By the way, if you weren't paying attention to this "debt ceiling" hubbub...

...this is serious business.

The debt showdown has now begun to mimic the global warming debate, in that all rhetoric about consequences is framed probabilistically and speculatively, and some would like to pretend that there wont be a problem at all. The debt ceiling is different to the extent that many Americans and political leaders are convinced that, if we act to late, mitigation of the damage will be relatively easy. We can prioritize our payments, or use potentially illegal fallback strategies, or resolve the showdown a day late and cover for any shortfalls.

Reading the news this week, though, I've noticed two major shifts in reporting on the issue. First, consequences are being framed in less probabilistic terms. Second, it's become increasingly clear that the mitigation strategies will be ineffective.

In particular, this is really unsettling news.

The two most important takeaways:

1.) You don't need to default to spook financial markets. Remember how all of this deficit scare business began with concerns that a lack of confidence in US debt securities would cause a run? That is the crisis we feared, not a default. This could be that crisis. Not twenty years from now, when our debt gets "too big".     Now.




2.) What the treasury department does isn't as straightforward as most people like to pretend. There are a large number of different flows of funds at hands, and many depend on market operations. Which might make it more difficult to quickly clean up any mess or to prioritize payments than members of congress seem to realize.

Keep watching. There's way more at stake here than in the shutdown showdowns.

Ernest Becker on the Deficit

...we think the budget mess is a squabble between partisans in Washington. But in large measure it’s about our inability to face death and our willingness as a nation to spend whatever it takes to push it just slightly over the horizon.

That's David Brooks, not actually Becker, in today's NY Times. If you're unfamiliar with the reference, Becker's Denial of Death is a minor classic, known for its very brunt yet sober claim that death plays a large role in our lives that most people are not ready to acknowledge. Though David Brooks doesn't always get the political dynamics of Washington correct, he does deserve credit for eschewing the rhetoric of the political leadership, with all it's hand-waving, wonk-speak, and intentionally inoffensive superficiality, and trying his best to address the heart of our political problems, even when doing so is probably uncomfortable and unpalatable for popular audiences. I do think there's truth to what he says, but I also think it would be comforting to put this out of mind and go back to speaking about the debt like it's just a matter of hard math.

The great marathon transit trek, part 1: Philly

I went up to New York over the weekend, and I decided to make the trip there more interesting by seeing how many rail transit systems and urban landscapes I could explore in one day. In total, I was able to get to 5 heavy rail metro systems, 3 light rails, 1 commuter rail, with 4 urban walks in between. In the next few posts, I'll share a little of what I saw.

Philly

I began my journey with a quick foray into the metro-like components of Philadelphia's SEPTA system. For those who have never had the fortune (I wouldn't necessarily call it good fortune) to experience transit in Philadelphia, SEPTA is perhaps the most schizophrenic system in the world. Just look at the map.

Seems straightforward enough. But I'll comment nonetheless. The amazing thing about this map is that one has no idea what kind of train (or whatever) to expect on any given line, or if switching lines is an easy transfer or a transition to an entirely different system with different fares, etc. Looking at a Metro map in DC, one can be relatively sure that every Metro train and station will look pretty much like every other one. But in Philly, the map depicts subway lines, trolley lines, light rail lines, and commuter rail lines--and it's not clear which is which.

To make things better (that's schadenfreude, not optimism),  Philadelphia has four subway lines, each of which is nothing like the other. That's why there's no mention of a "SEPTA metro" on the map. The two primary heavy rail lines--the Broad Street and Market-Frankford lines--form something of a metro system, with a central transfer station at city hall, but there are still major differences between the two--in particular, the two lines run on different gauges (which means they are different technologies), and the broad street line has express service, while the Market line doesn't. What they have in common (besides the archaic token fare system), is that they are both relatively foul and old.

I took the Market line from 30th street to City Hall, and then switched to the Broad line, which I took from City Hall to Walnut/Locust.

