Thursday, February 28, 2008

Econlinks for 28-02-'08

  • A very nice article about GMU's Econ department. I love for instance the following bit, despite its capitalizing on stereotypes (but we love those sometimes :-)); so here's Arnold Kling: My simple way of describing it is that at Chicago they say, ‘Markets work; let’s use markets.’ At Harvard and MIT they say, ‘Markets fail; let’s use government.’ And at George Mason, we say, ‘Markets fail; let’s use markets.’”

  • Barack Obama might be very good at writing books (see here my assessment of his most popular book); however, he fares pretty poorly so far, in his economics policies. Here's one of his worst ideas, for instance, rightly and well criticized on VoxEU. It is rather amazing that with some top economists as his advisors, Obama can actually support an economic proposal that is "reactionary, populist, xenophobic and just plain silly". One can only hope that Obama does all this nonsense economic campaigning for popular votes and he'd eventually get back to his senses if elected President... But could he deliver as President, as The Economist and probably most of us would like to know...?

Best phrase I've read so far today


[...] Basescu has repeated his insistence that Székelyföld will have no more nor less autonomy than anywhere else. This is not a position with which I disagree in principle, but since he trotted it out two years ago and has done absoultely nothing towards decentralisation in Romania since, it is clear that what he means by "Covasna will have the same amount of autonomy as Calarasi and Constanta" is, in fact, "absolutely none". I know he's fully locked into the Bucharest political scene, being ex-mayor of that city, but I suspect he needs to get out a bit more.



The above is by Andy, on Csíkszereda musings, part of an entry on whether the Kosovo precedent implies anything for Székelyföld. I also find the entire post well written and I disagree, if at all, only with respect to some minor details.

Saturday, February 23, 2008

Econlinks for 23-02-'08

  • "[...] it is surprising and disturbing that, at a time when the premium for skills has increased and the return to graduating high school has risen, the high school dropout rate in America is increasing. America is becoming a polarised society. Proportionately more American youth are going to college and graduating than ever before. At the same time, proportionately more are failing to complete high school." Read the whole article on education trends in the USA by Jim Heckman and Paul LaFontaine, on VoxEU (with references to the research papers they quote).

  • a nice interview in the latest Royal Economic Society (RES) newsletter with one of my favourite economists, Avinash Dixit. The interviewer is Andrew Oswald; since the newsletter is not yet available for download on the RES site, you can download the interview (PDF) from Oswald's site. Here's an excerpt dealing with Dixit's aversion towards reviewing long papers (same here, though, on the other hand, I admit to being guilty of having written some very long papers :-)):

[...] here is my reaction as I read, say, page 50 of the 70 page paper. I am reminded of the character Elaine in the show Seinfeld. [...] She is watching the movie of The English Patient. Finally she bursts out “quit telling your stupid story about your stupid desert and just die”. That’s what I think when I am on page 50 of a 70 page paper. Even a really good one!

  • Larry Summers goes into business. Part-time, for now. Probably Summers is one of the few academic economists (top academic economist: this guy is a recipient of the John Bates Clark medal, for instance) to have had quite a wide range of top jobs (the ones outside the typical academic activity as professor at Harvard: Secretary of the Treasury, President of Harvard University, and now managing director of a hedge fund firm).

Thursday, February 21, 2008

A classic Alekhine's Defence and 43 moves

... is all what Magnus Carlsen needed in order to win against Topalov. Wonderful, wonderful, we love it! The kid is back in the game (while, surprinsingly, Topalov has lost two consecutive games since I last praised him...).


PS. Nothing is sure yet in Morelia-Linares, but I think it starts to look as if Carlsen were a very serious candidate to become the youngest World Chess Champion ever (thus beating Kasparov, who currently holds that record). The first opportunity for the Norwegian to do so could be in two years from now. The (only) very powerful player whom he still has problems winning against is Anand, who rightly deserves to be the world champ now and for the years to come (before Carlsen takes the title from him :-)).

