Infiniti Conference TCD - Exceptional Line-Up

2009 INFINITI Conference on International Finance 8-9 June 2009 TCD

Sunday, 7 June 2009
1700-1900 Welcome Reception and Early Registration Dining Hall Foyer

Monday, 8 June 2009
0800-1800 Registration Desk Open Upper Concourse, Level 2, Arts Building
0830-0900 Welcome Walton Theatre
“Re-structuring, reform and re-regulation: what will finance look like in 2012?” Opening Remarks by Dan O’Brien, Senior Europe Editor/Economist, The Economist Intelligence Unit
0900-1030 Parallel Sessions 1
1030-1100 Tea & Coffee Upper Concourse
1100-1200 Plenary Session Walton Theatre
“Skewness and Systematic Risk" Robert F Engle,2003 Nobel Laureate and Michael Armellino Professor of Finance, Stern School of Business, NYU
1200-1300 Lunch (delegates’ own arrangements)
1300-1500 Special Session A Walton Theatre
“Moral Hazard in International Finance” : Speakers Sam Glucksberg, Emeritus Professor of Psychology, Princeton University; Nimi Wariboko, Katherine B Stuart Professor of Christian Ethics, Andover Newton Theological School (ANTS) ; Scott R Paeth, Religious Studies, DePaul University
1330-1500 Special Session B Emmet Theatre
“Asset Management and International Volatility” Speakers Diego Franzin, Head of Global Quantitative Research &
Management, Pioneer Investment Management Ltd, Joe Naughton, Head of Structured Products, Allied
Irish Banks plc; Giuseppe Insalaco, Entrepreneur ; Marco Lazzarino, Head of Strategy Management Desk, MPS Asset Management Ireland Ltd

1500-1515 Tea & Coffee Upper Concourse
1515-1615 Special Session C Walton Theatre
“Is there value in Corporate Governance Rankings?” Speakers Raj Aggarwal, Dean, The University of Akron Business School; Sandra Dow, UQAM Université du Québec à Montréal; William Megginson, Rainbolt Chair of Finance, The University of Oklahoma; Roberta Romano, Yale Law School Center for the Study of Corporate Law
1615-1630 Tea & Coffee Upper Concourse
1630-1800 Parallel Sessions 2

Tuesday, 9 June 2009
0800-1800 Registration Desk Open Upper Concourse
0830-1000 Parallel Sessions 3
1000-1015 Tea & Coffee Upper Concourse
1015-1145 Parallel Sessions 4
1145-1200 Tea & Coffee Upper Concourse
1200-1300 Plenary Session Walton Theatre
“The recent global crisis and how to measure its contagion” Roberto Rigobon, Sloan School of Management, MIT
1300-1330 Lunch (delegates’ own arrangements)
1330-1500 Parallel Sessions 5
1500-1515 Tea & Coffee Upper Concourse
1515-1615 Special Session D Walton Theatre
“Financial Stability: Experiences on both sides of the Atlantic” Speakers Frank Brown, Head of Monetary Policy and Financial Stability, Irish Financial Services Regulatory Authority, ; Gerald P Dwyer, Director of Center for Financial Innovation and Stability, Federal Reserve Bank of Atlanta ; James Lothian, Fordham University ;Maria J Nieto, Senior Advisor, Banco de España
Gerard Hertig, ETH Zentrum
Special Session E Emmet Theatre
“Research & Industry Interface in Sustainable and Ethical Investments” Speakers Constantin Gurdgiev, Trinity College Dublin, Steve Falci, KBC Asset Management ; Nick Robins, HSBC Bank Plc ; Dennis McLeavey, CFA Institute ; John Devitt, Transparency International Ireland
1615-1630 Tea & Coffee Upper Concourse
1630-1800 Parallel Sessions 6
1900 Conference Gala Dinner The Guinness Storehouse, St James’ Gate, Dublin 8

Note that over 160 papers in all aspects of international finance will be presented at the parallel sessions. Full details on the conference and booking forms can be found at http://www.tcd.ie/business/news-and-events/events/

Behavioural Economics: Irish Emancipation Style

Thaler and Sunstein would have to be writing for a long time to match the behavioural cunning of the Catholic Emancipation movement of the 1820's in Ireland.

