Category Archives: Economics

2017 Predictions

It’s fun to have opinions, and it’s easy to craft a narrative to fit your beliefs. But it’s especially dangerous to look back at events and place them retroactively into your model of the world. You can’t learn anything if you’re only ever looking for evidence that supports you.  However, if you try to use your model of the world to create testable predictions, those predictions can be proven right or wrong, and you can actually learn something. Incorrect predictions can help update our models.

This is, of course, the basis for the scientific method, and generally increasing our understanding of the world. Making predictions is also important for making us more humble; we don’t know everything and so putting our beliefs to the test requires us to reduce our certainty until we’ve researched a subject before making baseless claims.  Confidence levels are an important part of predictions, as they force us to think in the context of value and betting: a 90% confidence level means I would take a $100 bet that required me to put up anything less that $90. Moreover, it’s not just a good idea to make predictions to help increase your knowledge; people who have opinions but refuse to predict things with accompanying confidence levels, and therefore refuse to subject their theories to scrutiny and testability, must be classified as more fraudulent and intellectually dishonest.

First let’s take a look at how I did this past year, and see if my calibration levels were correct. Incorrect predictions are crossed out.

World Events

  1. Liberland will be recognized by <5 UN members: 99% (recognized by 0)
  2. Free State Project to reach goal of 20,000 people in 2016: 50% (occurred February 3rd)
  3. ISIS to still exist: 80%
  4. ISIS to kill < 100 Americans 2016: 80% (I think <100 were killed by any terrorists, fewer in combat)
  5. US will not get involved in any new major war with death toll of > 100 US soldiers: 80%
  6. No terrorist attack in the USA will kill > 100 people: 80% (50 did die in the Orlando shooting unfortunately)
  7. Donald Trump will not be Republican Nominee: 80% (whoops)
  8. Hillary Clinton to be Democratic nominee: 90%
  9. Republicans to hold Senate: 60%
  10. Republicans to hold House: 80%
  11. Republicans to win Presidential Election: 50% (I predicted in December, Nate Silver had Trump at 35% the day of, who’s a genius now??)
  12. I will vote for the Libertarian Presidential Candidate: 70% *
  13. S&P 500 level end of year < 2500: 70%
  14. Unemployment rate December 2016 < 6% : 70%
  15. WTI Crude Oil price < $50 : 80%
  16. Price of Bitcoin > $500:  60%
  17. Price of Bitcoin < $1000: 80%
  18. Sentient General AI will not be created this year: 99%
  19. Self-driving cars will not be available this year to purchase / legally operate for < $100k: 99%
  20. I will not be able to rent trips on self-driving cars from Uber/ Lyft: 90% **
  21. Humans will not land on moon by end of 2016: 95%
  22. Edward Snowden will not be pardoned by end of Obama Administration: 80% *

Personal

  1. Employed in current job:  90%
  2. I will have less than 300 Twitter followers: 60%
  3. I will have authored > 12 more blog posts by June 30, 2016:  50% *
  4. michaelelgart.com to have >4,000 page loads 2016: 50%
  5. These predictions are underconfident: 70%

Sports

  1. Miami Heat make playoffs 2016:  80%
  2. Miami Heat will not make Eastern Conference Finals:  90%
  3. Duke basketball wins 1 game or more against UNC: 60%
  4. Duke basketball makes it to Round of 32 in NCAA Tournament: 70%
  5. Duke basketball does not make Final Four: 90%
  6. USA wins Olympic gold medal in basketball: 70%
  7. Kevin Durant will not be highest paid NBA player during 2016-17 season: 70%

*I didn’t personally vote for the libertarian candidate, but I did trade my vote, resulting in Gary Johnson getting two votes more than he would have had I not voted at all. I’m counting this as at least a vote for Johnson.

**Technically, I am not particularly able to get a ride on a self-driving Uber because I don’t live in Pittsburgh, but I don’t think that’s what I meant. I also didn’t expect any self-driving Uber rides to be available anywhere, so I’m counting it against me.