Wednesday, February 20, 2008

Real stakes in the US election

Here's my favourite bit of the best essay I've read today:


The reality is that democracy is a very blunt instrument, and in today’s environment we are choosing between ways of muddling through. We may hear that the election is about different visions for America’s future, but the pitches may be more akin to selling different brands of soap.

We hear so many superficial messages precisely because most American voters have neither the knowledge nor the commitment to evaluate the pronouncements of politicians on economic issues. It is no accident that the most influential political science book of the last year has been “The Myth of the Rational Voter,” by Bryan Caplan. The book shows that many voters are ill-informed or even irrational; many economic issues are complex, and each voter knows that he or she will not determine the final outcome.

Rather than being cynics, we should be realists. Democracy is reasonably good at some things: pushing scoundrels out of office, checking their worst excesses by requiring openness, and simply giving large numbers of people the feeling of having a voice. Democracy is not nearly as good at others: holding politicians accountable for their economic promises or translating the preferences of intellectuals into public policy.


Read Tyler Cowen's entire article, from the NYTimes.


PS. I guess you've started reading Bryan Caplan's book by now ( I mentioned it before, e.g., here or here). If not, hurry up, what are you waiting for?! :-).

Tuesday, February 19, 2008

Carlsen should do better

After three rounds in the first leg of the Linares-Morelia tournament (the most powerful chess tournament of this year), the Norwegian wonderkid is not yet shining. Standings and results so far can be seen here (with at least one mistake on the site: Topalov's total number of points is 2.5, after 2 victories and 1 draw, and not 2.0). Obviously I still hope Carlsen will repeat what he did at Wijk aan Zee: anything is still possible, theoretically. Meanwhile, however, Topalov seems to be in an excellent shape. You can replay for instance his game won against Ivanchuk.

Monday, February 18, 2008

Econlinks for 18-02-'08


  • An excellent (& extensive) interview with Susan Athey, the most recent winner of the John Bates Clark medal. Here's one of the best parts:

    Finding the applications that resonate with the students or the population in general and then showing them how a little bit of structured thinking can substantially improve their understanding — I think that’s where you get the power of economics. I’m still amazed that in the business world how having a coherent and structured way of approaching problems can allow someone like me to walk into an industry meeting and talk to people who are brilliant people managing large companies and still have unique insights for them. That’s because I have these really powerful tools at my disposal. Economics allows you to think several layers deeper. Without that structure, you just get lost in a muddle.

  • Here's Steven Levitt answering (some of) the criticism of John DiNardo. I've mentioned DiNardo's criticism here (1st bullet point). DiNardo might have been bored indeed :-), but Levitt carefully selects which points to tackle in his reply; he eventually addresses (true, very well) some of the relatively minor ones and leaves the gist of the critique unanswered...
  • This IS NOT my reason for not using Facebook and declining every invitation to do so (don't even bother). I think the author of this text in The Guardian has little comprehension of economics, freedom to choose and the like, not to mention that at times he borders on paranoia. As long as users are perfectly informed of their rights and obligations, there is nothing to do with, e.g., invasion of privacy, to choose randomly from the 'sin list' of the article linked above. My rationale is much simpler: my opportunity costs would outweigh any eventual benefits from being active on Facebook or related 'social networking' sites. I however see them perfectly justified and a great business idea.

Chinese (Couch) Potato

"Tudou.com" (="Potato", in Romanized Chinese) is one of the several Chinese "Youtubes", seemingly the largest one at present (possibly larger than YouTube itself in some dimensions). Tudou's stated goal is "to move couch potatoes from the TV screen to computer screens, a process very much under way in China". Here's their wiki entry. While this might be not very exciting yet, what might knock you out is the fact that you can watch on Tudou an amazing number of excellent (whole) movies, both recent and old, in very high definition media format (typically split in several parts). For instance, you can find entirely the top 5 movies (and probably most of the rest, as well) from my 25 favourite movies list (which needs an update). Thus, if you have the time (even if you are not per se a couch potato), go for it: they've got an impressive collection. You can search for the titles of the movies in English: don't be put off by the Chinese, should you not understand it :-). It might be of course just a matter of time before Tudou will also have to start removing some of its material because of copyrights infringement (I am not sure to what extent that is a problem already, but at least concerning recent movies such as Sweeney Todd, the likelihood of foul play is very high...), but the Chinese legislation in context appears to be more than lenient for the time being.

