2026-01-13 15:59:48
Next, we consider the effects of grade inflation on future outcomes. Passing grade inflation reduces the likelihood of being held back, increases high school graduation, and increases initial enrollment in two-year colleges. Mean grade inflation reduces future test scores, reduces the likelihood of graduating from high school, reduces college enrollment, and ultimately reduces earnings.
Here is the full paper by Jeffrey T. Denning, Rachel Nesbit, Nolan Pope, and Merrill Warnick. Via Kris Gulati.
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2026-01-13 13:25:24
This paper derives “Scaling Laws for Economic Impacts”- empirical relationships between the training compute of Large Language Models (LLMs) and professional productivity. In a preregistered experiment, over 500 consultants, data analysts, and managers completed professional tasks using one of 13 LLMs. We find that each year of model progress reduced task time by 8%, with 56% of gains driven by increased compute and 44% by algorithmic progress. However, productivity gains were significantly larger for non-agentic analytical tasks compared to agentic workflows requiring tool use. These findings suggest continued model scaling could boost U.S. productivity by approximately 20% over the next decade.
That is from Ali Merali of Yale University.
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2026-01-13 04:29:09
By one estimate, almost 80% of Venezuela’s oil revenue is collected in stablecoins like tether, a local economist, Asdrúbal Oliveros, said on a recent podcast.
Here is the full WSJ piece.
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2026-01-13 03:22:57
We study how NAFTA changed the geography of violence in Mexico. We propose that this open border policy increased trafficking profits of Mexican cartels, resulting in violent competition among them. We test this hypothesis by comparing changes in drug-related homicides after NAFTA’s introduction in 1994 across municipalities with and without drug-trafficking routes. Routes are predicted least cost paths connecting municipalities with a recent history of detected drug trafficking with U.S. land ports of entry. On these routes, homicides increase by 2.1 per 100,000 inhabitants, which is equivalent to 26% of the pre-NAFTA mean. These results cannot be explained by changes in worker’s opportunity costs of using violence resulting from the trade shock.
That is from a new JDE paper by Eduardo Hidalgo, Erik Horning, and Pablo Selaya. Via the excellent Kevin Lewis.
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2026-01-13 00:46:40
1. The (strong) case for beans (WSJ).
2. Education is correlated with liberal and pro-market views in most countries.
3. Puffin photos.
4. Do GLP-1 drugs pay for themselves?
6. New Statesman recommends non-fiction for 2026.
7. David Deming on learning with generative AI.
9. Weird LLM generalizations. With a good Terminator example.
10. Hollis Robbins on Pluribus.
The post Monday assorted links appeared first on Marginal REVOLUTION.
2026-01-12 20:07:24
Whether an independent Fed is desirable is beside the point. The core issue is lawfare: the strategic use of legal processes to intimidate, constrain, and punish institutional actors for political ends. Lawfare is the hallmark of a failing state because it erodes not just political independence, but the capacity for independent judgment.
What sort of people will work at the whim of another? The inevitable result is toadies and ideological loyalists heading complex institutions, rather than people chosen for their knowledge and experience.
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