Last February I was thrilled to be invited to an economics bloggers forum at the Kauffman Foundation, organized by Tim Kane (who contributes to the Kauffman blog Growthology). As part of the forum the Kauffman folks recorded video interviews with each of us for their library.
They have now released a video from the event that includes some excerpts from our interviews and from the informal filming of the event, with Tim providing narration and context. I am pleased and honored to be included in the video, which also includes folks like Tyler Cowen, Robert Cringely, Mark Thoma, Arnold Kling, Don Boudreaux, Virginia Postrel, and Amity Shlaes.
Thanks to the Kauffman Foundation and Tim for creating such a good event and such a good video reflection of it.
I love traveling, but it is always good to return home. After two weeks on the road, first for some English countryside holiday time in Shropshire, then the Mont Pelerin Society meeting in Stockholm, then some SoCal holiday time at the La Jolla Music Festival and then in LA, the catching up and digging out is gonna take some time. But it was a much-needed break, including, to be honest, a much-needed break from my overly-attentive relationship with the Internet.
Big, huge, massive thanks and shout-outs (shouts-out?) to Mike for keeping up the reading, writing, analysis, and commentary here at KP during my travels. On the infrequent occasions when I did check in during my trip, I was glad to have something interesting and thoughtful to read when I got here.
And now it’s back to work.
Philip Tetlock – the expert on political expertise – reviews three books on political forecasting for The National Interest, but the problem of selecting a good forecast equally applies in commerce:
Reading these three books, it is easy to feel like a frustrated shopper wandering aimlessly down the forecasting aisle in the supermarket of ideas. The products on offer are packaged well—but we have no objective benchmarks, no trusted Consumer Reports, against which to gauge performance. We have no idea whether we would be better-off paying one of these consultancies gobs of money for their proprietary forecasts or simply downloading the latest odds from a high-profile prediction market that culls individual bets on world events such as Tradesport. Indeed, would we do as well relying on the dart-throwing chimps or mindless extrapolation rules, like “Predict the most recent rate of change”?
Tetlock observes that pundits like to both make bold claims and hedge their bets: bold, because pundits need to stand out from the crowd, and hedge, because pundits can’t afford to be tied to flat-out mistakes. Tetlock wants to pin forecasters down so we can score their track record. (I’m in favor, see my post at Midas Oracle: “Separating cheap talk from truly held beliefs.”)
In response to Tetlock, Robin Hanson wonders whether people don’t care so much about the accuracy of forecasts, but really just want to affiliate with high-status impressive folks by reading their provocative forecasts.
In the commercial world, say the oil and gas business, while affiliating with high-status impressive folks is good (why else CERAWeek?), people have a pretty strong incentive to care about the accuracy of forecasts, too. There are a lot of oil and gas forecasting companies out there, and they make reasonably clear quantitative forecasts and so should be relatively easy to score. Has anyone produced a “shopper’s guide to oil and gas forecasting companies”?
Forbes recently ran a story by Jonathon Farey, “Wind Power’s Weird Effect,” about how sometimes high wind power output and limited transmission capability combine to produce wholesale power prices dropping to zero or below. (Of course regular readers here have been aware of the issue at least since last November.)
Much more informative was Farey’s story on inventor Leif Hauge and the energy-saving pressure exchanger he invented for use in desalination plants. UPDATE ADDED: (Of course, if I were a better reader of Aguanomics, I would have been aware of the issue at least since last September.)
In the news, reports of a “cash for clunkers” program for major appliances: USA Today: Appliances get their own recycled clunkers programs; Business Week: Latest in Stimulus: ‘Cash for Refrigerators’; Associated Press: Meltdown 101: Government cash for green appliances.
From Business Week:
Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won’t have to trade in their old appliances.)
“These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy,” Energy Secretary Steven Chu said in a statement announcing the plan.
Since the cash is just a rebate for the purchase of an Energy Star certified appliance, and no old appliance needs to be returned, this really isn’t a “cash for clunkers” analogue for appliances. (Unless the Energy Star certified appliances turn out to be clunkers.) The program was created in the Energy Policy Act of 2005, but not funded by Congress until the carnival of stimulus spending earlier this year.
Joe Walsh Red Green and Blue blog is getting ahead of the curve, already picking apart the “win, win, win” claims of the appliance rebate program’s boosters.
Walsh expresses concern that without a requirement to junk the old appliance, it will instead migrate to the garage or the basement and store “extra beer and the overflow from Costco.” No energy savings in that scenario.
Of course requiring disposal of useful appliances would cause a more immediate and obvious waste of resources. At least in this case some of the old appliances may make it into the secondhand market and help reduce prices for consumers unable to afford to take advantage of government rebates for new, energy efficient devices.
(And while we’re picking on “Cash for Clunkers,” readers may enjoy Jeff Jacoby’s “The Truth about Cash for Clunkers” from the Boston Globe.)