Sunday, February 17, 2008

What I've been reading

Lately I've got about 5 books started at all times and I largely read them in parallel (unless I like one too much to let it out of my hands before I finish it). This seems to be an excellent strategy against getting "too much" of something in a short while and eventually deciding to drop it too soon (which, by the way, you should not shy away from doing anytime if you really--but really-- do not seem to find any merit in reading a particular book). Below some brief impressions on some of the books started by end '07-beginning '08 that I've finally finished:

  • Stephen Greenblatt's "Will in the World. How Shakespeare Became Shakespeare". This is a book once suggested to me by my good old friend Daniel, probably the only person in the world who can read even two-three books a day :-). You'll learn more about Shakespeare (both life and creation -wise) than you've ever known before. Greenblatt, probably best known as father of the New Historicism, combines his comparative advantage as literary critic with a great biographer intuition and manages to almost deliver Will Shakespeare in person (I strongly doubt one can do better than this, based on the current, scant evidence on Shakespeare's life etc.). A book you should not miss.

  • "Why beautiful people have more daughters [with too long of a subtitle...]" by Alan S. Miller and Satoshi Kanazawa. I once had a post related to research covered in this book, which was also when I decided that I had to read it. One good point is that you'll find out about a number of extremely interesting fertility or demographic empirical facts that you might have not known. For explaning most of these facts the authors try to fit an evolutionary psychology story. Unfortunately, there's also where you should be extra cautious: although they seem to be careful with presenting clearly the conclusions reached scientifically versus others that might be speculated upon, but cannot be given clear scientific backing, my opinion is that the book is still not satisfactory from that point of view. In fact I am very curious whether this is an opinion solely of people acquainted with scientific research/statistics/econometrics or it holds more generally. For those of you who'd like more details, some of the explanations in the book are simply taken over from several articles published in, e.g., the Journal of Theoretical Biology by one or the other of the two co-authors (Kanazawa most often), which have been already criticized on several grounds, see for instance the 'statistical' criticism by Andrew Gellman, published in the same journal. Somehow both the book and the previous articles on which the research therein is based, try to oversell, without always giving proper scientific foundations (though this does not mean the given explanations can be invalidated). This is not to say that you should ignore this book; once again, it can fill you up with facts you had no clue about (tip: facts that can be used in most colloquial discussions, since people seem to particularly like such topics: now you know which book to read if you want to get in the center of attention every time).
  • Barack Obama's "The Audacity of Hope". Steven Levitt was the one who convinced me to read this book, as I've mentioned before (post in Romanian, with links to Kakutani's review of the book in NYTimes and to Levitt's admission that he "was blown away at how well written it is"). While I am far from being "blown away" after having read Obama's book, I agree that the book is well written, perhaps unexpectedly so for an active politician. One of its strong points is that pretty much all of the author's ideas are conveyed in parsimonious, common sense language; this is essential for a politician aiming to engage and completely clarify his position in front of a mass audience (with electoral power, where applicable). For those of you who want a shorter version, you can watch on YouTube the two parts (part 1, part 2) of Obama's 2004 Democratic National Convention Keynote Speech (the book extends and expands on the themes touched on in this address). This was the talk that essentially launched Obama as a key player in US politics. Whether you'd eventually like this fellow in the White House or not (hopefully that decision would not be solely based on the most appealing book written by the candidates), you will only gain from reading his book.

More to follow soon. Meanwhile, you can also check my "books" blog-category for other books I've read and/or talked about in previous posts.