*Obama still has a few weeks to pardon Snowden, but it’s not looking good

**Most of the blog posts were not on this blog.

So let’s take a look at how I did by category:

  • Of items I marked as 50% confident, 2 were right and 1 was wrong.
  • Of items I marked as 60% confident, 4 were right and 0 were wrong.
  • Of items I marked as 70% confident, 7 were right and 0 were wrong.
  • Of items I marked as 80% confident, 8 were right and 2 were wrong.
  • Of items I marked as 90% confident, 4 were right and 1 was wrong.
  • Of items I marked as 95% confident, 1 was right and 0 were wrong.
  • Of items I marked as 99% confident, 3 were right and 0 were wrong.

 

2016-predictions-personal

You’re supposed to be as close to the perfect calibration line as possible. The big problems are the 60% and 70% predictions all coming true. The chance of all 60% predictions coming true assuming they actually had a 60% chance of happening is 13%. The chance of all 70% predictions coming true was 8%. These seem unlikely, so I need to work on finding more uncertain things to predict or upping my confidence in some of my predictions.

Predictions for 2017:

World Events

  1. Trump Approval Rating end of June <50% (Reuters or Gallup): 60%
  2. Trump Approval Rating end of year <50% (Reuters or Gallup): 80%
  3. Trump Approval Rating end of year <45% (Reuters or Gallup): 60%
  4. Trump 2017 Average Approval Rating (Gallup) <50%: 70%
  5. ISIS to still exist as a fighting force in Palmyra, Mosul, or Al-Raqqah: 60%
  6. ISIS to kill < 100 Americans: 80%
  7. US will not get involved in any new major war with death toll of > 100 US soldiers: 60%
  8. No terrorist attack in the USA will kill > 100 people: 90%
  9. France will not vote to leave to the EU: 80%
  10. The UK will trigger Article 50 this year: 70%
  11. The UK will not fully leave the EU this year: 99%
  12. No country will leave the Euro (adopt another currency as their national currency): 80%
  13. S&P 500 2016 >10% growth: 60%
  14. S&P 500 will be between 2000 and 2850: 80% (80% confidence interval)
  15. Unemployment rate December 2017 < 6% : 70%
  16. WTI Crude Oil price > $60 : 70%
  17. Price of Bitcoin > $750: 60%
  18. Price of Bitcoin < $1000: 50%
  19. Price of Bitcoin < $2000: 80%
  20. There will not be another cryptocurrency with market cap above $1B: 80%
  21. There will not be another cryptocurrency with market cap above $500M: 50%
  22. Sentient General AI will not be created this year: 99%
  23. Self-driving cars will not be available this year for general purchase: 90%
  24. Self-driving cars will not be available this year to purchase / legally operate for < $100k: 99%
  25. I will not be able to buy trips on self-driving cars from Uber/Lyft in a location I am living: 80%
  26. I will not be able to buy a trip on a self-driving car from Uber/Lyft without a backup employee in the car anywhere in the US: 90%
  27. Humans will not land on moon by end of 2017: 95%
  28. SpaceX will bring humans to low earth orbit: 50%
  29. SpaceX successfully launches a reused rocket: 60%
  30. No SpaceX rockets explode without launching their payload to orbit: 60%
  31. Actual wall on Mexican border not built: 99%
  32. Some increased spending on immigration through expanding CBP, ICE, or the border fence: 80%
  33. Corporate Tax Rate will be cut to 20% or below: 50%
  34. Obamacare (at least mandate, community pricing, pre-existing conditions) not reversed: 80%
  35. Budget deficit will increase: 90%
  36. Increase in spending or action on Drug War (e.g. raiding marijuana dispensaries, increased spending on DEA, etc): 70%
  37. Some tariffs raised: 90%
  38. The US will not significantly change its relationship to NAFTA: 60%
  39. Federal government institutes some interference with state level legal marijuana: 60%
  40. At least one instance where the executive branch violates a citable civil liberties court case: 70%
  41. Trump administration does not file a lawsuit against any news organization for defamation: 60%
  42. Trump not impeached (also no Trump resignation): 95%