The poet Raftery describes the peer pressure they created for people to contribute (from O'Tuathaigh - Ireland Before the Famine)

"I exhort everybody, dont leave yourself open to insult,
I will sing your praises always if you but pay the Catholic rent,
Sure, a farthing a week doesn't amount to much in a month
And let ye not run the risk of scandal or shame"

Such a combination of working with temporal framing and anticipated regret is about as good as it gets Nudge-Wise. If you look at the Catholic Association and the Temperance Movement at the time, they pretty much employed every behavioural economic trick under the sun.

RAND Summer Institute

The RAND Summer Institute is a fantastic event. They have made the videos available. This is a brilliant resource with full talks from people like Jim Smith, David Laibson, David Sinclair and many others. It gives an insight into some of the major issues in social science at the moment.

http://www.rand.org/pubs/conf_proceedings/CF254/aging_research.html

Financial Crisis - Long Johns

More genius from Bird and Fortune

Edward Leamer on Stories and Macroeconomics

A compelling interview with Edward Leamer as part of the excellent EconTalk podcast series

link here

100 Posts in May

As said at the start of the year, I am happy to keep this blog running. It attracts a reasonable number of hits and I regularly get emails about different things related to the posts. We will be revamping it over the summer to use a better template and to have more permanent content on the site that will be geared in different ways toward academics, policy-makers, undergraduate students and postgrads. I will also try to make better use of audio and visual materials. Suggestions for ways to improve this should be sent to me or left in the comments.

We debated before about the role blogs should play in academic and policy debate. To me, they play an important role disseminating information quickly, allowing discussion of issues that are evolving at a rapid pace, giving students a chance to see what is happening in academic and policy debates, providing ideas for journal papers and so on.

Caplan on EU Unemployment

An interesting analysis by Bryan Caplan is linked below. Many of the commentators note that the more lenient EU definition of disability relative to the more stringent US definition may be making the EU figures appear a lot better than they actually are. In general, the issue of defining unemployment as opposed to "not in labour market" needs to be teased through more in this debate. In France, where practically zero per cent of the male population aged 60+ are in the labour market, this issue is particularly important.

http://econlog.econlib.org/archives/2009/05/the_nuances_of.html

Caplan and Quiggin on EU-US unemployment

An interesting and constructive piece of arguing going on between Bryan Caplan and John Quiggin. I hope they develop this debate further

http://econlog.econlib.org/archives/2009/05/quiggan_takes_m.html

Health & inequality

The Institute for Public Health is hosting a seminar with authors Richard Wilkinson and Kate Pickett to discuss their new book The Spirit Level which argues that more unequal societies are bad for almost everyone - rich as well as poor." This ground-breaking book, based on thirty years research, opens up a major new approach to improving our health, quality of life and environmental sustainability" ‘The Spirit Level: why more equal societies almost always do better June 3rd.

For a different perspective see Angus Deaton's 2003 JEL paper:
www.princeton.edu/~deaton/downloads/Health_Inequality_and_Economic_Development.pdf

American Human Development Project

Required viewing for people here working on infant mortality, Irish life expectancy and so, the Economix blogs features the American Human Development Project that has been examining the development of living conditions in the US

link here

"Student Demographics, Teacher Sorting, and Teacher Quality: Evidence from the End of School Desegregation,"

http://www.eurekalert.org/pub_releases/2009-05/uocp-stc052109.php

This paper will be published in the upcoming volume of the Journal of Labor Economics and is written by C. Kirabo Jackson.

The paper uses the end of a policy - a busing program that distributed the minority students across schools in the area, to investigate whether the proportion of minority students in a school has a causal relationship to teacher quality, as measured by years of experience, certification test scores and ability to improve student test scores. They found that the schools that had a large increase in the proportion of black students after the policy was discontinued had a decrease in the number of high-quality teachers.

I will update this post with the link to the article from the Journal of Labor Economics when it is available.

