Tag Archives: review

Algorithms and humans

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If I were recommending one book for a general reader about the brave new world of algorithmic decision making and AI in particular, it would be Hannah Fry’s Hello World: How to be Human in the Age of the Machine. The ground it covers will be familiar to AI/ML experts, but for anyone else this is a terrific and – importantly – balanced introduction to the issues. There are other books around that are great on the concerns – Cathy O’Neill’s Weapons of Math Destruction leaps to mind as one aimed at the general reader. But these tend to skate over the other side of the story. There are also somewhat denser reads, such as The Master Algorithm. But Hello World is a really clear, informative introduction.

Sandwiched in between a general intro and conclusion, the bulk of the book is a series of chapters covering different issues (the locus of decision-making power,  and the role of data) and domains (the justice system, medicine, cars, crime and art). There were points in most of the chapters that made me stop and ponder.

If you wanted to criticise the book, you’d probably say it’s great on the problems and questions, light on the solutions, but that would be most unfair. Algorithmic decision making sheds an unforgivingly bright light on the trade-offs and choices our society already makes. They look far more unpalatable when we’re forced to confront them in such a stark way – because the decisions are so fast, because they are not fudged, because machines are not inconsistent in their judgements, and so on. We are all grappling with the challenges. So if you have an uneasy feeling you ought to know more about this, Hello World is a good starting point.

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The future of capitalism?

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The Future of Capitalism, Paul Collier’s new book, is not a small subject. In fact, the first half of the book is largely retrospective, looking at how capitalism got into today’s mess. There is a particular focus on the loss of moral compass in the organising structures of collective life – the family, the firm, the state. This echoes a number of authors identifying growing individualism, fed by the ideology of ‘the market’, as a corrosive force progressively undermining the conditions that enable it – Bell’s phrase ‘the cultural contradictions of capitalism‘ encapsulates it neatly.

Collier – a distinguished economist whose career has centred on developing economies –  expresses this critique with eloquence and conviction. He has a particular focus on the role of economic theory in validating self-serving behaviours such as bosses paying themselves hundreds of times more than their workers, and sketches an alternative approach to economics which embeds social norms and social influences on preferences. He blames the utilitarian and Rawlsian approaches to ethics, and advocates the communitarian alternative. I’m not persuaded by communitarianism, but surely you have to be pretty obtuse – a banker, maybe – to disagree with the diagnosis. Nobody thinks capitalism is doing just great at the moment.

It is of course harder to address the challenges than to diagnose them, and in a short book like this you can’t expect a detailed policy agenda. The book identifies three divides to be tackled: between successful global cities and ‘left behind’ places (although he deoesn’t use this term); between the skilled, well-paid, globe-trotting elite and the rest; between the rich and poor countries. It ends with the observation that capitalism is the only economic order capable of creating mass prosperity, but that it has not worked to do so since the 1945-70 period. This skates over the evident failings of postwar capitalism, which created the conditions for the ideological turn of the 1970s: inflation, shoddy nationalised industries, insider-outside labour markets and so on. Still, the suggestion here is that what’s needed is a combination of a rediscovery of ethics by political leaders (I’m not holding my breath on this front) and the shaping of identity around a shared sense of belonging to a place (rather than the more abstract ‘nation’ or identity-politics groupings).

This left me feeling a bit depressed. I can’t shake the feeling, despite only listening to the news while hiding behind the sofa these days, that it will take some cataclysmic event to reset current political dynamics. Another aspect of the turn to individualism in the 1970s was the existence of an intellectual framework on which to hang the political transformation, and I don’t see as yet a sufficiently broad and consistent alternative to the isolated individual, self-interested, rational choice model. Something for us economists to work on – as indeed Collier and others have started to do.

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A behavioural economics primer

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There are so many books about behavioural economics, including bestsellers like Kahneman’s Thinking Fast and Slow, Thaler’s Misbehaving, Ariely’s Predictably Irrational, and the original Sunstein and Thaler Nudge, you might wonder if we need another. It turns out the answer is yes. Behavioral Economics: Moving Forward by Fabrizio Ghisellini and Beryl Chang is aimed at students rather than a more general audience – it even has a few equations. Its real contribution though is to explain the distinction between the ‘American’ approach, which lists many psychological ‘biases’ and frames them as deviations from the standard rational model, and the ‘German’ approach (ie. Gerd Gigerenzer) which accounts for the well-known ‘behavioural’ behaviours as rational satisficing given a limited attention and brain energy budget.

The first half of the book discusses the shortcomings of the standard rational maximising approach (a bit overdone for my tastes), and explains the behavioural alternative, especially the ‘German’ version, which is presented here in the light of Herbert Simon’s work on satisficing and attention. The second half consists of seven open questions for behavioural research, including how to make sense of the proliferation of apparent ‘biases’, how to deal with time preference, the tensions in ‘libertarian paternalism’ and biased nudgers, and the formation of expectations.