Sports

  1. Miami Heat do not make playoffs:  95%
  2. Miami Heat get top 6 draft pick: 60%
  3. Duke basketball wins 1 game or more against UNC: 80%
  4. Duke basketball makes it to Round of 32 in NCAA Tournament: 90%
  5. Duke basketball makes Final Four: 50%
  6. Duke basketball does not win NCAA tournament: 80%
  7. Warriors or Cavs will win the NBA title: 60%
  8. Lebron James will not be highest paid NBA player during 2017-18 season: 70%

Personal

  1. Employed in current job:  90%
  2. I will have less than 300 Twitter followers: 60%
  3. I will change my registered party from Republican to Libertarian: 70%
  4. I will have authored > 14 more blog posts (not just on this blog) by June 30, 2017: 90%
  5. I will have authored > 30 more blog posts (not just on this blog) by December 31, 2017: 80%
  6. michaelelgart.com to have >3,000 page loads 2017: 70%
  7. These predictions are under-confident: 70%

2016 Predictions

How confident should we be? People tend to be overconfident.  One way to figure out if our confidence levels are correct is to test our calibration levels by making predictions and seeing how many of them pan out. Inspired by Slate Star Codex’s predictions, here are my predictions and accompanying confidence levels. For the sake of convenience I will choose from confidence levels of 50%, 60%, 70%, 80%, 90%, 95% or 99%. All predictions are by December 31, 2016 unless noted otherwise.

World Events

  1. Liberland will be recognized by <5 UN members: 99%
  2. Free State Project to reach goal of 20,000 people in 2016: 50%
  3. ISIS to still exist: 80%
  4. ISIS to kill < 100 Americans 2016: 80%
  5. US will not get involved in any new major war with death toll of > 100 US soldiers: 80%
  6. No terrorist attack in the USA will kill > 100 people: 80%
  7. Donald Trump will not be Republican Nominee: 80%
  8. Hillary Clinton to be Democratic nominee: 90%
  9. Republicans to hold Senate: 60%
  10. Republicans to hold House: 80%
  11. Republicans to win Presidential Election: 50%
  12. I will vote for the Libertarian Presidential Candidate: 70%
  13. S&P 500 level end of year < 2500: 70%
  14. Unemployment rate December 2016 < 6% : 70%
  15. WTI Crude Oil price < $50 : 80%
  16. Price of Bitcoin > $500:  60%
  17. Price of Bitcoin < $1000: 80%
  18. Sentient General AI will not be created this year: 99%
  19. Self-driving cars will not be available this year to purchase / legally operate for < $100k: 99%
  20. I will not be able to rent trips on self-driving cars from Uber/ Lyft: 90%
  21. Humans will not land on moon by end of 2016: 95%
  22. Edward Snowden will not be pardoned by end of Obama Administration: 80%

Personal

  1. Employed in current job:  90%
  2. I will have less than 300 Twitter followers: 60%
  3. I will have authored > 12 more blog posts by June 30, 2016:  50%
  4. michaelelgart.com to have >4,000 page loads 2016: 50%
  5. These predictions are underconfident: 70%

Sports

  1. Miami Heat make playoffs 2016:  80%
  2. Miami Heat will not make Eastern Conference Finals:  90%
  3. Duke basketball wins 1 game or more against UNC: 60%
  4. Duke basketball makes it to Round of 32 in NCAA Tournament: 70%
  5. Duke basketball does not make Final Four: 90%
  6. USA wins Olympic gold medal in basketball: 70%
  7. Kevin Durant will not be highest paid NBA player during 2016-17 season: 70%

Latin American Economies and Free Markets

Macroeconomics is a tricky beast. It’s easy to take data out of context to fit your narrative, but it’s always important to look at the data and consider what it means, whether it supports you point or not.

This first section is in response to a post on the internet about Chile and Pinochet. Continue reading

White Oak, Maryland
Seeding LEED, Public Domain image

David Friedman, Generic Drugs, Papal travels, and other links

I’ve got a couple interesting things in development, but in the meantime here are some links I’ve come across recently with some short analysis tacked on.