Market-Frankford Train Approaching 30th Street

The stations are reminiscent of an unkempt, older Boston subway station, except without the lively buzz of activity or any attempt to convey that someone is trying to keep the system updated and modern (that is, without the charm). The fare is a token that one purchases from an attendant in a booth (like it used to work in Boston). Waiting for a train, one gets the sense that no new work (or maintenance, really) has been done to the station since the early 70s. And then the loud, creaky, screechy train finally comes bumbling down the track, and one begins to suspect that the same might be true of the subways cars. Admittedly, this was more the case on the Broad line than the Market line, but the difference was a matter of degree. In particular, there was an striking absence of professional-looking people on the Broad line, but that's probably because of where it goes (and doesn't go).

Inside a Market-Frankford car

Boarding the Broad Street Line

I mentioned four subways lines, but have only mentioned two so far. The third is actually only a "pre-metro", which is a fancy way of saying that it's a streetcar/trolley line that has a section with underground tracks and stations. Many, but not all, of the trollies in Philadelphia collect near 30th Street Station and enter the tunnel that the Market-Frankford line runs through. The trolly lines straddle the heavy rail line, and have more frequent underground stops than the heavy rail line does (visible in the first picture above). At least at 30th street, the platform was not shared between trollies and heavy trains, and it was not clear if it is possible to transfer without leaving and reentering the station. The trollies turn around underground at 13th street.

The last subway line is a real heavy rail metro, but isn't part of the SEPTA system at all (though it's on the map). I'll talk about it in the next post.

I didn't have time to ride the trollies or the various light-rail-type-trains that run out in the suburbs, but I did have time to walk down to the italian market and get a ridiculously awesome italian hoagie at Sarcone's. This is the sort of thing that Taylor Gourmet in DC is trying to emulate. And it's fantastic.

Doesn't technological progress mean being able to make things more cheaply?

In almost every economics textbook I've seen, the hallmark of technological progress is increased productivity. That is, the ability to produce more stuff with the same amount of resources.

So, if we've really undergone a century of unprecedented technological and economic progress, full of productivity gains across the boards, then why the heck is the ARC tunnel (and it's successors) so darn expensive?

Just to recap--right now, all heavy rail traffic goes through two bores built over a century ago. They may not be perfect, but we've done pretty well with them over those 100+ years, right? We still send trains through them every few minutes now, and the opponents of a new tunnel are content to do so indefinitely. So in looking for new tunnels we don't need a better product, just additional bores to get more trains through, or maybe a replacement tunnel for when the existing one finally does reach its retirement age, right?

Given all the advancement we've seen over the past hundred years, I would have thought that we should be able build an identical tunnel at significantly lower cost. But the price tag for the ARC project (originally 8.7 billion, rose to 11 billion) and it's successor, the Gateway project, are significantly higher than the tunnels that have preceded it. For example, the PATH tunnels to midtown, built in 1908, cost about $1 billion in current dollars. The Holland Tunnel, built in the 1920's, entailed $48 million in construction costs, which is well under $1 billion in 2010 dollars. I can't find too much about the original tunnel, but this article makes it seem like the 1904 cost was $2.5 million, which is-again-less than $1 billion in today's terms (and, of course, my belated condolences to the grieving, inverted Mrs. Sea Cow).

The problem, then, isn't that transportation infrastructure is innately too expensive--it's that for a variety of reasons, transportation projects have become more expensive, despite improvements in technology.

I find this trend disheartening, and a little puzzling. Several explanations offer themselves: rising real estate costs make eminent domain more expensive; labor costs have risen above productivity gains; it's always cheaper to build the first tunnel (which claimed the most direct routes) than those that follow (especially if existing infrastructure needs to be reconfigured); the costs of interrupting activity in the city are much larger in the modern economy; new regulations and standards have drastically increased the costs of doing business. Some of these obstacles have no real justification--what's the point of new regulation if we were content with the previous outcomes? But others seem to be innate to the task of modifying well-established urban areas, and finding ways to overcome those hurdles will be one of the great challenges of the urban renewal age, which is finally in full swing.

Update: Did I mention lack of competition as a potential problem? I reckon I should have.

Taller buildings downtown would not solve all of DC's problems.

As I was biking across what I suppose is now called "Penn Quarter" today, I was reflecting on the arguments for skyscrapers in DC. And while I suppose there is some validity to a handful of them, many of them seem off the mark to me.