Voodoo Correlations in FMRI: Full Issue

Michael posted recently on what has rapidly become a famous paper taking social neuroscience to task for using statistical methodologies that deliver spurious high correlations. The paper was a working paper and is now published along with six replies in Psych Science. Two of the papers, Lieberman et al and Nichols and Poline argue against the main conclusions of the paper.

http://www3.interscience.wiley.com/journal/118509128/home

Sachs-Easterly

The Sachs-Easterly debate is hotting up considerably. Given the stakes, some heat is warranted. Lets hope when the dust settles it also produces some light

link here

RAND Paper on Giving and Receiving Financial Help

Financial transfers between individuals are an important component of economic adjustment discussed in a recently released RAND Occassional Working Paper

link here

Microfinance - Evidence from an RCT

Journal Club Paper - From the Policy Action Lab at MIT. Further papers here

The Miracle of Microfinance: Evidence from a randomised evaluation
To date there have been no randomized trials examining the impact of microcredit. Using such a design, 52 of 104 slums in Hyderabad, India were randomly selected for opening of an MFI branch while the remainder were not. We show that the intervention increased total MFI borrowing, and study the e§ects on new business starts, investment, and consumption. House-
holds with an existing business at the time of the program invest in durable goods, and their profits increase. Households with high propensity to become business owners see a decrease in nondurable consumption, consistent with the need to pay a Öxed cost to enter entrepreneurship. Households with low propensity to become business owners see nondurable spending increase. We find no impact on measures of health, education, or womenís decision-making.

The Wonder of Chile

Ok - here's a macro post but only to show that macro is pretty simple. The government should save money and pay off debt when the economy is booming and then spend on good projects when the economy is slumping. Now we can go back to micro!

link here

Natural experiment designs

This paper by Michael Rutter is a couple of years old but has some useful guidelines on various kinds of natural experiment designs. One I liked is the children of twins design where the children of monozygotic and dizygotic twins are compared to assist in separating genetic and environmental factors that contribute to the physical or mental health of the children. In this case it's expected that the children of the MZ twins (comparing the children of MZ twin 1 with the children of MZ twin 2) should have more similar problems than the children of DZ twins if the inheritance is genetic. If parents transfer risk factors to their children socially/through environmental factors then it is expected that the differences between the children of MZ twins and between the children of DZ twins should be comparable. You may have to consult the article for this one!

Meditation increases heart rate variability by enhancing the control of the anterior cingulate cortex

Just five days of integrative body–mind training (IBMT) can improve attention and self-regulation in comparison with the same amount of relaxation training (See Tang et al., 2008). This new paper in PNAS explores the underlying mechanisms of this finding:

"Differences in heart rate variability(HRV) and EEG power suggested greater involvement of the autonomic nervous system (ANS) in the IBMT group during and after training. Imaging data demonstrated stronger subgenual and adjacent ventral anterior cingulate cortex (ACC) activity in the IBMT group. Frontal midline ACC theta was correlated with highfrequency HRV, suggesting control by the ACC over parasympathetic activity. These results indicate that after 5 days of training, the IBMT group shows better regulation of the ANS by a ventral midfrontal brain system than does the relaxation group.(See Tang et al., 2009)"

Baby schema activates appetitive reward network in childless women

The study showing infantile features to promote brain areas that may motivate caregiving is detailed here.

Sympathy and similarity: The evolutionary dynamics of cooperation

If we are to cooperate with those who carry our genes how can we do this?
The answer from commentary this week in PNAS is that we need to have a system for tagging people:

"The first to investigate a tag for altruism was W. D. Hamilton (2). He conceived
what he called a supergene, able to produce (i) a distinctive phenotypic
trait, (ii) the faculty to recognize the trait in others, and (iii) the propensity to
direct benefits toward bearers of that trait, even though this entails a fitness cost."

One way to tag genetically related people to cooperate with is to judge how similar a person's face is to your own according to a study last year in 'Evolution and Human Behaviour'.

Understanding Blocks of Time Use

I discussed student time use with one of my professors several weeks ago. He mentioned the importance of considering how time is allocated across activities in sequence. For some individuals, study-time may be interrupted by other activities, whereas other individuals may avail of contiguous study sessions. This could affect how study time affects academic achievement. Another nuance of study time that was recently mentioned on the blog is the degree of attention exercised during study-time; this also has implications for academic achievement. While the scheduling of study-time could be investigated using the Day Reconstruction Method (DRM), measuring the degree of attention exercised during study is more challenging.