I don’t consider myself an anarcho-capitalist, although I agree with some of the arguments ancaps make.  I don’t find them too crazy if, for example, you accept the premise that even a well constrained government slowly escapes its constitutional shackles (debatable).  The result of this premise that the only option that would keep a government from expanding and infringing on freedom is to never have one at all. But I find it mostly uninteresting since I’m into politics and the political reality is that we have a government, we’ve had one for a long time, and we’re going to have one for quite some time into the future. Moreover, because I’m a consequentialist and most ancaps are deontological, some of the outrage at the government’s existence is also dulled. But despite all of that, this video by consequentialist anarcho-capitalist David Friedman summarizing his argument in The Machinery of Freedom (reviewed by Slate Star Codex here and more here) is excellent and well worth the 20 minute watch. Continue reading

Public Domain Image - White House Photograph Courtesy Gerald R. Ford Library.

The Limitations of the Left-Right Spectrum

I.

I came across an article whose thesis is that people with my worldview are gravely mistaken about everything they believe.

How many liberals and progressives have heard this? It’s ridiculously common. Hell, even David Koch of the Koch brothers has said, “I’m a conservative on economic matters and I’m a social liberal.”

And it’s wrong. W-R-O-N-G Wrong.

You can’t separate fiscal issues from social issues. They’re deeply intertwined. They affect each other. Economic issues often are social issues. And conservative fiscal policies do enormous social harm.

Despite the age of the article (it was published in May), I’m interested in this for a couple reasons. One is that if we take “economically conservative” to be in favor of free markets (not always clear), then “economically conservative and socially liberal” is a good working definition for moderate libertarianism or classical liberalism. Believing libertarianism is just “wrong” is something that needs to be addressed given the large amount of people who identify as such, including myself. I was hoping for a strong critique of libertarianism, but it seems that the author mischaracterizes some libertarian positions. What’s more, if the author’s argument is correct, there are no real political positions outside the Left-Right political spectrum and perhaps none outside the Left at all! This would severely limit political discourse and our creativity in forming policy solutions to society’s challenges. Continue reading

The Idealized Presidential Platform

If you were running for president, what would you run on?

These days there are more presidential candidates than ever, and those candidates like to come up with idealized policy proposals that have no chance of passing to post on their websites and shore up their ideological credentials. I’ve decided to join the ruckus with my own mix of libertarian proposals from fairly obvious to extremely radical. I’m going to be treating these pieces as a first draft of my hypothetical presidential platform with room for growth and change, and I won’t be delving too deeply into any single topic.

The Republican National Convention, held in Philadelphia, June, 1900 – Public Domain Image

Continue reading

New Horizons, Prediction Markets, and other Links

This morning, the New Horizons probe had its closest approach to Pluto.  It’s pretty cool that human ingenuity has gotten to the point where it’s possible to launch a rocket, and then 10 years later get it within a couple thousand miles of a (dwarf) planet orbiting ~6 billion kilometers away from us. But keeping with this blog’s theme, this doesn’t seem very libertarian! Isn’t this a big waste of money and resources for the government to be sending probes to Pluto?  Well, yes, obviously.

 - Public Domain Photo from NASA

This picture of Pluto cost $650M

Continue reading

Inequality and Consequentialism

This post is a response to two related posts on Bleeding Heart Libertarians, one by Duke Professor Jonathan Anomaly and one by Richmond Professor Jessica Flanigan.