First of all, Yglesias' argument that there is nowhere left to build downtown is a little bizarre. As far as empty land goes, of course that's true. The innermost core of the CBD in any city will unlikely have any undeveloped land. It's not like there's any room "left to build" in Manhattan, or even most of the Bronx! You'd have to tear something down and build something bigger. But we have a height limit, Yglesias would say. And yet, as I look around many blocks downtown, many of the buildings are six or seven stories tall, while the height limits would allow for buildings twice that size.

And that fact should serve as a reminder that maybe the height limit isn't the only reason we don't have skyscrapers. Sure, Providence has the Hospital Trust Building and the Bank of America building--but that's it!

Also, the claim that the height act has induced people to build ugly boxes build right to the sidewalk and as high as possible, with no friendly aesthetic presence seems to be untrue. Sure, that's what buildings look like around Farragut square, but most of that construction occurred during a time when people built ugly things. Compare that area to Seventh st. in Penn Quarter, where new buildings incorporate the historic fronts of their predecessors, and rise fourteen stories in the rear--a style I find to be very tasetfull. It would seem as if there is quite a lot of room for expansion in that area, and there's evidence that it can be done in a tasteful way.

Second, the idea that the height limits are the biggest problem downtown because urban development should occur in immediate proximity to the current center of development to maximize returns to scale, or density, or something-or-other, doesn't seem very well, founded either. I can easily understand why keeping jobs in a dense area close to other business is preferable to letting it expand into sprawling suburbs, but why is it preferable to have everything crammed into the twenty blocks that are the existing core, rather than developing the next twenty blocks over? That's not even how things work in Manhattan! Midtown is several miles from Downtown, separated by several neighborhoods with relatively short buildings. So why not push out into SW, SE, and east-of-river? As long as new development is sufficiently close to existing development, there doesn't seem to be any real problem with the creation of a second (Midtown Manhattan-style) core.

In fact, expanding density into new neighborhoods instead of building taller in the existing core seems to encourage transit use, despite what Yglesias has said. Transit has been most useful in cities where density is pervasive, like New York, London, Paris, or even Boston. In areas with dense, sky-scraper laden cores but no density outside that core--like Houston, Charlotte, or Kansas City, or really most "new" American cities--transit has taken a backseat. So it's not clear why DC would be different. As much as DC-skyscraper advocates like to write off the Roslyn-Ballston corridor, the new density in those not-too-far-out regions has is widely cited as one of the nation's great transit-oriented-development success stories of the pas several decades. There's no reason that model could work in parts of DC.

Which brings me to the third main point. Yglesias loves to talk about the height limits as a revenue issue. But let's be clear--that is not a net gain! Whatever revenue the city government would gain would probably be revenue lost by a neighboring government. Yglesias is not advocating a regional perspective, but a strictly municipal one--a perspective that places the District in an adversarial relationship to it's neighbors.

Of course, backhanded policy measures to raise revenue are always suspect. What would the city do with those revenues? How much would go back towards serving the businesses that have moved into DC? Would that really solve our budget problems? And isn't this a local version of "grow our way out of the deficit"? Why is Yglesias so skeptical of the Bush tax cut's intentions, but so lenient when it comes to local policy? And, the maxim still applies that any revenue-raiser raises less than you think, but causes all the distortions you'd expect. I wonder if he takes into account the slopes of supply and demand--that increasing supply will lower average prices and property values, which will lower taxes owed per unit. So there's a tax gain from new supply, but not as high as it would be if prices and property values stayed at the same level.

Now, this isn't to say that there aren't good reasons for taller buildings downtown. It's definitely true that one block in central Charlotte, NC has as much office space as ten blocks in DC (but Charlotte's downtown is puny as result). And I know that economists think that prohibitions always lead to deadweight losses (though, given the massive positive and negative externalities, city planning and the resulting restrictions are a necessity). But what causes me, a native of DC, a lot of alarm (and I suspect what irks so many people about Yglesias), is when people from Manhattan come to DC and make a lot of patchy arguments to create a sense of urgency about the need to make DC look like Manhattan. One can't help but think the driving motivation is personal taste, and not sound policy logic.

