Kevin Drum

A PhD student in Sweden asked a bunch of Swedish economists which concepts they thought ordinary people should understand in order to manage their own affairs better. Here are the results:

The only concept that got anything like a positive response was opportunity cost. Understanding of interest and marginal concepts got a sort of meh response, and all the others were so low that basically no one thought they were very useful in regular life.

I'm not so sure myself that an understanding of opportunity costs would be very useful. It's one of those things that I suspect most people understand innately. Ditto for interest. Everyone knows that interest means you pay more than the base price for an item in return for the privilege of paying over time. And most common forms of interest—mortgages, credit cards, auto loans—come with pretty understandable descriptions of the gory details. As for marginal concepts, I dunno.

On the flip side, I would have put risk and sunk costs higher. I think there are plenty of people who could benefit from having it hammered into them that higher return always comes with higher risk—which means you really could lose a lot of money.¹ Likewise, people could benefit from taking sunk costs more seriously, although I'm a little curious about what effect that would have in practice.

What else? Apparently not a single Swedish economist mentioned any of the concepts of behavioral economics, which surprises me. I won't try to construct a list, but surely there at least several findings of behavioral economics that many people could benefit from knowing.

¹Although it's true that the people who could benefit from this advice are the least likely to pay attention to it. That's very frequently the case, though, and it shouldn't stop us from trying.

According to the FTC, romance scams have skyrocketed over the past five years:

Do you believe this? Do you believe that the number of romance scams has increased 230% and the money amount has increased 500%—in just the past five years? I don't. Come on.

In fact, even the FTC doesn't. Way down in footnote 2, they tell us that the vast majority of frauds aren't reported and refer us to a paper on the subject:

Less than 3 percent of victims complained to a government entity....Less than 1 percent complained to a state Attorney General or other state authority or to a federal agency.

This is such a tiny number that it means the number of fraud complaints is all but useless as a guide to the actual number of frauds committed. If the number of people who were scammed stayed exactly the same, but the share of people who complained about romance frauds rose by just a tiny bit, from 0.5% to 1.5%, it would account for the entire increase reported by the FTC. So the real answer could plausibly range from 0% to 230%. Who knows where the truth really lies?

Data is data, and I'm always happy to see more. But meaningless stuff like this is what produces misleading factoids that bounce around the country forever. The FTC should know better.

Over at National Review, Dominic Pino says the woes of the IRS are its own damn fault:

The agency answers only 11 percent of incoming calls, takes 45 days to turn around correspondence, and finished the 2021 tax season with a backlog of 35 million returns.

....The IRS is clearly a poorly run organization, and poorly run organizations should not be rewarded with more money....The bureaucrats who run the agency will always tell Congress that they don’t have enough money, and there’s a certain amount of institutional learned helplessness that goes into that. If the agency actually improved its processes and better served taxpayers, its case for funding increases would weaken.

I admire the brass on display here. Whatever institutional problems the IRS might have, the proximate cause of its problems is that conservatives have been hellbent on gutting the agency over the past 25 years:

It started in 1995 when Newt Gingrich took control of the House. Within four years he had slashed 14,000 employees from the IRS.

Gingrich was on his way out after four years, but in 1998 Sen. William Roth kept the flame alive by holding a week of hearings in which witnesses were hidden by black curtains and had their voices altered. Everyone was searched before entering the room. Republicans lined up to denounce the IRS as “Gestapo-like” and a law was quickly passed that handcuffed agents and slashed the budget for audits and enforcement, especially against high-income taxpayers.

In 2001 George Bush became president and Republicans were once again free to do as they wished with the IRS. Over the next six years they cut another 5,000 employees, stopping only when they lost control of the House to Nancy Pelosi and control of the presidency to Barack Obama.

In 2011 Republicans took control of the House and slashed another 20,000 employees by bargaining with Obama over things he cared more about.

In 2019 Democrats took control of the House and the hemorrhaging stopped.

Bottom line: over the course of the past three decades, Republicans have cut the IRS workforce by nearly 40,000. Even when you add back the small numbers that Democrats have won, the IRS workforce is still down by over a third since 1992.

But that's not all. It would be simple for the IRS to simply calculate your taxes for you if you have a simple return. This would save tens of millions of taxpayers a huge amount of grief and would take a lot of pressure off of IRS help lines. So why not do it? Roughly speaking, the answer is that Intuit, the maker of TurboTax, has lobbied relentlessly to prevent it. And who supports Intuit? Mostly Republicans. If they supported free IRS tax prep, the vast majority of Democrats would join them.