Professor Anomaly’s post asks the question: “Is global wealth Inequality unjust?”. He cites Dan Moller in an article about economic growth divergence which is pretty convincing.  Moller points out that most of the disparities in wealth can be attributed to exponential economic growth that certain nations seemed to stumble upon. The causes for these are not known, but they seem to be long-term over the course of hundreds of years. Likely candidates include scientific advancement and technology, political and economic institutions, bourgeois social norms, etc.  Since growth was similar across countries that participated in colonialism and ones that did not, over the course of hundreds of years and many different policies, it seems clear that colonial exploitation, while awful and unjust, isn’t a good explanation for differences in wealth.  The resources exploited were trivial in terms of how vastly the differences in economic development are. I would highly recommend reading the whole article. Continue reading

The Burden is on Free Trade Opponents

In response to the Senate’s difficulties in passing Trade Promotion Authority for the Trans Pacific Partnership, I’ve noticed a fair amount of opposition to TPA, often implying opposition to free trade generally (this reddit thread is demonstrative). First, in regards to TPA, as long as you feel that a trade agreement can have pros and cons just like any other international agreement, there really isn’t much reason to oppose it. Most international negotiations are unlikely to happen without Congress delegating negotiating authority to the executive branch. I think the Strategic Arms Limitation Talks, for example, were negotiated somewhat in secret.  And then legislation was later placed in front of Congress to implement.  I couldn’t find much more info on it so I may be wrong, but trade treaties aren’t substantially different from other international agreements.

Public Domain image thanks to Captain Albert E. Theberge, NOAA Corps (ret.)

Next on America’s trade policy and free trade generally, it’s difficult for me to accept criticisms of free trade, when so many experts seem to be pretty sure it is beneficial. Honestly, I’ve never seen so many economists from all the top institutions all agree on something. Moreover, this isn’t exactly a new position, and it’s not like alternatives haven’t been tried. Brookings, which is by no means some right-wing think tank, is pretty set on free trade (NAFTA included). It’s also probably worth noting, that higher educated voters tend to favor free trade more. Lots of bad policies may be popular, but hopefully higher information voters will actually like better policies.

There’s also some belief that free trade hurts poor Americans. Even if that were true (which seems unlikely given expert opinion and increased growth), doesn’t that imply that poor people in other countries are benefiting? Is fighting global income inequality a particularly bad outcome? Allowing for freer investment in developing countries seems like a categorically “good” thing.

That’s not to say I’ve never heard of opposition to free trade from respectable sources…but most of them tend to be single economists from the 1980s. There’s also this recent article in the New York Times…except it was an op-ed written by a fellow from a partisan progressive think tank.  It’s just hard to find opposition to trade from academic sources, not tied to industry. Now, it’s possible I’ve just been brainwashed to believe the same things that lots of smart people believe and I can’t think for myself, but at this point I think I’d be crazy to largely oppose American free trade policy, there’s just too much expert opinion on the other side.

Updated Links

I’ve updated the links to add a new section for reference websites that aren’t updated in the same way blogs are.  All of the new sites listed under “Reference” I would highly recommend, but for different reasons.

Basketball-reference.com is the best way to get basketball stats hands-down. If you are at all into sports data, this site has data on games, teams, players, and coaches for college and professional levels going back decades. It even has more advanced stats, pace-adjusted, whatever you could want for free.

Learn Liberty, Libertarianism.org, and the Library of Economics and Liberty are awesome libertarian/economic websites. Libertarianism.org (run by the Cato Institute) is the best site for introductory essays discussing libertarianism and classical liberalism, and Learn Liberty (run by IHS) is similar but with an emphasis on videos.  The Library of Economics and Liberty has tons of publications from classical liberal thinkers going back centuries.

Steve Gibson’s Sci-Fi Book Guide is a list of science fiction novels compiled by computer security expert Steve Gibson (whose Podcast is in my blog list).  It’s different from your normal sci-fi book list and I’ve enjoyed his recommendations so far. I plan on having a more in depth blog on sci-fi novels soon.

Things Every CS Major Should Know is a way too long of a list of things that I don’t know, but an excellent guide for self education for anyone interested in computers and coding.  Professor Might’s blog is awesome but is often more technical than I need, so I don’t have it in my blog list.

I’d also like to highlight one relatively new addition to my blog links: Slate Star Codex. Scott Alexander, the author of this blog, is the most impressive writer I’ve seen in a blogger.  He writes volumes, and has an emphasis on rationality and rhetoric.  He’s also libertarian leaning, but I would describe his position as rational, libertarian-leaning political skeptic. I would highly recommend his blog.