2026-02-09 07:01:27
No, this is not an AI post. Codex is a NYC bookshop at 1 Bleecker St., at Bowery. It is quite extraordinary in its curation of used books. The fiction section is large, yet you can pick up virtually any title on the shelves and it is worth reading. A wonderful place to go to get reading ideas, plus the prices are reasonable and the used books are in decent shape. Such achievements should be praised.
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2026-02-09 00:51:37
2. Charter city plans for Nevis? (FT)
3. Michelangelo’s foot for $27 million.
4. Philosophy intern position at Mercatus.
5. Taking governmental equity stakes in American companies.
6. The One Child Policy was not even the most important way the Chinese government discouraged births.
8. The Inkhaven Residency (for writers).
9. The political status of the Faroes (NYT).
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2026-02-08 23:27:42
AI technology can generate speculative-growth equilibria. These are rational but fragile: elevated valuations support rapid capital accumulation, yet persist only as long as beliefs remain coordinated. Because AI capital is labor-like, it expands effective labor and dampens the normal decline in the marginal product of capital as the capital stock grows. The gains from this expansion accrue disproportionately to capitalists, whose saving rate rises with wealth, raising aggregate saving. Building on Caballero et al (2006), I show that these features generate a funding feedback—rising capitalist wealth lowers the required return—that can produce multiple equilibria. With intermediate adjustment costs, elevated valuations are the mechanism that sustains a transition toward a high-capital equilibrium; a loss of confidence can precipitate a self-fulfilling crash and reversal.
That is from a new NBER working paper by Ricardo J. Caballero.
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2026-02-08 17:03:56
That is the new Knausgaard book, excellent and moving. Better than any Knausgaard work other than the first two volumes of My Struggle. The ending is especially good and meaningful, revising much of what came before. You can buy it here.
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2026-02-08 13:45:24
From Anonymous:
Hello Professor Cowen,
I hope all is well with you and that you have navigated the recent weather alright.
I have a thought that I wanted to run by you that related to phones and teen anxiety.
You have cited a variety of studies that say that phones and social media do not cause anxiety. As you may recall, I have taught junior high and high school for almost 30 years. I did see a big spike in anxiety for my students, especially females, around the years 2010-2017/18ish. I used to think “phones,” but now I’m not sure. The anxiety spike has declined. My last ‘anxious’ class of seniors are now seniors in college. Students today are on the phones as much as those in the past.
Here is my theory: Students started to feel more anxious around 2010 because they could sense the coming seismic cultural and political shifts coming, of which phones were a harbinger or carrier. They were mostly not conscious of this, and couldn’t express it, but they were trying to cope.
Now, they have coped. My current seniors have unusual political ideas but are mostly optimistic. I contrast them to a centrist friend of mine who does some DC work and constantly thinks the sky is falling.
Now, adults are more anxious, not students. Adults are starting to see these seismic shifts and they are trying to cope. Perhaps they are projecting their own anxiety onto their kids, and are behind the times with the cause. Phones may have helped drive anxiety 10 years ago, but maybe not anymore. Students have coped and adjusted to a new equilibrium.
It is also possible that phones serve as a good/useful “myth” (I mean this in a positive sense) for the shifts we are seeing and the anxiety many feel . We need something tangible to hold our thoughts on the shifts in culture, and we have chosen phones. Thus, the clash over phones today might be between those who think in mythic/symbolic ways, and those who think in more scientific ways. Both are right in their own perspective. The new cultural and political shifts over the last 10-15 years would naturally bring on anxiety. Phones are not the cause of the shift, but a good symbol of it.
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2026-02-08 02:12:32
The most successful economics blog in the world is called Marginal Revolution.
That is not an accident….Consider a few common mistakes that reappear whenever marginal thinking is abandoned:
One of the most uncomfortable implications of marginal analysis is that reallocation is essential. Labor and capital must sometimes leave declining uses so they can enter expanding ones. That process is rarely smooth, and never painless. But blocking it does not make an economy more humane; it makes it poorer.
The twentieth century gave this insight a name. Joseph Schumpeter called it creative destruction. János Kornai warned that when losses are systematically covered—when budget constraints are soft—adjustment never happens, inefficiency becomes chronic, and stagnation follows.
Marginal analysis explains why. If losses have no consequences, margins lose meaning. Prices stop signaling scarcity. Productivity differences stop guiding allocation. The economy becomes a museum of preserved structures rather than a system that adapts.
Excellent throughout, here is the link.
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