Interesting Stuff 20/11/3017

Marginal Revolution: “suppose a private firm and the federal government both value a worker’s output at $100k/yr and the tax rate is 20%. The private firm offers the worker $100k and the worker receives $80k after paying taxes. The federal government, however, can offer the worker $125k in nominal salary, *knowing that it will receive $25k back in income tax*. The net result is that the federal government pays $100k and the worker receives $100k after taxes, i.e., the worker earns $100k tax free, $20k more than he or she would earn at the private firm. Another way of seeing this is to note that taxes paid by employees are economically equivalent to taxes paid by employers. So, if employers received rebates for income taxes paid by employees, then the net income tax would be zero. Well, the federal government *does* receive a rebate for all income taxes paid by employees!

Doesn’t this mean that taxes are doubly distortive? Not only do they discourage employment by creating a gap between what (private) employers pay and what workers receive — the usual cited distortion — they also distort the *composition* of the workforce by allowing the federal government to crowd out other employers.”

 

New York Times on the Siege Mentality: “The siege mentality starts with a sense of collective victimhood. It’s not just that our group has opponents. The whole “culture” or the whole world is irredeemably hostile.

From this flows a deep sense of pessimism. Things are bad now. Our enemies are growing stronger. And things are about to get worse. The world our children inherit will be horrific. The siege mentality floats on apocalyptic fear.

The odd thing is that the siege mentality feels kind of good to the people who grab on to it. It gives its proponents a straightforward way to interpret the world — the noble us versus the powerful them. It gives them a clear sense of group membership and a clear social identity. It offers a ready explanation for the bad things that happen in life.

Most of all, it gives people a narrative to express their own superiority: We may be losing, but at least we are the holy remnant. We have the innocence of victimhood. We are martyrs in a spiteful world.”

Evidence for the Red Queen Hypothesis: “Asexual clones that were plentiful at the beginning of the study became more susceptible to the parasites over time. As parasite infections increased, the number of clones dramatically decreased. Meanwhile, the population of snails exhibiting sexual reproduction stayed relatively stable. Jukka Jokela of the Swiss Federal Institute of Aquatic Science and Technology said that, “These results suggest that sexual reproduction provides an evolutionary advantage in parasite rich environments.” The host-parasite relationship and the sexual and asexual forms of the snail were key to proving that sexual reproduction is advantageous.”

On low power as a a cause of replication failure on neuroscience: “First, low power, by definition, means that the chance of discovering effects that are genuinely true is low. That is, low-powered studies produce more false negatives than high-powered studies. When studies in a given field are designed with a power of 20%, it means that if there are 100 genuine non-null effects to be discovered in that field, these studies are expected to discover only 20 of them11.

likely that the estimate of the magnitude of that effect provided by that study will be exaggerated. This effect inflation is often referred to as the ‘winner’s curse’13 and is likely to occur whenever claims of discovery are based on thresholds of statistical significance (for example, p < 0.05) or other selection filters (for example, a Bayes factor better than a given value or a false-discovery rate below a given value). Effect inflation is worst for small, low-powered studies, which can only detect effects that happen to be large. If, for example, the true effect is medium-sized, only those small studies that, by chance, overestimate the magnitude of the effect will pass the threshold for discovery. To illustrate the winner’s curse, suppose that an association truly exists with an effect size that is equivalent to an odds ratio of 1.20, and we are trying to discover it by performing a small (that is, underpowered) study. Suppose also that our study only has the power to detect an odds ratio of 1.20 on average 20% of the time. The results of any study are subject to sampling variation and random error in the measurements of the variables and outcomes of interest. Therefore, on average, our small study will find an odds ratio of 1.20 but, because of random errors, our study may in fact find an odds ratio smaller than 1.20 (for example, 1.00) or an odds ratio larger than 1.20 (for example, 1.60). Odds ratios of 1.00 or 1.20 will not reach statistical significance because of the small sample size. We can only claim the association as nominally significant in the third case, where random error creates an odds ratio of 1.60. The winner’s curse means, therefore, that the ‘lucky’ scientist who makes the discovery in a small study is cursed by finding an inflated effect.”

Melting Asphalt on the evolutionary cause of bad beliefs: “In other words, just like Acme, the human brain has to strike an awkward balance between two different reward systems:

  • Meritocracy, where we monitor beliefs for accuracy out of fear that we’ll stumble by acting on a false belief; and
  • Cronyism, where we don’t care about accuracy so much as whether our beliefs make the right impressions on others.

And so we can roughly (with caveats we’ll discuss in a moment) divide our beliefs into merit beliefs and crony beliefs. Both contribute to our bottom line — survival and reproduction — but they do so in different ways: merit beliefs by helping us navigate the world, crony beliefs by helping us look good.”

merit_vs_crony_beliefs

 

 

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