Update Q4 2023 (Part 2): News

Some of you have helped me improve my drafts in the past. I’d like to go a bit farther in article collaboration, mainly research and argument debate. Do you have expertise in any of the following areas? In order of priority: the economics of real estate (past and future); nuclear energy; planetary boundaries; woke movement; history of education & interventions that work.

If you do and want to participate, please reply to this email and give me a gmail-compatible email address to invite you!

---

Welcome to the second and last Q4 2023 update (first part here). I meant to send it last week, but had to reprogram due to OpenAI. I also sent to premium readers How AI Is Changing Jobs Today, about how AI is impacting jobs now.

Here’s what you’ll learn in today’s article:

News

• Is the Placebo Effect Real?

• Could We Cure Lyme Disease?

• How Is the Malaria Vaccine Working?

• Argentina Games the System with the Big Mac Index

• We Don’t Know Who Will Commit Suicide or How to Reduce its Odds

Diverse topics:

• Update on Insurance and Climate Change, and Czechia

• Will English Rule the World?

• The Space Economy Is Booming

• How Much Will We Work from Home?

Behind the paywall

• Transportation Lines Define City Success

• Where to Look for Life in the Universe

• Mental Breakdown of Young People

• We Shrink Animals

• Why Korean Dramas Beat Chinese Dramas

• How Substack Fulfills Its Destiny

• Don’t Read the News

• The Benefits of Obsession

• What Palestinians Think of the War

---

News

This is a new section: news items you might have missed that are super important and interesting.

The Placebo Effect is (Mostly) Not Real.

From Jonatan Pallesen:

It is a result of statistical confusion. Whenever you have a group with extreme values, they tend to exhibit regression to the mean. Eg. on average, sick people tend to become more healthy over time.

Thus if you give one group medicine, and one group placebo, the placebo group will also tend to get better over time, because of regression to the mean.

People have then misinterpreted this to think that it is the placebo pill that actively does this. 

We Could Cure Lyme Disease

From @SHL0MS:

There was a proven effective cure for Lyme disease until antivax advocacy groups forced them to take it off market. Lyme cases in the US have roughly tripled since then. It’s now the most common vector-borne disease in the United States.

First Malaria Vaccine Slashes Early Childhood Mortality

From Science.org, via Michael Nielsen: A new malaria vaccine has saved 13% of infected children’s lives in Africa over four years so far. With 470k infected children born every year in the region, that’s at least 60k children saved per year.

Argentina Games the System with the Big Mac Index

The Economist publishes the Big Mac Index to get a sense of purchasing power parity around the world: By tracking the price of a Big Mac, you know how expensive things are in a country because its price is close to its cost, and its cost is representative of the overall economy (agriculture, transport, packaging, human resources, real estate, marketing, etc.)

When the price of the Big Mac rises very quickly somewhere, it’s also an indicator of hyperinflation.

But some countries don’t like to advertise hyperinflation, so the official rates of inflation are lower than the actual inflation. Except the Big Mac index betrays that.

So the government started leaning on McDonald’s to avoid raising the price of Big Macs, which McDonald’s agreed to do — but then the company responded by ceasing any advertising or promotion of the existence of the Big Mac. I read about this before going and checked it out in person — Big Macs were super cheap (cheaper than a Quarter Pounder!), but to find out that they existed at all you had to dig deep into the menu fine print.—from Slow Boring.

We Don’t Know who will Commit Suicide or How to Reduce its Odds

Via @DegenRolf

Understanding why people die by suicide is a harder problem to solve than most social scientists admit. Buried in technical reviews of intervention efficacy, scholars will admit, “There are no well-established, empirically supported treatments for decreasing suicide attempts or non-suicidal self-injury in adolescents with elevated suicide risk.”—Pulling Back the Curtain on Suicide Research, Kevin McCaffree.

Suicide is a fundamentally random event because, over an evolutionary timescale, selection will have sought out all available cues from the organism’s internal and external environment that usefully presage this outcome. People rated “high risk” seldom take their own lives. Most incidents occur among people who appeared normal to the extent that they remained outside of the mental healthcare system.—On the Randomness of Suicide, Soper et al.

Updates on Insurance vs Climate Change and Czechia

In my previous quarterly update from last week, I said that Czechia, Slovakia, and Hungary are more pro-Russian today than other EU countries. Several Czechs vehemently disagreed and didn’t want Czechia to be added to the mix. Apparently, they’re right. I did also find out that Hungarians are not very keen on Russia, even if their government is. Greeks are actually more favorable, as they both are Christian Orthodox.

As for insurance, a few people working in insurance reached out to me to say that the reason why several insurance companies were leaving Louisiana, California, and Florida had nothing to do with climate change. Here are their thoughts, edited for readability:

The insurers aren’t leaving Louisiana and Florida because of the weather though, which I know well as insurers are clients at [edited].

Florida has had an epidemic of Assignment of Benefits fraud. Basically, a contractor knocks at your door, says you might have storm damage on your roof. “Sign here, we’ll sue your insurance company and they’ll pay for you to have a new roof.”

Everyone’s tried to get a new roof from their insurance company and insurance rates have literally gone through the roof. The law was just changed last year to prevent this, but the financial hangover continues.

The issue with insurance companies in the US is they’re State regulated. They need State approval to start underwriting. The State sets their prices. They need State approval to stop doing business… Many of them have been forced to stay in massively loss making lines of business. They can’t change their prices quickly and they can’t stop taking on new clients. Many have gone bust. When they have the chance to leave the State, they take it. It’s government messing with the market and lawyers taking advantage.

Similar thing in Louisiana. It’s not weather there, it’s auto negligence. I’m from the UK, you rarely see a car accident there. In America there is an entire car crash economy. Getting in a car accident and suing the other driver’s insurance company is marketed like a lottery win.

If you drive around Baton Rouge, Louisiana (the State Capitol, where I was asked by their legislature to give testimony on this issue), every billboard has an ad for a car accident lawyer. Louisiana is 49th out of 50 States on car accidents per capita, medical cost per capita, repair cost per capita, etc. The laws are even different there.

In the UK, an injured driver not wearing a seatbelt is treated as contributory negligence and their award is reduced. In Louisiana, they have a “seatbelt gag rule”. The defense lawyer is forbidden from mentioning that fact to the jury. And a whole bunch of other naughtiness driven by special interests from the plaintiff bar, car repair shops, etc…  Insurers also cannot change their rates or leave the State quickly, but when they can, they flee.”—Toby U.

And from Swami:

As a retired insurance executive who was actually responsible for developing underwriting and pricing property insurance nationally, I am extremely skeptical of your canary in a coal mine analogy. The overwhelming reason we stopped writing insurance was because of regulatory interference, especially inadequately charging for the risk. You might argue that one reason (among many) we need to increase rates is climate change, and may be a factor in Florida, but not California.

For the record though, we certainly knew how to play the climate change card to try to gain regulatory approval. The spin looked better when we blamed it on climate change rather than inflation or a reluctance to lose money.

Granted insurance pricing and underwriting would be complex even without regulatory interference, but the primary issue is that companies are not allowed to ask for a price commensurate with the risk they are insuring. Why? Because regulators interfere with the competitive market and replace it with an approval process where they get to determine what companies can charge.

The increase in premiums in hurricane areas has been primarily driven by massive increases in coastal population, coastal home prices and repair cost inflation. Notably, these trends are exactly 180 degrees from the canary in a coal mine flowchart which predicts the opposite. To date, there have been either no trends for more or stronger storms, or slight increases especially compared to the driving forces above. But when we talked to regulators and asked for increases we would gladly use any models we could find which would argue for increased storms.

Will English Rule the World?

In Should Everybody Learn English? and The Ineluctable Progress of English, I explain why English will take over the world¹, and how no other language can compete.

