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: