mann seems confused about what the industrial revolution was – he treats rubber as a necessary component of the industrial revolution, but that happened well after experts say the industrial revolution started.

It wouldn’t be hard to use the ideas in this book to generate speculation that Columbus caused the industrial revolution, e.g. the potato’s ability to feed several times as many people as wheat, as well as cheaper security due the difficulty of stealing potatoes which are left in the ground until needed, made more people available to invent technology, and might have generated wealth and predictability that enabled inventors to focus on more distant rewards. But my guess is that this is only a small part of what caused the industrial revolution.

Thinking, Fast and Slow

Posted by Peter on January 15, 2012
Posted in: Book Reviews, Investing, The Human Mind. Tagged: , , .

Book review: Thinking, Fast and Slow, by Daniel Kahneman.

This book is an excellent introduction to the heuristics and biases literature, but only small parts of it will seem new to those who are familiar with the subject.

While the book mostly focuses on conditions where slow, logical thinking can do better than fast, intuitive thinking, I find it impressive that he was careful to consider the views of those who advocate intuitive thinking, and that he collaborated with a leading advocate of intuition to resolve many of their apparent disagreements (mainly by clarifying when each kind of thinking is likely to work well).

His style shows that he has applied some of the lessons of the research in his field to his own writing, such as by giving clear examples. (“Subjects’ unwillingness to deduce the particular from the general was matched only by their willingness to infer the general from the particular”).

He sounds mildly overconfident (and believes mild overconfidence can be ok), but occasionally provides examples of his own irrationality.

He has good advice for investors (e.g. reduce loss aversion via “broad framing” – think of a single loss as part of a large class of results that are on average profitable), and appropriate disdain for investment advisers. But he goes overboard when he treats the stock market as unpredictable. The stock market has some real regularities that could be exploited. Most investors fail to find them because they see many more regularities than are real, are overconfident about their ability to distinguish the real ones, and because it’s hard to distinguish valuable feedback (which often takes many years to get) from misleading feedback.

I wish I could find equally good book for overuse of logical analysis when I want the speed of intuition (e.g. “analysis paralysis”).

Islands of Genius

Posted by Peter on December 28, 2011
Posted in: Book Reviews, The Human Mind. Tagged: .

Book review: Islands of Genius: The Bountiful Mind of the Autistic, Acquired, and Sudden Savant, by Darold A. Treffert.

This book contains a fair amount of interesting information, but the writing style leaves much to be desired, and many parts disappointed me.

It describes savant syndrome (formerly known as “idiot savant”), where unusually good numeric or artistic skills coexist with some sort of mental disability (and usually prodigious memory).

Some people appear to have been born with savant skills, a few developed the skills in what appears to be a sudden insight. But the cases that seem to tell us the most about what is special about savants are the ones where the skills emerge after a brain injury. Savant skill seem to be often caused by a left brain dysfunction removing some inhibitions that prevented the right side of the brain from developing or displaying unusual skills.

This suggests that there may be some sense in which we all can potentially develop savant skills.

He doesn’t provide a good explanation of why the syndrome is defined so that savants with no disability fail to qualify. There seems to be some tendency for savant skills to coexist with some drawbacks (such as the drawbacks associated with autism), but the author denies that there’s any trade-off requiring that savant skill cause deficiencies in other areas.

Some of the weaker parts of the book claim some savants know things they couldn’t have learned, and attribute skills to genetic memory. I find it much more plausible that the savants learned their skills in ways that would look like an extreme form of normal learning, and that we just don’t know how to observe when and where they accomplished the learning.

3 Idiots

Posted by Peter on December 15, 2011
Posted in: Movies.

I highly recommend the movie 3 Idiots.

It’s very popular in India, but hasn’t gotten as much attention in the U.S. as it deserves.

The early parts of the movie remind me of the better parts of Ferris Bueller and MacGyver (including some of the ethically questionable parts of Ferris Bueller). The last half is more serious, more impressive, and harder to describe. I was surprised at how quickly it could alternate between making me laugh and making me sad.

It’s longer than I normally want a movie to be, but there are hardly any parts that I would have wanted cut. I want to thank the Netflix recommendation system, without which I probably wouldn’t have heard of it.

Protein

Posted by Peter on December 7, 2011
Posted in: Health. Tagged: .

A protein rich diet may make us more alert and help us lose weight.

The reaction of Hypothalamic orexin/hypocretin neurons to amino acids (especially nonessential amino acids) appears to be a mechanism for this effect.

Poultry products appear to be one of the better ways to get nonessential amino acids.

I’ve been trying to increase the protein in my diet for the past four months (in response to weaker evidence than I’ve linked to here), and have found that animal sources have been the easiest way to do that (I’ve mainly increased my egg and meat consumption). I think I’ve found it slightly easier to avoid gaining weight. I think I’ve also been more alert, but I don’t think the increase in alertness coincided too closely with the increase in protein consumption.

The Better Angels of Our Nature

Posted by Peter on November 23, 2011
Posted in: Book Reviews, Politics. Tagged: .

Book review: The Better Angels of Our Nature: Why Violence Has Declined, by Steven Pinker.

Pinker provides a cautiously optimistic view of the dramatic reduction in violence over the past few centuries. He has tied together a wide variety of violent behavior (from genocide to cruelty to animals) into one broad pattern of people becoming more civilized.

He mostly covers the west, and I wished for more about the trends in the mideast and the more peaceful parts of asia. And why does he avoid commenting on the reported homicide rate for Somalia that’s less than the US – does he have reject the data as inaccurate, or does he want to ignore evidence that’s inconsistent with his claim that the rise of leviathan reduced crime?

The substance of the book is less reassuring than a casual glance would suggest. In particular, the section on the power law distribution of war deaths shows that the model he uses says the expected number of war deaths is infinite, apparently due to small probabilities of really destructive wars. It’s easy to overlook this disturbing implication if you aren’t reading carefully. I’m disappointed that Pinker didn’t talk about this more – how is it altered if we try to incorporate the finiteness of the available population? Should we focus a lot of our attention on avoiding unlikely megawars?

He cautiously speculates about possible causes (increased global communications, trade, democracy, self-control, reason, feminization, education, and intelligence via the Flynn effect).

If you’re an ideologue looking for an excuse to be offended, you’re fairly sure to find one in this book.

Pinker exaggerates the evidence for violence among hunter-gatherers (see the book Sex at Dawn for the other side of this debate). And the evidence Pinker does present is quite consistent with the hypothesis that violence increased when people switched from hunter-gatherers to stationary farmers.

The book is very long, and that’s not due to a simple desire to be thorough. Much of the evidence seems selected more for vividness and memorability (e.g. his evidence from fairy tales – not completely frivolous, but insignificant enough evidence that he wouldn’t have put it in a peer-reviewed article).

I didn’t learn enough from it to justify the time spent, but the ideas in it deserve to be known more widely.

Kratom Update

Posted by Peter on November 23, 2011
Posted in: Miscellaneous.

Just after my last post about Kratom, I noticed changes in my reaction to Kratom. I experienced hangover-like withdrawal symptoms. I cut back my typical dose to 1/4 teaspoon, occasionally 1/2 teaspoon. I still feel most of the benefits at those doses that I originally felt with 1 teaspoon. Plus the effects seem to last all day now. I’ve sometimes felt the stimulant effect last until I go to bed, but it doesn’t seem to have interfered with my sleep. I intend to continue taking it once or twice a week, but only when I have nothing important to do the next day.