Neil Kaye found data I was looking for: a breakdown of language speakers per first and second language:

Blue is more important than red. Source.

What matters is not just the sheer number of speakers, but more importantly, whether they use it as a lingua franca. Mandarin and Hindi might be spoken widely in their regions, but few learn it outside. Meanwhile, a vast majority of English speakers learn it to communicate with other people across countries. That makes it a lingua franca, and it will win. 

The biggest prediction from this is that, despite China’s economic rise, Mandarin will not become prevalent worldwide in the next few years and decades.

The Economist reports that, in America, enrolment in university Mandarin courses fell by 21% between 2016 and 2020. It shares some hypotheses:

• Translation tools like ChatGPT mean that low-level Mandarin skills are not needed anymore. 

• Western students may be put off by China’s government, which has become more oppressive in the past decade, making living in or working with China seem less appealing.

To be clear, I don’t expect this trend to play out in months or a handful of years, but rather decades. But I find these small clues telling.

You can find similar clues in the other side of the trend: In the Netherlands and Nordic countries, people speak English so well that protectionism for local languages is growing.

Some citizens of the Netherlands and Nordic countries wonder what space will be left for their national languages if their flagship universities increasingly do not teach in it.

Many citizens of Denmark, Finland, the Netherlands, Norway and Sweden are fluent in English and often impress tourists with their command of the language. This aptitude has also prompted controversy, however, as universities have become excellent, international institutions offering courses taught mostly—or even entirely—in English.

In June the minister of education in the Netherlands announced that at least two-thirds of teaching in undergraduate programmes would have to be in Dutch. University leaders took it badly. The head of the Eindhoven University of Technology has said that “for a number of courses we can’t even find professors who can speak Dutch”. The Dutch government subsequently fell, leaving the policy in limbo.

The worry is that a language like Dutch, if neglected in academic contexts, will eventually lack the vocabulary needed for cutting-edge topics. People discussing such subjects will have to pepper their Dutch with English words—until, that is, talking this way gets so cumbersome they switch to English entirely. It risks leaving the impression that Dutch is somehow unworthy, feeding a vicious cycle.—In northern Europe, a backlash against English is under way

The Space Economy Is Booming

In Starship Will Change Humanity Soon, I explained how new industries are going to spring up with the new space transportation technologies. My prediction was that most of the next few years would be about Earth imagery. Here we have two examples:

We now know agronomists can predict wheat yields with 98% accuracy!

The IRS is very happy.

Also, here are orbital images from OSK showing methane leaks:

Another example of a new space economy!

Last Saturday, SpaceX launched its second Starship. This time, it didn’t explode soon after launch. Instead, the ship was able to separate from its main booster, but three minutes in the booster malfunctioned and was remotely terminated. The remainder of Starship flew for several minutes and was terminated about eight minutes in. This is just one more step of learning in the path to reach the stars.

How Much Will We Work from Home?

Interesting takeaways from a new WFH paper:

1. WFH levels dropped in 2020-2022, then stabilized in 2023.

2. Self-employed and gig workers are 3x more likely to be fully remote than salaried workers (If you are your own boss, you WFH a lot more).

3. Huge variation by industry, with IT having 5x the WFH level of food service

4. WFH level rises with population density, and is 2x higher in cities than in rural areas.

5. WFH levels peak for folks in their 30s and early 40s (kids at home); those in their 20s have lower levels (mentoring, socializing and small living spaces).

6. Similar WFH levels by gender pre-, during and post-pandemic

7. Much higher levels of WFH for college graduates with kids under 14 at home

8. Productivity impact of hybrid WFH is about zero. Productivity impact of fully-remote work varied, dependent on how well managed it is.

9. Future will see rising levels of fully remote (the Nike Swoosh).

Source

As you can see, it’s stabilizing around 28% for now:

In 2021, I guessed it would be 10-25%, so this is slightly above my guess.

Transportation Lines Define City Success