2025-10-22 14:48:07
Here is the link, it runs about forty minutes, with links to Spotify and Apple versions as well. Lots of economics and tech talk in this one, UK productivity, the School of Salamanca, and a discussion of GOAT and the history of economic thought as well, more too. Here is a Twitter thread on the chat.
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2025-10-22 12:37:31
By
AI agents—autonomous systems that perceive, reason, and act on behalf of human principals—are poised to transform digital markets by dramatically reducing transaction costs. This chapter evaluates the economic implications of this transition, adopting a consumer-oriented view of agents as market participants that can search, negotiate, and transact directly. From the demand side, agent adoption reflects derived demand: users trade off decision quality against effort reduction, with outcomes mediated by agent capability and task context. On the supply side, firms will design, integrate, and monetize agents, with outcomes hinging on whether agents operate within or across platforms. At the market level, agents create efficiency gains from lower search, communication, and contracting costs, but also introduce frictions such as congestion and price obfuscation. By lowering the costs of preference elicitation, contract enforcement, and identity verification, agents expand the feasible set of market designs but also raise novel regulatory challenges. While the net welfare effects remain an empirical question, the rapid onset of AI-mediated transactions presents a unique opportunity for economic research to inform real-world policy and market design.
I call it “AI for markets in everything.” Here is the paper, and here is a relevant Twitter thread, there is now so much new work for economists to do…
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2025-10-22 02:27:03
1. I am pleased to see Emergent Ventures make The Deseret 50 Changing Philanthropy.
2. The true purveyors of AI slop?
3. Peanut allergies have plummeted in children (NYT).
4. Is major reform coming to Opus Dei?
5. French culture is looking to the private sector.
6. How AI is making cover letters less informative.
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2025-10-21 23:51:25
The Faculty of Arts and Sciences slashed the number of Ph.D. student admissions slots for the Science division by more than 75 percent and for the Arts & Humanities division by about 60 percent for the next two years.
The scale of reductions in the Social Science division was not immediately clear, though several departments in the division experienced decreases over the coming two years ranging from 50 percent to 70 percent.
The reductions — detailed by five faculty members and in emails obtained by The Crimson — stipulate smaller Ph.D. admissions quotas across dozens of departments. Departments were allowed to choose how they would allocate their limited slots across the next two years.
Here is the full article, via Chris Brunet.
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2025-10-21 19:21:27
On The Marginal Revolution Podcast this week we continue discussing some of our favorite models with a whole episode on the Baumol effect (with a sideline into the Linder effect). I say our favorite models, but the Baumol Effect is not one of Tyler’s favorite models! I thought this was a funny section:
TABARROK: When you look at all of these multiple sectors, the repair sector, repairing of clothing, repairing of shoes, repairing of cars, repairing of people, it’s not an accident that these are all the same thing. Healthcare is the repairing of people. Repair services, in general, have gone up because it’s a very labor-intensive area of the economy. It’s all the same thing. That’s why I like the Baumol effect, because it explains a very wide set of phenomena.
COWEN: A lot of things are easier to repair than they used to be, just to be clear. You just buy a new one.
TABARROK: That’s my point. You just buy a new one.
COWEN: It’s so cheap to buy a new one.
TABARROK: Exactly. The new one is manufactured. That’s the whole point, is the new one takes a lot less labor. The repair is much more labor intensive than the actual production of the good. When you actually produce the good, it’s on a factory floor, and you’ve got robots, and they’re all going through da-da-da-da-da-da-da. Repair services, it’s unique.
COWEN: I think you’re not being subjectivist enough in terms of how you define the service. The service for me, if my CD player breaks, is getting a stream of music again. That is much easier now and cheaper than it used to be. If you define the service as the repair, well, okay, you’re ruling out a lot of technological progress. You can think of just diversity of sources of music as a very close substitute for this narrow vision of repair. Again, from the consumer’s point of view, productivity on “repair” has been phenomenal.
TABARROK: That is a consequence of the Baumol effect, not a denial of the Baumol effect. Because of the Baumol effect, repair becomes much more expensive over time, so people look for substitutes. Yes, we have substituted into producing new goods. It works both ways. The new goods are becoming cheaper to manufacture. We are less interested in repair. Repair is becoming more expensive. We’re more interested in the new goods. That’s a consequence of the Baumol effect.
You can’t just say, “Oh, look, we solved the repair problem by throwing things out. Now we don’t have to worry about repairs.” Yes, that’s because repair became so much more expensive. A shift in relative prices caused people to innovate. I’m not saying that innovation doesn’t happen. One of the reasons that innovation happens is because the relative price of repair services is going up.
COWEN: That’s a minor effect. It’s not the case that, oh, I started listening to YouTube because it became too expensive to repair my CD player. It might be a very modest effect. Mostly, there’s technological progress. YouTube, Spotify, and other services come along, Amazon one-day delivery, whatever else. For the thing consumers care about, which is never what Baumol wanted to talk about. He always wanted to fixate on the physical properties of the goods, like the anti-Austrian he was.
It’s just like, oh, there’s been a lot of progress. It takes the form of networks with very complex capital and labor interactions. It’s very hard to even tease out what is truly capital intensive, truly labor intensive. You see this with the AI companies, all very mixed together. That just is another way of looking at why the predictions are so hard. You can only get the prediction simple by focusing very simply on these nonsubjectivist, noneconomic, physical notions of what the good has to be.
TABARROK: I think there’s too much mood affiliation there, Tyler.
COWEN: There’s not enough Kelvin Lancaster in Baumol.
Here’s the episode. Subscribe now to take a small step toward a much better world: Apple Podcasts | Spotify | YouTube.
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2025-10-21 15:06:47
Among these changes, the most underrated is not misinformation or kooky conspiracy theories or even populism per se — it’s relentless negativity. One thing that we’ve learned from revealed preferences on the internet is that negativity-inflected stories perform better…
The impact of ultra-negativity is symmetrical in the sense that both sides do it, but it’s asymmetrical in the sense that conservatives outnumber progressives. In practice, oscillating extremism results in a right-wing authoritarian regime, not a left-wing one.
That is from the gated Matt Yglesias. The important thing is to keep a positive, constructive attitude toward what is possible. Content creators who do not do that, no matter what their professed views, are supporting the darker sides of MAGA.
So keep up the good work people!
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