Moral Hazard and Morals and Hazards

While the phrase "moral hazard" does not, I think, come from ethics (the concept originated in the insurance industry), moral hazard is actually a central and yet not-well-addressed concern in ethics. That is, moral behavior is almost always subject to abuse. That includes both mean-spirited abuse (con-artists targeting do-gooders, or bullies picking on someone who won't hit back), but also the more common, passive abuse displayed by homeless people who become content to live off of the goodwill of others who might otherwise be working--though, as a liberal, I guess I'm supposed to pretend like that is very rare. A better, and much more pervasive case of the latter emerges in Ezra Klein's discussion of Yglesias and Cowen's back-and-forth over replacing Medicare with block grants:

[Providing cash to be used at the recipients will instead of Medicare] has a lot of wonkish allure, particularly if you think, as I do and Matt does and Tyler does, that medical care is overvalued. But it misses the problem that leads to universal health-insurance systems: As a society, we are not willing to let people die painfully in the street, even if they have previously made decisions that would lead to that outcome. In reality, what terrifies all of us is what happens after someone takes the cash and then gets sick. .....

This is why Medicare is universal and the health-care law has an individual mandate. If we were willing to let people simply live with the consequences of their decisions, we could have a very different health-care system than we do. But we’re not — and, as a compassionate, rich society, I don’t think that’s such a bad thing. This is why we, like every other developed nation, are moving toward insurance solutions that assume an eventual need for health care. If we can’t say no credibly, then we need to say yes responsibly, and in advance. 

It's a fascinating point, and I think Ezra nails it. To understand Medicare, you have to go back to the reasons we care at all. For a true ethical consequentialist, the cash grant idea is probably right, since letting someone die isn't a problem if they received all the cash they were entitled to, and their choice to spend their healthcare money on something else made them happier on net. But for most people, the driving moral concern for Medicare is the one Ezra highlights--we don't like hearing about people dying when it could have been avoided. Period. And that is more of a deontological view--regardless of the greater universe of consequences, many people feel it's just wrong to let someone die.

But in reality, these "it's just plain wrong"  types aren't totally unconcerned with consequences, at least when they have some experience with the world--and that's because of moral hazard. Maybe at first we can maintain the moral stance that "it is always necessary to give money to those in need of urgent medical care"--but the truth tends to be not that we consider the statement in quotes is a categorical imperative, but rather that we can't stand unnecessary deaths, perhaps at a gut level. And thus as we learn that people might abuse fungible cash, the imperative becomes "provide cash when explicitly used to prevent unnecessary death". In a sense, we look for the most efficient means to avoid gut disgust, and to allow us to sleep easily. Welfare programs like Medicare should be understood in this context.

I wish more people involved in philosophy or policy research wrote more often about the detailed calculations people make--not in pursuing a consequentialist ethics--but rather in merely alleviating gut-level moral disgust. In particular, I wish we knew more about the implications of moral hazard-type situations for deontological views. Or at least were more willing to apply what we have been learning from psychological/neurological studies. I think that line of work would prove invaluable in understanding the dynamics of the policy debates that are typical of the modern welfare state.

Anacostia residents like Anacostia just fine, thank you

The GGW folks recently put the spotlight on streetcar plans in historic Anacostia, highlighting various proposals and popular responses. They note that, even if the streetcars manage to avoid increasing congestion and populated regions, some folks just don't want new folks coming in:

While some residents support the project under certain alignments, others oppose the project entirely. In addition to traffic and parking concerns, there was a palpable sense at the meeting that the streetcar is an unnecessary expense and will only benefit new residents.
 ...
Some residents articulated fears that the streetcar will bring wealthier, white residents to Anacostia, ultimately displacing folks currently living in the community. Others believe the streetcar will only serve riders from other parts of the District or commuters from Maryland. They have doubts that the streetcar will provide any new value to the existing community.

This line of reasoning leads to the conclusion that any projects that increase economic activity or attractiveness of Ward 8 are undesirable, because they risk attracting white people with money, who will destroy the way of life down there/"displace" current residents.

Now, as to the "white" part of the problem, which may just be speculation on the part of GGW, that attitude is indicative of a general complacency with the way of life in Ward 8. Often times, white is equated with wealthy, but it's important to remember that there is a sizable black middle class in DC, and they tend to comprise the population of people who complain at Ward 8 public forums. I've mentioned this before, but I suspect that black people east of the river enjoy their lives there more than white people suspect, and by letting the latter propagate those beliefs, the former can continue to enjoy their neighborhood without newcomers getting in the way and changing things up. Hence the loathing of a streetcar that would shuttle in capitol hill yuppies, and thereby let the secret out. Note that, among the black community clued into the benefits of live in Anacostia without the yuppie glitz, the middle class may already be competing for housing and displacing poorer residents, but you probably won't ever hear about it. This is all speculation, and not to say that those attitudes are unreasonable or, rather, unnatural.