Saturday, February 16, 2008

Quote for week 10th-16th Feb '08

At the root of the difference between the Libertarian and welfarist-Utilitarian conception of optimal tax policy is the relationship of the individual to the state. The welfarist-Utilitarian model sees the state as an entity outside the individuals who compose it, in that the government puts in place policies that are optimal according to its own social welfare function. This function is dependent upon the individuals' welfare, but by combining them in a particular way the state assumes an authority to force individuals to act in ways with which they may disagree. In constrast, a Libertarian model sees the state as merely a collection of individuals who agree to cooperate only insofar as it serves their individual interests. Thus, all contributions by individuals to the state's activities must be voluntary, and the state has authority over individuals only insomuch as they wish to grant it.





Read the quote of the previous week.

Friday, February 15, 2008

A heated debate on gender-based taxation

I mentioned this article from VoxEU by Alessina et al a while ago (1st bullet point). Meanwhile Gilles Saint-Paul came forth with a tough critique and Alessina, Ichino and Karabarbounis have replied today.

All very interesting (& most likely this is just the warming up stage...), but I really think all these researchers are (most likely willingly...) missing the more general point raised by Greg Mankiw (this is a great paper, by the way!).


PS. Everything in these entries is self-explanatory, so you won't get additional comments from me this time-- unless you really insist, that is...

Saturday, February 09, 2008

Quote for week 3rd to 9th of Feb '08


Mathematics is trivial, but I can’t do my work without it.
Richard Feynman



Thursday, February 07, 2008

Best phrase I've read today


Sure, let those who have become rich under capitalism try to do good things for those who are still poor, as Mr. Gates has admirably chosen to do. But a New-Age blend of market incentives and feel-good recognition will not end poverty. History has shown that profit-motivated capitalism is still the best hope for the poor.

The above is by Bill Easterly and is part of the best article I've read today.

HT to Greg Mankiw.


PS. You might also want to remember what a corporation's unique goal is supposed to be (I mentioned this also before, in the end of this post).

Wednesday, February 06, 2008

Econlinks for 06-02-'08

  • 'Economics according to Google': a very interesting interview with Hal Varian, the currrent Chief Economist at Google. The interview was taken just a few days after Varian took over his new (full-time) job. Retain Varian's prediction: "I think marketing is the new finance".

The blue-eyed islanders puzzle

The morning pill: Terry Tao has just reminded me of the following famous logic puzzle. Obviously some of you have seen it before and might know the answer (disclaimer: I was confronted with this quite a while ago, in my first university year, as part of a challenge among Maths students), but many of you did not. Try to think about it on your own before checking the web for answers :-). Here's the puzzle in Tao's formulation:


There is an island upon which a tribe resides. The tribe consists of 1000 people, 100 of which are blue-eyed and 900 of which are brown-eyed. Yet, their religion forbids them to know their own eye color, or even to discuss the topic; thus, each resident can (and does) see the eye colors of all other residents, but has no way of discovering his own (there are no reflective surfaces). If a tribesperson does discover his or her own eye color, then their religion compels them to commit ritual suicide at noon the following day in the village square for all to witness. All the tribespeople are highly logical and highly devout, and they all know that each other is also highly logical and highly devout.

One day, a blue-eyed foreigner visits to the island and wins the complete trust of the tribe.

One evening, he addresses the entire tribe to thank them for their hospitality.

However, not knowing the customs, the foreigner makes the mistake of mentioning eye color in his address, remarking “how unusual it is to see another blue-eyed person like myself in this region of the world”.

What effect, if anything, does this faux pas have on the tribe?


If you give up (don't!) or simply want to check your reasoning, read Terry Tao's entire post and the subsequent comments. And if you still have problems understanding, you're welcome to drop a line :-).


Tuesday, February 05, 2008

Peer review how-to

The Science edition from the 4th of Jan had two extremely interesting short essays published in the "letters" section. You can read them both on the first page of this PDF.

