Tuesday, January 29, 2008
EU beer drinking profiles
Monday, January 28, 2008
Deja Vu & eTBlast
Watch for Magnus...
Econlinks for 28-01-'08
- John DiNardo's 3(!) reviews of Freakonomics (1, 2, 3). I agree with most of the points DiNardo makes, though I must say that I never thought Freakonomics was meant as a 'popularization' book, to start with. I also think Tyler Cowen is right in saying that 3 reviews of the same work, by the same author, look somewhat... odd (though I do not agree with Cowen that DiNardo's reviews are "unfair": if this is unfair, what to think of Rubinstein's or Rust's criticisms to Freakonomics :-))?
- On Sovereign Wealth Funds: Summers not shy at all at Davos; Gary Becker and Richard Posner also had some previous critical posts on SWFs.
- Bandiera, Barankay and Rasul received the IZA Young Labor Economist Award for 2007 for their very nice paper "Social Preferences and the Response to Incentives: Evidence from Personnel Data"
- Now, this is one way to raise public awareness concerning tax competition! And hey, Romania is one of the good fellows here (OECD is THE villain :-)). Read also Posner and respectively Becker on international tax burdens. And let's not forget Landsburg's interesting analysis on the desirability of a sales tax replacing the income tax. HT to Greg Mankiw for some of the links in this paragraph.
Thursday, January 24, 2008
Econlinks for 24-01-'08
- The American's 2008 Young Economist Award went to Raj Chetty. Chapeau bas, this guy totally deserves it (see for instance a recent ReStud paper of his that impressed me)! And no surprise there; in fact, should he keep his publishing pace, I think Chetty has considerable chances of becoming the youngest winner of the John Bates Clark award (see who was the '07 winner of that prestigious prize).
- Interesting thoughts on how to deal with plagiarism in the academe. Nevertheless, I think the power of the market is downplayed too much in this argument; the market has in fact been remarkably good at solving such issues. I don't think that we deal with serious market inefficiencies in this context and hence, that external interventions are necessary.
- Here's Martin Feldstein with a short but informative piece on how to reform the FBI in the light of the terrorism threat (UK's MI5 is taken as benchmark).
- Financial incentives do affect fertility. At least in the case of Israel.
- If Gary Becker were campaigning for the US President job, here's how he'd reform the US health care sector. Read also Posner's discussion.
Wednesday, January 23, 2008
Quiz: White to move and mate in 2 moves
Paul Anka and Frank Sinatra can get you in a book nowadays. Plus the song of the day
I traveled each and every highway...
Here: I am even doing publicity for their tour :-). If you don't know what this is all about, check this previous post of mine. I was never asked whether I actually wanted to be part of this "Not Quite What I Was Planning: Smith's Mag's Book of Six-Words Memoirs", but at the very end of the day, why not, it's fun, the whole creative act took less than 10 min. "I did it my way", in other words :-).
Monday, January 21, 2008
Hedonic marriage
So what drives modern marriage? We believe that the answer lies in a shift from the family as a forum for shared production, to shared consumption. In case the language of economic lacks romance, let’s be clearer: modern marriage is about love and companionship. Most things in life are simply better shared with another person: this ranges from the simple pleasures such as enjoying a movie or a hobby together, to shared social ties such as attending the same church, and finally, to the joint project of bringing up children. Returning to the language of economics, the key today is consumption complementarities-activities that are not only enjoyable, but are more enjoyable when shared with a spouse. We call this new model of sharing our lives “hedonic marriage”.
Sunday, January 20, 2008
Is there or is there not?
It occurred to me that maybe there was no Romanian translation of the sentence “Do you know who I am?” — which would have been the first thing out of an American director’s mouth in a similar situation. Or perhaps this was a double-edged metaphor: maybe in Bucharest, nowadays, a filmmaker with a prize from Cannes is nothing special.
These are the last lines of a very interesting article by movie critic Anthony Scott on the new wave in Romanian cinema (and if you didn't know: Scott considers Mungiu's movie "4 months, 3 weeks and 2 days" --wiki, IMDB, RottenTomatoes-- the best movie of 2007)
HT to Dan, who also has many other interesting comments.
Read also a previous entry of mine on Romania and the world of film.
