Electricity, the New Deal, and America’s urban-rural divide

But the New Deal’s electrical reformers aimed for something even bigger than an economic stimulus to relieve farmers and put workers back in business. They hoped to use this program to heal a cultural rift between urban and rural America that had been widening for decades, as city populations boomed, rural villages dwindled, and many farmers felt increasingly alienated from the economic and social mainstream. By the 1920s, the center of cultural authority had shifted in America; public opinion was now dominated by cosmopolitans who lampooned country “hayseeds” and dismissed parochial thinking as “small town stuff.” Once proud to think of themselves as belonging to a nation of farmers, many Americans now faced an identity crisis.

Page 301 of Age of Edison which I have now finished. My previous posts on it are here, here, and here.

Who gets credit for America’s adoption of electricity?

Another post from Age of Edison:

Defending these new regulations [on electric light], the progressive reformers pointed to Europe’s example. Governments there had played a more active role in controlling the development of the electric industry. National laws encouraged municipal ownership of utilities and set standards for all electrical work, drawn up by leading scientists and engineers. And Europeans had done a better job of preventing the new technology from scarring their fine buildings and urban boulevards, placing most wires in the urban core underground early on…

But American electric companies drew a very different lesson from Europe’s example. As they claimed time and again, the United States enjoyed far more electric light than any other place in the world, a bounty that electricians traced not only to their own inventiveness and entrepreneurial spirit but also to the lack of government interference.

Both arguments sound familiar.

So who really deserves the credit for America’s rapid embrace of the electric light?

By the turn of the twentieth century, electricity was coming of age, no longer a curiosity but a mass commodity, delivered by a sophisticated and heavily capitalized industry that saw nothing but exponential growth ahead. Some old-timers who gathered at the National Electric Light Association conventions looked back nostalgically on the early years when any man with a bit of enterprise, practical skill, and a fascination with electricity could go into the light business for himself. But most acknowledged that the changes had been necessary, the only way for industry to grow, providing more, safer, and less expensive light while paying healthy dividends for its inventors.

Though the rash of fires and electrocutions had threatened the industry’s growth in the late 1880s, it emerged from these challenges stronger than ever. The owners and operators of the utility companies deserved a share of the credit for turning electric light from an invention into a paying business, but the expanding electrical grid was also created by other institutions and conflicting forces, an attempt by many Americans to mediate the interests of rival inventors and manufacturers, the salesmen of light and their customers, the competing values of free enterprise and progressives’ all to use government to protect the public from the twin dangers of market chaos and corporate monopoly.

The more mature and stable electrical system that emerged by the early twentieth century had been produced by other forces as well–the scientists and journalists who helped to develop and spread a common language of electricity; research institutions and technical schools that turned a growing number of enthusiastic students into licensed electricians and engineers; legislatures that created regulatory bodies and electrical codes; the experts who protected the public interest through their work as inspectors, utilities commissioners, and civic-minded economists; unions that tried to protect their members from unsafe work practices; and the insurance companies that guarded the public’s interest and their own bottom line by imposing safety standards on electrical products and work. All played their part in turning Edison’s famed invention into the far more complex and powerful creation, the modern electrical grid.

Pages 210-212. My previous posts on the book are here and here.

America the inventive

More from Age of Edison, on why the U.S. surpassed Europe in invention:

Europeans often conceded that Americans displayed a remarkable aptitude for invention, particularly in the field of labor-saving devices. The country had not produced many philosophers, as one Englishman put it, “but her practical men may be numbered by the hundreds. If a Yankee has an idea, he likes to put it into practice. He is not content to read a paper, and let someone else work out his theories.” Pioneers in industrial innovation, the British still made better products, and sold the world many more of them. But they conceded, with evident concern, that “it is from America that all the new inventions come to us.”

…As one educator put it, “very great inventiveneness” had become a defining national trait…

Many explained America’s inventiveness as a by-product of its expanding market and its chronic labor shortage…

Others attributed American inventiveness to the nation’s more democratic educational system…

Americans were fast passing the Old World in technological creativity, many argued, because the U.S. economy offered these rewards not just to a small educated elite and those who inherited titles of nobility, but to all those entrepreneurs who served their fellows through the marketplace… In a variation on the American dream, some people joked that every true American man would feel ashamed to go to his grave without at least one patent to his name.