As far as displacement goes, that might be a real concern. In the end, if you want to help people, you need to help people, not just their environs. In theory, most benefits of neighborhood improvements will be captured in housing prices, so the improvement is just a transfer to the homeowner (who may be a landlord).  Of course, the proximity of historic Anacostia to downtown makes it intrinsically valuable. On the one hand, one might argue it is the duty of the city to make the best use of that value, and if people have to move because of priciness, so be it. On the other hand, one might suppose that whatever development is going to happen is going to happen due to that value, and streetcar planning should factor in the preferences of future as well as current residents. On the third hand, if you really think your obligation is to current, low-income residents, then the best thing you can do is sabotage any sort of economic development, since, after-all, low-income people simply can't afford nice things or rent in nice neighborhoods. At least let them live in squalor in a culturally rich, centrally-located neighborhood close to jobs, as opposed to diaspora in the slum-burbs. But any city official is going to have to choose one of those lines to tow.

What Economics Doesn't Have to do with Libertarianism

Do economists really believe that they have anything to learn or say about philosophical libertarianism? I mean, free markets make sense, but "taxation as theft" type talk?

By "philosophical libertarianism," I refer to the deontological belief in the value of liberty and property--that violating liberty and property is wrong in and of itself. Major thinkers along those lines include Locke, Nozick (circa the mid-70s), and Rothbard. I recall Mankiw discussing Nozick as the counterpoint to Rawls in his intro textbook chapter on redistribution, as if Nozick presents a point in Anarchy, State, and Utopia that should inform economic discussions. And Bryan Caplan likes to remind us occasionally that reasonable people sometimes think that taxation is theft.

Economics as a discipline, though, is explicitly focused on economic outcomes. Economic theory is entirely, exclusively about the consequences of economic interaction for the agents involved.  Normative economics, then, can only be carried out under the umbrella of consequentialist ethics/political philosophy. That is, economics can only guide us to "better outcomes" if we are judging on the basis of outcomes. So the economist might choose an ethical framework, be it classical utilitarian, or Rawlsian, or egoistic, but it never be the type that Nozick or Rothbard have supported. Why? Because once you become concerned with "procedural fairness" and Kantian categoricals, then outcomes don't matter, and economics is therefore entirely irrelevant.

Now, if you are a textbook authors and have latent libertarian sympathies, maybe its worth warning incoming freshmen that Nozick might be right, and it might therefore be worth jumping ship before committing too much time to irrelevant study. But beyond that, I can't imagine why so many economists like to talk about those guys. At least any more than they like to talk about Islamic conceptions of sin and duty or Hellenistic stoicism.

Armchair Follies

The Economist's Democracy in America blog posted recently posted a response to Stephen Landsburg's (author of the Armchair Economist) outrage that an opponent to a constitutional ban on gay marriage made a rhetorical appeal instead of offering statistically significant results. Landsburg had said:

In a video that’s begun to go viral, University of Iowa engineering student Zach Wahls attempts to refute this notion [that gay people, on average, are less successful as parents] without offering a shred of evidence beyond a single cherry-picked case (his own) to prove that children of gay parents sometimes turn out just fine (except, perhaps, for their ability to reason)...

What’s particularly disturbing to me is all the chatter about how eloquent this kid is, as if eloquence in the service of intellectual misdirection were somehow something to be admired.

 The Economist blogger nails the response:

He's got no problem with gay marriage, as far as I know. And he certainly doesn't think people should undermine their honourable aims by behaving irrationally. So what gives? My guess is that, like a number of right-leaning economists, Mr Landsburg has a regrettable tendency toward tone-deaf, context-dropping, contrarian provocation based on an unexamined assumption that this is what it means to be bravely rational. It is not.