In other words, Republicans have spent the past three decades committed to the very things that hamstring the IRS most effectively: stripping it of workers and refusing to let it adopt an obvious labor-saving reform. There are two reasons for this:

• They want people to tear their hair out during tax season. It helps make taxes unpopular.
• They want to gut the IRS of the resources to audit rich people—and they have. I assume this needs no explanation.
   
  

Recently, of course, the IRS has been in even worse shape. But this is because of temporary staffing shortages due to COVID-19, not IRS incompetence. Even an NRO writer ought to know that.

Happy Valentine's Day! Please enjoy this lovely picture of Santa Catalina Island, 26 miles across the sea. It's the island of romance, romance, romance, romance.

Exciting news, folks. Thanks to an especially dismal 2021, the 2000-21 megadrought in the Southwest is now the worst on record, barely edging out the infamous 1571-92 megadrought:

But we didn't do this all by ourselves. It was a team effort. If not for climate change, our current megadrought would have been unremarkable, barely even cracking the top five. This just shows what we can accomplish by taking a naturally arid region and then adding a few hundred gigatons of CO₂ to the atmosphere. Congratulations to everyone involved.

Ezra Klein wants us to think different:

This reflects some atrophy and some fear.

Most liberals can list the programs they want the government to create or expand.

Fewer can name the five technologies they want the government to finance or the five scientific challenges they want to see it mobilize to solve.

— Ezra Klein (@ezraklein) February 14, 2022

Scientific challenges? You're speaking my language! But I assume we're not talking about things like reconciling quantum mechanics and General Relativity. We want to tackle practical scientific challenges. And we want five of them. Okey doke:

1. Artificial intelligence. There is, needless to say, boatloads of private money already being spent on this, and money per se is not really the bottleneck. But money makes a difference, and whoever leads in AI will lead the world in 2040. Why not us?
2. CRISPR. This is sort of a catchall for medical research, which we already spend tons of money on. But we could spend more!
3. Climate change. We should be spending huge sums on every technology that looks even a little promising as a solution to climate change. Carbon capture, solar, geoengineering, biofuels, nuclear (fission and fusion), land use, adaptation, and more.
4. Human genomics. Do our genes make us who we are? Do they vary systematically between different groups. Can they turn aging on and off? Which genes affect which human traits?
5. Human stress. This is sort of a dark horse, but as societies get richer they also get more stressful. And more stress equals worse decisionmaking. We need more research into how to allow people to live more comfortable lives even as society becomes ever more complex and stress-filled.

Some of these, like climate change and AI, would probably show up on anyone's list. But there are others that are more contestable, including some I probably don't even know about. This is especially true in the social sciences, which most people don't think about when they talk about funding "science." But there's a marriage of social science and medical science that needs to happen if we want to accelerate our understanding of what's needed to live fulfilling lives in the face of constant change. Someone just needs to figure out what that marriage looks like and how to study it.

A couple of weeks ago Denmark decided to eliminate all COVID restrictions and open up completely. How's that working out for them?

Shazam! Maybe they acted a little too soon? On the other hand, there's this:

Denmark is in the top half, but the United States has opened a big lead for first place even though our case rate is fairly low. I imagine it's because of this:

The best Valentine's Day gift you can give your beloved is to get them vaccinated. If they're already vaccinated, get them boosted. And if you're both already boosted, find a friend who isn't and badger them into it.

Here's the headline of an editorial in the New York Times:

Please stop this. As the Times admits in its first sentence, this protest rates as little more than a nuisance: "The number of protesters, about 8,000 at their peak, is modest; there have been no serious injuries or altercations, the truckers stopped blaring their horns after residents got a temporary court injunction against them, and most Canadians support neither the truckers nor their cause."

Not everything is a test of democracy. Even if the Trudeau government eventually reacts harshly and stupidly to break up the protests, it still wouldn't be a test of democracy. It would just be a minor protest that was handled badly. That happens in democracies all the time.

Western democracy is in much better shape than the doomsayers claim. It has its problems, but there's no point in pretending that every minor crisis is yet another log on the fire of civilization.

Did you notice Charlie's whiskers in yesterday's catblogging photo? They're two-toned. Some are all white and some are all black, but many of them start out white and then switch to black as they grow out. I don't think I've ever had a cat with two-toned whiskers before.

The medal ceremony for the team ice skating event at the Olympics has been in suspended animation for a week as authorities try to figure out what to do about Kamila Valieva, the Russian teen sensation who tested positive for a banned drug last December.

There are a bunch of minor mysteries here, but the biggest one is this:

• Experts seem to agree that the drug in question, trimetazidine, would do very little to help an ice skater.
• On the other hand, trimetazidine is an angina medication. Experts also agree that there's virtually no legitimate reason it would be prescribed to a healthy 15-year-old.

The world is ever more like a matryoshka doll these days. I suppose that's appropriate in this case.