A recent NBER paper (Increasing Marginal Value of Time in Recreation - Raymond B. Palmquist, Daniel J. Phaneuf, V. Kerry Smith) considers the scheduling of time use in "blocks". They focus on leisure time and begin with the premise that leisure activities usually take place in discrete blocks of time that are surrounded by time devoted to other commitments (i.e. non-contiguous scheduling). An economic insight is that it can be costly to transfer time between blocks. They suggest that traditional methods for valuing time using labour markets miss important considerations (due to the costs of transferring between blocks of time).

The Palmquist, Phaneuf, and Smith paper uses non-employment time commitments to infer the shadow value of time spent in recreation. They use a survey that elicited revealed and stated preference data on household time allocation. The results from their work support the hypothesis that there is an increasing marginal value of time for recreation as the block of time increases.

Cormac O'Grada: Famine A Short History

I have blogged before about Cormac O'Grada's epic papers on famines throughout the world. O'Grada's work on Irish Famine is also known to anyone with an interest in Irish history. His IDEAS page is below, which contains links to many of his papers. Information on his new book, "Famine: A Short History", is below that.

O'Grada IDEAS Page

Link to Famine: A Short History

Benefits of Unemployment

As always, when posting on a topic like this I restate that I can probably claim to be among the most active people in the country researching and examining negative psychological consequences of the current recession and I have written about these now almost continuously. My purpose in raising the current issue is not to be flippant or cute but to start a counterbalancing discussion to help make sure that the research I am doing does not skewed by too strong priors. During our journal club today, the issue of the beneficial effects of unemployment were raised. On average, there are now countless papers demonstrating an average negative effect of unemployment on psychological well-being but its worth thinking about potential upsides for different groups of people

- During the initial spell, many people carry with them a redundancy payment. For people without large mortgage debts this redundancy payment can potentially finance life-improving capital purchases.

- For people with a high chance of reemployment, a brief spell of unemployment may provide a chance to rebalance health and personal factors particularly if they have working extremely hard during a boom. For example, people may be able to spend some time getting closer to their children or performing necessary upgrades to their homes.

- Some people may have become habitually constrained to a job that was not satisfying. Forced redundancy can act as a habit-breaker leading people to reassess their prospects and aim higher. For example, people may set up small businesses or upskill or otherwise try to improve their prospects.

- Increased leisure time.

Anyway, worth keeping in mind in the upcoming work on well-being and recession.

Unemployment and Well-Being: From Psychology Today

Psychology Today have an interesting post on the work of Johoda on the social psychology of unemployment. Below are reasons why employment might contribute to well-being. The full post is here


1. It imposes a time structure on the day and thereby on our experience. Much as we celebrate leisure, Jahoda made the interesting point that leisure time is valued only when it is scarce, a complement to work as opposed to a substitute.

2. It enlarges the scope of relationships beyond those of the immediate family or neighborhood where one lives.

3. It provides meaning through the shared purposes and activities of a social group.

4. It assigns social status and clarifies personal identity. Work (or employment) need not be "high status" to meet this need.

5. It requires regular activity.

Optimal Taxation of Height - Update

The NBER Working Paper on this is available on the link below. As the tallest person regularly posting on the blog, I protest against this outrageous proposal.