Econlinks for 20-01-'08
- I made a mistake last time when I mentioned Gelman and Cai's recent research on whether the US political parties would gain from shifting their position on the economic axis, focusing on the Kerry vs. Bush former election. In the paper they did have more electoral dimensions (they analysed the case with one, two and three dimensions), which makes it very very interesting, so my comment concerning analysis done on solely the economic dimension was not very sound :-). But see below the most interesting parts, from my point of view, of that study. Self-explanatory. I think they both confirm and complement one of the 5 myths of ballot-box behavior in Bryan Caplan's recent short article, which I mentioned here.
"Democrat's views of Bush's position on social issues is negatively predicted by self-perceptions on economic issues, with self-perception on social issues not coming into the equation at all. In contrast, Democrats' views of Kerry's positions on social issues are entirely predicted by self-perceptions on social issues. Now we look at the coefficients for Republican respondents: to predict their views of Bush's position on social issues, only their self-perception on social issues is relevant, but when predicting Kerry's position on social issues, only their self-perception on economics is relevant. To summarize: voters appear to characterize their own party's nominee's positions in a way consistent with their self-perception on each issue dimension. But their views of the other party's nominee, in both dimensions, is predicted (with a negative coefficient) solely based on self-perception of economics"
and
"We also see that the coefficients for idelogical distance are greater for Democrats than for Republicans, which is consistent with the idea that Democrats are more diverse in their political preferences (so that conservative Democrats are more likely to vote for Bush than liberal Republicans were to vote for Kerry)."
- Read Brian Snowdon's excellent interview with Oded Galor, the artisan of the unified theory of economic growth. This (very informative!) article takes you very briefly through Galor's research in this context; for the details you should start reading his many papers in the area (taking into account that Oded Galor comes up with two-three new papers before you finish reading one of his older ones :-)).
- the complete index of the 'markets-in-everything' section on Marginal Revolution, so far. Now you know where from to get your exotic entrepreneurship ideas.
- Romania apparently has the same total GDP as Delaware. Now, if you recall that Delaware has less than 1 million inhabitans, while Romania counts over 22 million, you have an idea where we stand in terms of the more appropriate GDP-per-capita comparison :-).
- Harford, Rodrik and Cowen discuss further--- here's the whole summary of that by Tyler Cowen on MR-- on what do we owe the losers from free trade, with the initial article by Landsburg (which I mentioned as last bullet point here). I think Cowen concludes this nicely with "Tax the pollution, not the trade".
Saturday, January 19, 2008
Quote for week 13th to 19th of Jan '08
[...]The gift of early insight into chess or math or music is often also accompanied by a growing obsession with those activities, simply because of the wonders of connection and invention that unfold in the young mind. The world itself, with its more messy human interactions, its complicated histories, its emotional conflicts, can be put aside, and attention focused on an intricate bounded cosmos. Perhaps we should be grateful that such gifts are so rare, for if they were not, how many of us would prefer to remain cocooned in these glass-bead games? At least in mathematics and music, we may be grateful too that ultimately, with the coming of maturity, the world starts to put constraints on abstract play. Great music attains its power not simply through manipulation and abstraction, but by creating analogies with experience; music is affected by life, not cut off from it. Mathematics also comes up against the demands of the world, as the field opens up to understanding; early insights are tested against the full scale of what has been already been done and what yet remains undone. But chess, alone among this abstract triumvirate, is never tested or transformed. The only way expertise is ever tried is in victory or defeat. And if a player is as profoundly powerful as Mr. Fischer, defeat never creates a sense of limits. Seeing into a game and defeating an opponent — that defines the entire world.
CEO of the Princeton Economics Department
Friday, January 18, 2008
Wednesday, January 16, 2008
Econlinks for 16-01-'08
- Alessina, Ichino and Karabarbounis arguing for gender based taxation, on VoxEU. This recent CEPR working paper has the details. Their modelling is very basic (one obvious extension to make this more realistic-- probably requiring a lot of effort-- should be to allow for frictions in the search & matching of agents on the marriage market), but still makes for super interesting research with (potential) serious policy implications. I guess female readers of this blog can only agree with their idea? :-).
- 5 myths about ballot-box behaviour (works very well also beyond the USA, if you're in any way worried about external validity :-)) from the author of the excellent "Myth of the Rational Voter...", see also a related, older entry of mine.
- voor degene die Nederlands begrijpen, een heel interessant video-interview met CPB directeur Coen Teulings (ja ja, hij is ook mijn promotor...) op de BNR: deel 1, deel 2 en deel 3. Inter alia, het interview gaat over de eventuele effecten van de kredietcrisis, handelen met China en India, de situatie in het zorg sector, de arbeidsongeschiktheidswet voor jongeren, het onderwijs en nood hebben aan toptalent daarin-- alle in de context van de Nederlandse economie.