 That same thought kept popping into my head while reading The Armchair Economist. Landsburg and his intellectual brethren frequently make interesting analytical observations, however, the lessons and judgments that they seem to think follow are, well, tone deaf. His stubborn resistance to leaving his armchair allows him to construe the problems he wants to solve in a way that simply doesn't recognizably reflect the real world. Moreover, it allows him to act like everyone else is less rational (stupider, really) than him, because he never really stops to think about what everyone else involved might be thinking or what is really motivating their positions. But it's hard to take someone like that too seriously.

I'd also note that one of the major features that distinguishes right-wing from left-wing types is one's willingness to give other parties the benefit of the doubt--and it's probably a more important determinant than belief in "individual responsibility."

My Preference for Endogenous Preferences (which may be endogenous)

The recent financial crises has resulted in a chorus of voices claiming that we have exhausted the limited explanatory power of neoclassical economics. The leading problem with that view, most people seem to think, lies with the oversimplifications inherent to the rational actor model. As a result, there has been a wave of hype and excitement about the nascent fields of behavioral economics and neuroeconomics. That kind of out of the box thinking seemed like it could blaze the trail to a new kind of economics--an economics in which new understanding of perplexing economic and financial trends that had eluded neoclassical thinkers would finally come about.

But it wont. I think. The thing is, the primary paradigm of economic research suffices to account for many market phenomena. Of course, the original formulations of neoclassical theory left some phenomena unexplained (say, certain auction behavior). However, progress on those questions came not in the form of a true revolution, but rather a tinkering with the standard tools of rational actor theory (e.g. the development of game theory to explain auctions). To draw from Kuhn, one should distinguish between progress within a paradigm and a true scientific revolution. The development of game theory, institutional economics, and information economics were all cases of the former--the standard toolkit was expanded, but not replaced. That kind of progress has gone a long way (at least for explanatory purposes, if not forecasting). A true revolution requires a new paradigm that fully replace the old one, while providing an avenue to explain new phenomena.

Right now, behavioral economics constitutes a series of experiments that show that individuals behave in "predictably irrational" ways contrary to many predictions of standard economic theory. However, what's lacking is a consistent grounds for a new understanding of economies. What effort has been made to create a conceptual frameworks in which to place experimental findings has been akin to earlier efforts to tweak the existing paradigm--the goal is to find concrete rules which economic actors follow, be it rational maximization or some other heuristic--either way the mode of research stays the same.

Nonetheless, I do think that economic research is reaching a stasis point. Most papers these days are pained to find some setting of interest which lends itself to economic analysis--be it auctions of oil wells, regulation of a certain kind of forest, or new tax breaks in Swaziland--but the pace of progress in our understanding is slowing under the current framework. The aftermath of the financial crisis and the recession has made this clear, and the failure of neoliberal development policy has done so as well.

So I've been thinking: if there were a revolution in economics, what would it look like? What about the standard toolkit is holding economics back? It's worth mentioning that Kuhn found that most ideas that became revolutions were not new--in fact, they often were as old as the previous paradigm, but were never really necessary enough to be fleshed out. So it's probably something already out there.

My bet: endogenous preferences.

What do I mean by that? What unites all economic theory is that characteristics about the individual are treated as fixed and predetermined, or exogenous. Most importantly, our motivations are predetermined biologically (genetically, really), presumably. As if our conception of desirability and experience of satisfaction is absolute, and not materialized in our relationships with others.  As if fashion is absolute. As if social psychology doesn't exist.

And that's nuts. That sort of oversight should be implicated in the failure of economic forecasting, some of the "revolutionary" findings of behavioral experiments, and, above all, the inevitable failure of economic imperialism. And it's not like people don't know that its nuts--economic anthropologists and sociologists have been screaming at the top of their lungs about this stuff for decades, begging to be heard. These ideas are definitely out there, waiting for their moment.


Tyler Cowen recently  wrote a very good post on the related subject of methodological individualism (and the lessons to be learned from Foucault) a few weeks ago.  In economics, everything can be reduced to the behavior of individuals, just as in physics researchers boil everything down to the behavior of basic particles. But, as Cowen notes "actual historical explanation relies on the use of broad categories, classes, and exemplars, and in a manner which is not logically reducible to statements about individual beliefs and desires." Why? One important reason is that's how people understand the world, and that informs the decision-making process. If economics really wants to go imperialist in the pursuit of better development and business cycle models, they are going to have to deal with that fact sooner or later.