The first of those two letters, by William F. Perrin, raises a well known problem in the academic publishing area, namely the serious difficulty of finding reviewers for scientific articles submitted to journals. Next to the grave implications mentioned by Perrin in the letter (editors will often have to settle for less-knowledgeable reviewers and reviews of lesser quality), one other obvious consequence is that the refereeing period increases considerably. I've faced myself this problem for one of my papers submitted for publication, where, after an incredibly long period without hearing anything, I've contacted the editor of that journal only to find out that no less than 5 persons he had initially approached have refused to review the manuscript and worse, one of the two who had accepted, has eventually given up after a few months-- leaving the editor with no option but to search for a new referee.

How are we to approach this dilemma, what are possible solutions one can think of? Perrin capitalizes on the academic ethics: "Doing a fair share of peer reviews should be a recognized and expected part of the job for scientific professionals; it should be written into the job descriptions of salaried scientists and be considered in evaluating junior faculty for tenure. The caution should be "Publish and review, or perish"". While I agree with Perrin's normative ideal, I think this would not be sufficient to provide the right incentives: after all in most high-level academic places, the above is implicitly understood as part of the job of professional scientists already; I doubt any of these scientists would disagree with Perrin, should they be asked. The problem is that such a rule cannot be really enforced since, given that the peer-reviewing is typically done under anonimity, there is no way to tell how many times a potential referee refuses to peer-review. And simply setting a rule concerning a minimum of reviews (e.g., one scientist should have 12-16 reviews per year, according to the back-of-the-envelope computation of Perrin) is really not going to work for related reasons (one cannot proxy how many proposals for refereeing one particular scientist receives in a given time period, not to mention that it is very likely that this variable has a high variance etc.). So, can we do anything else? And here's something I see as straightforward solution: why not pay the referees every time? The obvious way to ensure this is sustainable is to ask a submission fee for every paper submitted (some scientific journals practice this submission-fee policy already) and to use most of that fee to pay referees, if they provide a referee report in a requested amount of time. I am not aware of any study that compares paid-referee-reports with non-paid-referee-reports practices (they both exist nowadays, though to the best of my knowledge the former is rather exceptional) in terms of: a. the length of the period necessary to obtain two or three referee reports, the number depending on the policy of the journal; b. the quality of the reports. My intuition would tell me that the reviewing period would be shortened considerably and that the editor would find referees faster under the pay policy; I doubt the quality of the reports would increase under the pay system, but this remains an empirical question (e.g, one can expect people to deliver higher quality reports under the pay system, in order to be asked again to referee, but at the same time one could potentially expect people to accept to review even when they know they could not do a good job reviewing that particular paper because of real lack of time, expertise etc.). There are also questions regarding the amount and form of this eventual payment etc., but those are already second-stage considerations and would not present insurmontable problems (e.g., if it turns out one has to pay the referees more, the submission fees could be raised etc.).


The second letter tackles the fact that reviews might have become too critical and demanding (e.g., to the point of virtually demanding the entire paper be rewritten), a view shared by many others (and here see also Preston McAfee's idea of revolutioning the reviewing policy of the journal he's been recently assigned to as editor). Robert S. Zucker makes some great points in his letter to Science (they might seem obvious, but you'd be surprised how many times they are grossly violated in actual practice), which I take ad litteram below and place in a list format-- 'a peer-review how-to':



  • Reviewers should highlight a paper's strengths and weaknesses, but they need not delineate strengths in very weak papers nor stress minor weaknesses in strong papers.
  • Reviews should be prompt and thorough and should avoid sharp language and invective.
  • [Do not] reflexively demand that more be done:
    • Suggest an additional experiment, further analysis or altered specification, but do not make publication contingent on these changes.
    • If the conclusions cannot stand without additional work or if the evidence does not distinguish between reasonably likely alternatives, recommend that the editor reject the manuscript.
  • Seek a balance among criteria in making a recommendation:
    • Do not reject a manuscript simply because its ideas are not original, if it offers the first strong evidence for an old but important idea.
    • Do not reject a paper with a brilliant new idea simply because the evidence was not as comprehensive as could be imagined.
    • Do not reject a paper simply because it is not of the highest significance, if it is beautifully executed and offers fresh ideas with strong evidence.
  • Step back from your own scientific prejudices, in order to judge each paper on its merits and in the context of the journal that has solicited your advice.