- the exotic entrepreneurship edition today, again with a great example from one of my favourite reads last year (read here the previous entry on exotic business ideas): 'mud spray to cover license plates'. Somewhat illegal this time :-), but seems to work:
"Many markets are designed to help people avoid or circumvent lawful regulations. One British entrepreneur sells squirt bottles of spray-on mud for license plates. It is ostensibly so the buyer's vehicle can "look rugged", but more realistically it is used so police cameras cannot record the license plates of speeding vehicles. The mud is from Shropshire, and it contains secret ingredients so that it sticks to the license plate longer".
- an excellent article in the NYTimes on whether we ought to compensate the losers from free-trade (answer preview: NO), by Steven Landsburg (remember, he's the author of a book I've previously recommended for those who do not necessarily have a formal training in economics, but are, more seriously than the average person, interested in the topic; I am currently reading his latest book, will inform you of my final assessment once I am done with it:-)). You're my guests to offer counter-arguments; I couldn't.
CES 2008 and Bill's last keynote speech
Tuesday, January 15, 2008
Romania gets a B for its flag. Think anthems, next...
HT to Tyler Cowen on MR.
Sunday, January 13, 2008
Please keep Economics out of that argument...
PS. Let me state it clearly. I eventually switched from Maths & Theoretical Physics to Economics precisely because I thought (& still think!) that Economics (proper Economics, that is; trust we're talking about that and not, for instance, Euronomics: that beast still roams free) was way more challenging (and that is in no way meant to say that Maths, in particular, and certain other natural sciences, do not elicit very much my passion, still)... and I have been all my life looking for ever bigger challenges: I am a ferocious challenge hunter :-). But perhaps Gelman's reason for sticking to social sciences, rather than natural sciences, was the opposite? :-)
Friday, January 11, 2008
Today's musical treat: "A secret place", by Yann Tiersen
Quote for the week 6th-12th of Jan '08
Best phrase I've read today
[...] motorcycle riders should be exempt from helmet laws as long as they agree to be organ donors.
Read the whole summary of Charles Wheelan's favourite session, "Economics of Traffic Safety: Children, Teenagers and the Elderly", from the AEA meeting this year. And if you want more details, 3 of the 4 papers in that session can be downloaded here (direct links: Levitt and Doyle on child safety seats and seat bealts; Karaca-Mandic and Ridgeway on graduated driver licensing and respectively, Laughran and Seabury on accident risk of senior drivers). The 4th paper in that session, by Thomas Dee, on traffic safety and organ donations---connected to the phrase of the day--- is seemingly not yet available for download, so you'll have to stick to Wheelan's appraisal for now.
PS. Since I mention Wheelan above, remember that a while ago I recommended his book to all those that have no clue about economics, but would like to learn something fast and without much effort :-).
Thursday, January 10, 2008
Beware the Euronomics. Plus some further thoughts on the economics curricula in Romania and The Netherlands
Retain at least the conclusion of this excellent article (applying, unfortunately, well beyond just France and Germany, within EU or Europe in general), which draws attention to the enormous, though often neglected*, importance of (high) school economics education, with emphasis on the (very real) risks of learning absolute nonsense from state-sponsored economics courses.
"If countries like France and Germany hope to get their nations on a new economic track, they might start paying more attention to what their kids are learning in the classroom".
(HT to Greg Mankiw)
Wednesday, January 09, 2008
Richard Freeman as the 'blue-collar brute'...
Thanks to Justin Wolfers, guest blogger on Freakonomics.
Tuesday, January 08, 2008
Quote for week 30th Dec '07- 5th Jan '08
Utopia is located not in New York or L.A., or in the endless wheat fields of Iowa, but somewhere around Copenhagen and the green countryside of Jutland.