(Pages 144-154.) Here’s my previous post on the book.

Algorithms and the future of divorce

In Chapter 21 of Thinking, Fast and Slow Dan Kahneman discusses the frequent superiority of algorithms over intuition. He documents a wide range of studies showing that algorithms tend to beat expert intuition in areas such as medicine, business, career satisfaction and more. In general, the value of algorithms tends to be in “low-validity environments” which are characterized by “a significant degree of uncertainty and unpredictability.”*

Further, says Kahneman, the algorithms in question need not be complex:

…it is possible to develop useful algorithms without any prior statistical research. Smple equally weighted formulas based on existing statistics or on common sense are often very good predctors of significant outcomes. In a memorable example, Daws showed that marital stability is well predicted by a formula:

frequency of lovemaking minus frequency of quarrels

You con’t want your result to be a negative number.

Kahneman concludes the chapter with an example of how this might be used practically: hiring someone at work.

A vast amount of research offers a promise: you are much more likely to find the best candidate if you use this procedure than if you do what people normally do in such situations, which is to go into the interview unprepared and to make choices by an overall intuitive judgment such as “I looked into his eyes and liked what I saw.”

All of this makes me think of online dating. This is an area where we are transitioning from almost entirely intuition to a mixture of algorithms and intuition. Though algorithms aren’t making any final decisions, they are increasingly playing a major role in shaping peoples’ dating activity. If Kahneman is right, and if finding a significant other is a “low-validity environment”, will our increased use of algorithms lead to more optimal outcomes? What truly excites me about this is that we should be able to measure it. Of course, doing so will require very careful attention to the various confounding variables, but I can’t help but wonder: will couples that meet online have a lower divorce rate in 20 years than couples that didn’t? Will individuals who spent significant time dating online be less likely to have been divorced than those that never tried it?

*One might reasonably object that this definition stacks the deck against intuition, and I think this aspect of the debate deserved a mention in the chapter. The focus on “low-validity environments” is the focus on areas where intuition is lousy. So how shocking is it that these are cases where other methods do better? And yet, the conclusions here are extremely valuable. Even though we know that these “low-validity” scenarios are tough to predict, we still generally tend to overrate our ability to predict via intuition and underrate the value of simple algorithms. So in the end this caveat – while worth making – doesn’t really take away from Kahneman’s point.

Framing your friendships

Two things are indisputably true of Tyler Cowen: he has an interesting mind, and he has an economist’s mind.

This struck me as I was reading Chapter 4 of Create Your Own Economy, titled ‘IM, Cell Phones, and Facebook’.  It’s a quirky (and occasionally funny) chapter about how our choice of communication platform impacts our communications.

On one level it’s the “medium is the message” thesis.  But, since he’s a behavioral economist, Cowen frames his argument as competition between competing frames of reference.

We choose to send or receive messages in particular ways, in part, to determine which kinds of framing effects will influence our thoughts and emotions.  The greater the number of media we have to choose from, the more likely this process will suit our tastes.

Though economists often discuss framing effects in the context of bias or irrationality, Cowen focuses on the potential benefits of competition between mediums.  “Facebook,” he writes, “has made me friendlier… It is a framing effect that I have chosen to keep, and to my advantage.”

Framing effects may not be the simplest lense through which to view his basic point: greater choice in our communications is a good thing.  But it’s an interesting lense.  And an economist’s lense.

Tyler Cowen on cultural literacy

I’m reading Tyler Cowen’s book Create Your Own Economy and I’ll be posting thoughts and snippets as I go.  Here’s Cowen on the new cultural literacy:

What cultural literacy means today is not whether you can “read” all the symbols in a Rubens painting but whether you can operate an iPhone and other web-related technologies.  The iPhone, if used properly, can get you to website on Rubens as well.  The question is not whether you know the classics but whether you are capable of assembling your own blend of cultural bits.  When viewed in this light, today’s young people are very culturally literate and in fact they are very often the cultural leaders and creators. (pg. 59)

I’m only a few chapters in, but I’m greatly enjoying the book.  And, of course, I can’t recommend Cowen’s blog, Marginal Revolution, highly enough.