Song of the day: "Non-convex desires", by John DiNardo

Today's song is by an amateur musician and professional (academic) economist (a winning combination anytime!), John DiNardo. You can listen to "Non-convex desires" here (in .mp3 format) and you can read an approximation of its lyrics here (compared to the audio version linked above, you will notice some permutation in the early verses, some slightly changed words and the last verse left entirely for future research :-)). The following shall be retained for future reference: "Come on baby won't you share/ your non-convex desires with me".

If you want to find out more John DiNardo-the musician, here's some serious review of his musical production so far. My other favourite piece from him is "(My Little) Regression Discontinuity". Check out also this very very promising duo (composed of John DiNardo and a much better little fellow), excellently covering "What I like about you".


Oh: almost forgot that after listening to the song of the day, you should definitely (re)listen to this other one, featured some time ago in the same "song of the day" category on my blog. They complement each other perfectly.

Monday, February 04, 2008

Econlinks for 4-02-'08

  • Greg Mankiw's birthday wish (with my "Happy Birthday", of course!). Among other things, I learnt I'd be young forever, despite being (aspiring to be?) an economist; here's why: "[...] you know you are old when you spend more time thinking about money than sex. If so, we economists must age prematurely. After all, it’s our job to think about money, both our own and other people’s." Apparently Mankiw forgot about the Solow-Friedman sex vs. money context (see page 3 of that PDF presentation; don't worry about the rest of the presentation in Romanian- unless you are Romanian, of course, in which case you might also want more background on that presentation).

  • When to say "I love you", in Tyler Cowen's perspective. I am particularly fond of the 'Proustian reminder' rationale in 4 (though I will strongly deny that was my only reason, ever, to utter those words) :-).

Time to study: MIT Open Courseware

It is old news by now, but for those of you who did not know (and especially for all students among you, undergraduates and graduates alike), MIT made available online extensive material for no less than 1800 courses from their curriculum. Inter alia, you can't miss:

Saturday, February 02, 2008

Quote for week 27th of Jan- 2nd of Feb '08

In fact, science clashes with the democratic ideal. Though it is meritocratic, it is practiced in the elite and effete world of academe, leaving the vast majority of citizens unable to contribute to it in any meaningful way. Science is about freedom of thought, yet at the same time it imposes a tyranny of ideas.

In a democracy, ideas are protected. It's the sacred right of a citizen to hold — and to disseminate — beliefs that the majority disagrees with, ideas that are abhorrent, ideas that are wrong. However, scientists are not free to be completely open minded; a scientist stops becoming a scientist if he clings to discredited notions. The basic scientific urge to falsify, to disprove, to discredit ideas clashes with the democratic drive to tolerate and protect them.



Is flexicurity an alternative for the French labour market?

Probably not, says Gilles Saint-Paul in his assessment of the recent labour market agreements from France. I agree (and strongly recommend Saint-Paul's short but concise essay on VoxEU, one of my best readings this week).

While it is imperative to make the French labour market more flexible (remember however how a small step in this direction, the infamous CPE, was received in France 2 years ago), trying to handle this as part of a flexicurity package, with generous unemployment benefits complemented by active labour market policies meant to induce unemployed workers to search for and accept jobs fast, might have different effects in France. Next to Saint-Paul's reasons for why the security part in a flexicurity package would possibly misfire in France, here's one more. A major difference between Denmark and France relevant for this context is the fact that France is a melting pot of ethnicities (though, as expected, Sarkozy's proposal of 'officializing' that, by allowing the collection of ethnic statistics, never made it through the Conseil d'Etat) whereas Denmark is incredibly homogenous population-wise (not for nothing, they also fight hard to preserve the status quo; the Danes currently have the most stringent immigration laws within Europe and the nationalistic 'Danish People's Party' has been part of the government coalition since 2001); my take on this issue is that, in its current form, the Danish flexicurity would not be sustainable in the long run even in Denmark, should the composition of its population change significantly. See also a previous, related, discussion on whether Denmark can be scaled up, in general.