Thursday, January 03, 2008
Importance of early environment for children's cognitive development: Bucharest Early Intervention Project
As you can see from the abstract linked above, none of the authors is affiliated with a Romanian institution; however, it comes clear from the full text that they were greatly helped (and initially invited to do the study) by the Romanian authorities, which is a very pleasant surprise; I must confess that I would have been (and in fact, still am, to a certain degree...) very pessimistic inasmuch cooperation of Romanian authorities is concerned in such cases (perhaps this one here went through just fine given the huge importance of the topic and continuing international pressure etc.). I copy-paste below the fragment depicting the chronological interaction with the Romanian authorities in context and parts of the crucial ethical considerations for such a study:
First, our study was initiated at the invitation of the then–secretary of state for child protection in Romania and was approved by the local commissions on child protection in Bucharest, the Romanian ministry of health, and, in 2002, by an ad hoc ethics committee comprising appointees from several government and Bucharest University academic departments. It was therefore done with the participation and approval of local authorities. Second, the institutional review boards (IRBs) of the home institutions of the three principal investigators (the University of Minnesota, Tulane University, and the University of Maryland) approved the project. Third, we implemented a policy of noninterference with placement of children in both groups into alternative family care environments, leaving those decisions to Romanian child protection authorities (according to Romanian law). The only exception to the noninterference rule was that we ensured that no child placed in foster care as part of the randomization process would ever be returned to an institution [...]. Fourth, after our preliminary results began to suggest positive benefits of foster care, we held a press conference to announce the results of our investigation. Key ministries in the Romanian government were invited to attend and sent representatives to this meeting. The then–U.S. ambassador to Romania (who was briefed in advance about our findings) gave the opening remarks at the conference. Fifth, although the usefulness of clinical equipoise is controversial among bioethicists [...], a reasonable interpretation of clinical equipoise supports the research design in this project. Clinical equipoise is the notion that there must be uncertainty in the expert community about the relative merits of experimental and control interventions such that no subject should be randomized to an intervention known to be inferior to the standard of care [...]. Because of the uncertainty in the results of prior research, it had not been established unequivocally that foster care was superior to institutionalized care across all domains of functioning, especially with respect to how young children initially placed in institutional care function when placed in foster care as compared with children who remain in the institutional setting. Moreover, at the start of our study there was uncertainty about the relative merits of institutional and foster care in the Romanian child welfare community, with a historical bias in favor of institutional care. Additionally, given that the study was invited by Romanian authorities and conducted there, with the aim of guiding child welfare policy in Romania, it made sense to assess the study in view of the local standard of care, which was institutional care. The study also presented no more than minimal risk to the subjects; specifically, children assigned to the IG continued to receive the same care as if the study had not been conducted, and the measures we used have all been used for many years in developmental science research. Lastly, we were aware from the outset of the policy implications of our work, and as the study progressed we made our results available to government officials and child protection professionals. Indeed, several years after our study began, the Romanian government passed a law that prohibits institutionalizing children less than 2 years old, unless the child is severely handicapped.
Three main findings emerge from this study. First, as we have previously reported [...], children reared in institutions showed greatly diminished intellectual performance (borderline mental retardation) relative to children reared in their families of origin. Second, as a group, children randomly assigned to foster care experienced significant gains in cognitive function. Lastly, at first glance our findings suggest that there may be a sensitive period spanning the first 2 years of life within which the onset of foster care exerts a maximal effect on cognitive development. However, a closer reading of our analyses suggests a more parsimonious conclusion: That the younger a child is when placed in foster care, the better the outcome. Indeed, there was a continuing "cost" to children who remained in the institution over the course of our study. These results are compatible with the notion of a sensitive period, but discovering whether such a period truly exists or determining the borders that delineate it would likely require a larger sample size with a broader age range at intervention onset.
The results of this study have implications for child welfare because they suggest that placement in families is more advantageous for cognitive development in infants and young children than placement in institutional settings. For countries grappling with how best to care for abandoned, orphaned, and maltreated young children, these findings deserve consideration. The results also indicate that previously institutionalized children's cognitive development benefits most from foster care if placement occurs relatively early in a child's life.
I would only add that it would have been great to also deal with the non-cognitive implications of the child early environment, which are possibly even more important than the effect on the cognitive development. There is considerable current research addressing this issue (and a very important chunk of this research is also performed within economics nowadays-- area where I am personally interested in, in terms of future plans of research-- see for instance the very interesting related projects of Jim Heckman and his co-authors, e.g. here, under the headline "Studies in Cognitive and Non-Cognitive Skills"), but, as always, the difficulty rests with implementing such a randomized trial, to start with. Hence, this would have been a great opportunity (perhaps that idea is still pursued and a different study will be/is being published dealing with it); nonetheless, I agree that the initial focus was different and to design and perform this bit already required a lot.
If you want to read more on the topic of this post: the link to the full Science report (you need a subscription to Science to access it). Read also a summary with further comments regarding ethical considerations, on 60-seconds-science (I do not agree with the author's remarks, concluding in 'I’m not sure why this study was necessary', but I leave further discussions here for some other time). Finally, read also a short article on ethical guidelines concerning international research with abandoned children (again, subscription to Science required).