http://www.nber.org/papers/w14976

Gould, Lavy and Paserman - Sixty Years After the Magic Carpet Ride

From the NBER Working Papers

This paper estimates the effect of the childhood environment on a large array of social and economic outcomes lasting almost 60 years, for both the affected cohorts and for their children. To do this, we exploit a natural experiment provided by the 1949 Magic Carpet operation, where over 50,000 Yemenite immigrants were airlifted to Israel. The Yemenites, who lacked any formal schooling or knowledge of a western-style culture or bureaucracy, believed that they were being "redeemed," and put their trust in the Israeli authorities to make decisions about where they should go and what they should do. As a result, they were scattered across the country in essentially a random fashion, and as we show, the environmental conditions faced by immigrant children were not correlated with other factors that affected the long-term outcomes of individuals. We construct three summary measures of the childhood environment: 1) whether the home had running water, sanitation and electricity; 2) whether the locality of residence was in an urban environment with a good economic infrastructure; and 3) whether the locality of residence was a Yemenite enclave. We find that children who were placed in a good environment (a home with good sanitary conditions, in a city, and outside of an ethnic enclave) were more likely to achieve positive long-term outcomes. They were more likely to obtain higher education, marry at an older age, have fewer children, and work at age 55. They were also more likely to be assimilated into Israeli society, were less religious, and had more worldly tastes in music and food. These effects are much more pronounced for women than for men. We find weaker and somewhat mixed effects on health outcomes, and no effect on political views. We do find an effect on the next generation – children who lived in a better environment grew up to have children who achieved higher educational attainment.

IRCSET Application

Applicants interested in submitting an application to IRCSET to work with Prof Kevin Malone, myself and others working in areas like biological aspects of well-being in depression and chronic illness, please get in contact. Professor Malone has supervised a number of succesful candidates and is willing, in principle, to act as primary supervisor for suitable candidates.

http://www.ircset.ie/Default.aspx?tabid=68

Eoin O'Leary from UCC on the Smart Economy

Cork's UCC arguing that the Smart Economy is flawed

link here

Measurement Problems with Class Sizes Litarature

An interesting discussion on this on the Economic Logic blog

here

Student Drop Out and the Recession

This article discusses the possibility that some students whose parents can no longer afford to send them funds will start dropping out of college. Coming to UCD, TCD and so on without some parental support would be tricky although rents will be a lot lower in the City in September.

here

Report on Long-Term Effects of Current Recession on Children

Courtesy of NYT Economix blog, below is a link to an important report examining the potential effects of the current recession on children. This is something that we have not discussed enough on the blog. Mark had a nice post on the literature relating to long-term health effects.

With respect to the Irish case, residential instability may not be so much of a problem, or at least not be exacerbated by the downturn. The effect of parental psychological distress due to unemployment and financial strain is something I would like to know and think more about. I also wonder what effects being in a neighborhood that is contracting substantially has on self-concept and expectations. There may be direct effects also. For example, we have reports today of one kid being sent home from school because his school fees were in arrears but I have no way of knowing the extent of this type of thing. One other effect is parents switching to cheaper high calorie foods due to declining budgets.

http://www.fcd-us.org/usr_doc/Final-2009CWIReport.pdf

Closing Racial Gaps in Achievement - Fryer

Certainly one for the journal clubs - this experimental educational work is among the most influential in terms of policy of anything happening across science right now.

http://econ-www.mit.edu/files/4056

Angrist Seminar

Professor Joshua Angrist (Department of Economics, MIT) will present his paper "Autonomy and Decentralization in Public Schools: New Evidence from Boston's Charters and Pilots" at UCD next Friday, May 29th. Details below. All welcome.

PLEASE NOTE THE CHANGE IN VENUE - the seminar will take place in the Humanities Institute seminar room and not the Geary seminar room.

"Autonomy and Decentralization in Public Schools: New Evidence from Boston's Charters and Pilots"Professor Joshua Angrist (MIT)

Humanities Institute of Ireland Seminar Room, Second Floor (H204), HII Building. 1430, May 29th 2009.

Mostly Harmless!

DON'T PANIC! The core methods in today's econometric toolkit are linear regression for statistical control, instrumental variables methods for the analysis of natural experiments, and differences-in-differences methods that exploit policy changes.

This is the refrain of Joshua Angrist and Steve Pischke in the preface to their new book: "Mostly Harmless Econometrics". We mentioned it on the blog before here. In advance of Professor Angrist's visit to Geary on Friday, people might be interested in a preview of the Mostly Harmless book that is available here. For anyone who doesn't have a copy of the book (or even if you do), it's worth looking at the paper by Angrist and Krueger on "Empirical Strategies in Labour Economics". This is more a primer than a paper; it featured here (takes less time to to load up) in the 1999 Handbook of Labour Economics.