So having started with the same question the authors use to open the book – do we really need another one – I’d agree with them that there is a gap to fill. This is a really useful book for introducing students to behavioural economics and the key research questions in the field, far more so than the pop behavioural literature, excellent as some of it is. Unfortunately, it won’t get widely used given the shocking pricing by the publisher (Palgrave Macmillan) – it must be so frustrating for authors to have a publisher who sets prices only libraries will ever pay (and decreasingly often at that).

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A hymn to expertise

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How often could you say a book about the workings of government departments, even including a Department of Agriculture org chart, is as gripping as a thriller? Michael Lewis is such a teeth-gnashingly good writer that he’s pulled this off with The Fifth Risk. Ostensibly about the chaos the Trump ‘administration’ is bringing to government as it expropriates whatever it can for personal financial benefit, the book is fundamentally a description of and hymn to the vital role of expertise in modern societies.

Expertise, and a strong sense of public service mission. It does so through interviews with a range of experts who have recently left government service – experts on nuclear weapon safety (managed by the Department of Energy), child nutrition (USDA), meteorology (the NOAA in the Commerce Department) and even social science (also in the NOAA, because what was the point of ever more accurate tornado warnings if people didn’t respond to them by evacuating their homes?)

It is, therefore, fundamentally a terrifying book. All these dedicated scientists waited for the new Trump administration to contact them after the election. And waited. And waited some more. Nothing. No interest in governing, in detail, for instance in why a small town storing nuclear waste might poison vast areas of the western United States and the Colorado River if the DoE didn’t spend billions a year on remediating and containing the problem. And of course, the ‘Administration’ gets away with it because so many voters had no interest either. This is where we are.

Anyway, a brilliant book. Do read it.

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The joy of (economic) geography

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I once met the late Doreen Massey, before knowing who she was. It was after the publication of my first book, The Weightless World (intangibles avant la lettre), which she had read and had interesting questions about. It was therefore long before I had anything to do with the academic world. I was a nobody, in other words, and she a highly respected economic geographer. She was open minded enough, and kind enough, nevertheless to have read my book and been willing to talk to me about it.

She died in 2016 and two recent books honour her work. One is the Doreen Massey Reader (editors Brett Christophers, Rebecca Lave, Jamie Peck and Marion Werner) and Doreen Massey: Critical Dialogues (same editors, different priority ordering). I’ve read most of the former and  dipped into the latter. The first thing to note about them is that they reflect the energy in economic geography these days, indeed often far more energy about major economic issues than you find in some economics departments. Massey is one of the people who has made a major contribution to the intellectual strength and curiosity in the discipline.

Now, as I’m not a geographer but an economist, most of the cited literature is unfamiliar, and the language can be a bit of a struggle. So it’s with diffidence that I comment on these books at all. Most interesting to me is the section in the Reader on regional economies, a subject far too much overlooked in mainstream economics, given the regional inequalities in all major western economies including London-centric UK.

For example, in a 1973 essay on industrial location theory Massey pointed out the inadequacy of an economics discipline that was then – certainly pre-Krugman and the revival in economics of economic geography – both (comparative) static and a-spatial. As she noted, it’s hard to understand industrial concentration in space if (a) you ignore location and (b) you’re not interested in dynamic forces. Agglomeration economics – which now dominates this area of research in econ – is, she argues, a narrow lens on the question. If the focus is on the firm’s decision to locate in a place where there are agglomeration externalities, it is all too easy to miss the system effects and the input-output system of the regional or local economy as a whole. The externalities are everything. This too is starting to percolate through business economics at least, in the shape of ‘ecosystems’. Massey got there a generation ago.

There is a lot to interest economists in these books, albeit most will find – as I did – that they are far more overtly political than is the norm in our discipline. No doubt the geographers would argue that economics is covertly political. Anyway, these books contain critiques of capitalism in general, whereas we make our critiques of capitalism specific. It certainly seems odd to criticize economics for being too abstract when critical disciplines such as this are equally so, only in words rather than algebra; there are abstract nouns galore in these two books.  Nevertheless, we economists should be concerned that some of the liveliest work on key economic issues is going on in geography departments. And maybe ‘agglomeration’ isn’t the only approach to issues of economic location?

All the more reason, perhaps, to be as open minded as this important, interdisciplinary scholar was herself.

A PS One of the editors, Brett Christophers, has a new book out soon about the privatisation of public land in Britain, The New Enclosure: The apprpriation of public land in neoliberal Britain. Despite the ‘neoliberal’ in the subtitle, it looks a must-read. His 2013 Banking Across Boundaries was a terrific analysis of the globalisation of finance and lifted the veil on the FISIM issue in the construction of GDP, since cited by me, and recently by Mariana Mazzucato.

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