Maybe I'm overselling endogenous preferences. In truth, endogeneity of key individual attributes can be brought under the individualism umbrella. With sophisticated mathematics, one could develop an economic model in which individual attributes are both a product of external factors and the primary units of analysis. It would be very difficult to tie those models to concrete cases, but I bet it could be done. Above all, those models would create a framework for better understanding the world, even if it has to remain an abstraction--much as Walrasian equilibrium theory did. Would that sort of shift constitute a true revolution, then? It's hard to tell, but I'm guessing that sort of innovation, coupled with new inputs from biology/neuroscience, would result in a new sort of understanding of socio-economic phenomenon, and a new paradigm for research at that. The result could wind up being a framework which accounts both for run-of-the mill economic phenomena and for the strange results coming out of behavioral labs. Neoclassical economicsCBO to abandon DSGE or I/O models anytime soon).

When you search for "endogenous preferences" in google scholar is this one by Samuel Bowles. Bowles is now at the Santa Fe Institute, whose researchers the WSJ's has hinted are, in fact, the best promise for a new economics.

Economics Doesn't Care About Your Free Will

A while back, the New York Times ran a few interesting pieces on free will as part of "The Stone", their philosophy blog feature. Now that the academic community has come to accept that our minds are essentially physically determined systems, though, the debate quickly becomes tired. The big questions that lure most people to the subject--i.e. "do I really have agency, or are my actions predetermined?"--have been set aside and replaced by legalistic, technical discussions about responsibility and ethics--"given that the mind is a product of physical processes governed by the laws of physics, how can one assign responsibility for a wrongdoing?" However, I suspect that outside of academia, most people still carry with them the question of whether or not their thoughts and actions are really predetermined. Determinism is a hard pill to swallow.

What I find really interesting, though, is that, from the perspective of rational choice theory, our actions are effectively predetermined even if we have complete free will. In economic and decision theory models, people come to the table with preferences and a set of choices that entail various costs and benefits (and, to be accurate, certain beliefs about their situation). Even if individuals have complete free will, as long as people do what they are motivated to do as guided as their beliefs (this is what I understand to be meant by "rationality," and it is tautologically true), every decision and action will be a function of their beliefs, values, and choice set. That is to say that even if one has complete agency, the use of that agency is predetermined by one's innate preferences and the outside environment. Therefore, even back in the days when one could claim with impunity that the free mind was a thing apart from the brain, behavior could still be described as deterministic.

Admittedly, this account focuses narrowly on instrumental rationality. One might claim that we can escape from rational choice determinism through the choices we make about our values and beliefs. But that begs the question--on what basis are those higher-order decisions made? If we follow some higher ethical code as necessitated by rationality, then that code is determined outside our minds, and there must be some basis for us choosing to do so. It seems likely to me that, as long as the individual in question is an agent with a unified, self-consistent thought process, some sort of determinism will necessarily result. Of course, the brain is not really a unified, self-consistent thought process, but then we're getting back to the basic questions of the nature of brain processes and free will.

What's worth noting, though, is that in economic models, agency doesn't really matter either way. If we were somehow granted free will after lacking it beforehand, all that would change is that we would get to feel good about having free will. Life would go on the same.

Rising "Tide"

As someone who likes riding trains and travels to Norfolk at least once or twice a year, you'd think that I'd be pretty excited about "The Tide," Norfolk's almost-ready light rail system. 

But, as the people I know who live there are quick to point out, it doesn't really go anywhere that useful. The current route traverses the downtown area (mostly street-running), and then follows an old abandoned right-of-way through sparsely populated areas in the south of the city, and then just kind of... ends. Sure, there will be some transit-oriented development in those neighborhoods, what current residents do live there will have greater access to downtown, and (provided service is regular enough), it will be easier to move around the downtown area without a car. And yet, there is nothing particularly special or promising about the areas around the end of the line except that they surround a convenient right-of-way. 

Until you look at a larger map. While it's true that the right-of-way doesn't lead anywhere in Norfolk, the old right-of-way continues three miles directly into the heart of Virginia Beach's recently developed "Town Center," which is now a major commercial center and heart of one of the densest residential neighborhoods in that city. (On the map below, the red line is the current route, and the purple line is the continuation of the ROW to Virginia Beach Town Center). What's more, is that the right-of-way continues directly to the Oceanfront region of Virginia Beach, which is a major recreation/business destination. While connecting downtown Norfolk to a few random neighborhoods might only have a modest impact, connecting the largest commercial centers (passing through the most densely populated parts of Virginia Beach) in a region plagued by increasing traffic congestion will likely be a great boon for the metro area. 

So, yes, the current system route looks pretty silly. But Norfolk probably didn't build the system to look like it does now--they built it knowing that Virginia Beach would be lured into completing the line. The original proposals called for a line connecting the CBDs of Norfolk and Virginia Beach, but Virginia Beach pulled out in the end. Norfolk made a bold move in going ahead--the route they built will stand on its own, but probably won't flourish without a Virginia Beach extension. But with the line now built, an extension at least to the Town Center is a pretty tempting prospect for Virginia Beach. And it looks like they're starting to give way--a year and a half ago, Mayor Sessoms went ahead and arranged for the city buy the remaining section of the right-of-way. And the city's 10-year moratorium on the issue is finally up. Now one can only hope that poor management of Hampton Roads Transit doesn't botch it.

In the meanwhile, Norfolk will just have to make the best of the system they have--if it does actually get running.

The Caper of the Lingering Anacostia Taboo!

Maybe this is a misperception, but I get the notion that a lot of people in my demographic have a vision that the south/east side of the Anacostia river in DC is some sort of backwards ghetto. Not only the kind of place you wouldn't want to live, but the kind of place you wouldn't want to set foot in. It's common to hear people advise newcomers to "avoid Southeast", as if DC were an analogy for the Old World, in which the south and east were associated with primitiveness and underdevelopment. You might remember the Maine Tea Party's warnings along these lines. Perhaps it's a matter of concern over high crime rates (as if one is likely to be shot on sight), but many people I talk to believe that even the built environment constitutes some kind of depressing slum.  I suppose that, growing up in DC, I bought into some version of that narrative too.

Out of curiosity, I've started going on runs and bike rides across the river to see for myself what lies on the other side.

To my surprise, most of what I've seen looks perfectly nice. Most of it is pretty quaint, and typical of middle-class neighborhoods in the DC area. Admittedly, there is a sizable idle population, and idle minors do tend to cause trouble. And, although it's true that there is not much commercial development to appeal to young urban types like myself, the bulk of the landscape is very pleasant. Nice, quiet, neighborhoods.

You may have known this all along. But if you didn't, here's what you can expect to find:

Dropping the streetview man randomly in another neighborhood across the river:

As someone walking down the street, it was hard to visually distinguish many of the neighborhoods I've been wandering through from the ones near my childhood home in far northwest. Like, say, Hawthorne:

Pretty similar, right? (Though, "nicer neighborhoods" can be usually be picked out by their lack of sidewalks.)

By contrast, this is a typical streetscape inwest Baltimore:

Homey! And this is east Baltimore (seriously, try dropping the streetview guy somewhere random anywhere near the Hopkins' Medical School):

See, now that's a downer streetscape. When 50% of doors are boarded up on a block, and 20% are missing their doorsteps, then the neighborhood can be described as in need of some sort of salvation. But markedly different than what exists in the wider area people like to call "Anacostia" (which, I realize, is different than the neighborhood called Anacostia.)

To fail to understand how livable the neighborhoods across the river is to risk missing an important point concerning the political tensions that were on display this past election cycle, in particular the backlash against "Smart Growth" types. I would guess that many residents in wards 7 and 8 feel like they live in pretty nice neighborhoods as they are. However, the ethos of the Fenty administration and its supporters (in contrast to Gray), is that the south and east of the city are in desperate need of salvation--reshaping, really--both in terms of its values and in terms of its physical environment. Which could only be expected to alarm current residents, who probably enjoy the fact that they aren't being overrun by youngsters (who tend to be Fenty supporters) who stay out late at rowdy bars and who are willing to pay hefty sums for rent, as H street NW, Logan Circle, and U St NW are. Sure, education needs to be improved (given worsening unemployment), and crime needs to be kept down. But it seems to me to be very important to not assume that someone hates his or her life until they personally tell you they do. Otherwise, you're bound to make enemies.