Abstract below:

This chapter provides an overview of the methodological and practical issues that arise when estimating causal relationships that are of interest to labor economists. The subject matter includes identification, data collection, and measurement problems. Four identification strategies are discussed, and five empirical examples -- the effects of schooling, unions, immigration, military service, and class size -- illustrate the methodological points. In discussing each example, we adopt an experimentalist perspective that emphasizes the distinction between variables that have causal effects, control variables, and outcome variables. The chapter also discusses secondary datasets, primary data collection strategies, and administrative data. The section on measurement issues focuses on recent empirical examples, presents a summary of empirical findings on the reliability of key labor market data, and briefly reviews the role of survey sampling weights and the allocation of missing values in empirical research.

Finally, there is also a range of "Mostly Harmless" t-shirts for sale; see below for a sample!

JEP Symposium on Econometric Tools

The 2001 (Volume 15, No. 4) edition of the Journal of Economic Perspectives was dedicated to a symposium on econometric tools. This seems like a good outline for a broad course in graduate econometrics, or maybe a day-long workshop comprised of nine journal clubs (Krueger's intro is an overview). Angrist and Krueger discuss IV in #6.

1. Symposium on Econometric Tools - Krueger, Alan B.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 3-10

2. Nonparametric Density and Regression Estimation - DiNardo, John; Tobias, Justin L.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 11-28

3. Semiparametric Censored Regression Models - Chay, Kenneth Y.; Powell, James L.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 29-42

4. Binary Response Models: Logits, Probits and Semiparametrics - Horowitz, Joel L.; Savin, N. E.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 43-56

5. Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left - Hausman, Jerry; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 57-67

6. Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments - Angrist, Joshua D.; Krueger, Alan B.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 69-85

7. Applications of Generalized Method of Moments Estimation - Wooldridge, Jeffrey M.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 87-100

8. Vector Autoregressions - Stock, James H.; Watson, Mark W.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 101-15

9. The New Econometrics of Structural Change: Dating Breaks in U.S. Labour ProductivityPreview Hansen, Bruce E.; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 117-28

10. The Bootstrap and Multiple Imputations: Harnessing Increased Computing Power for Improved Statistical Tests - Brownstone, David; Valletta, Robert; Journal of Economic Perspectives, Fall 2001, v. 15, iss. 4, pp. 129-41

10.37am: Monday

New figures suggest that irish people are the most miserable in Europe. Apparently, we spend the equivalent of more than a working day -- nine hours and 28 minutes -- every week griping about something. And women are more likely to moan than men. A majority (59pc) of both sexes agreed on that.

Our objects of grief (in order) are the weather (see previous papers on weather and well-being here and here), traffic, feeling tired and our workloads. And we are at the peak of our grief at 10.37am each Monday. "That's when more of us are whining and moaning than at any other time of the week."

The survey was conducted by Uniroyal Tyres and involved asking 4,000 Europeans about the frequency of their gripes. More details are available in the Irish Independent here.

Interesting paper on education choice in Ireland

Looks interesting:
Participation in Higher Education: A Random Parameter Logit Approach with Policy Simulations Flannery, Darragh (National University of Ireland, Galway)
O'Donoghue, Cathal (Teagasc Rural Economy Research Centre)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4163&r=edu
In this paper we present a theoretical model of higher education participation. We assume that young people that complete upper secondary education are faced with three choices, go to higher education, not go to higher education or go to higher education and work part time. Utilizing the Living in Ireland survey data 1994-2001 we model this choice in an Irish context by variation in costs (direct and indirect), the estimated lifecycle returns and household credit constraints. Using a random parameters logit choice model we find that simulated lifecycle earnings positively impact the educational/labour choices of young individuals in Ireland. This positive relationship is also found to be true for a choice-specific household income variable constructed in the paper. From the random parameters logit estimations we also find that preferences for choices with higher simulated lifecycle earnings and household income vary across individuals

Relegation Creates Serious Trauma

worth listening to this - surely this type of distress could not last too long after the day? Ill keep an open mind though.

http://news.bbc.co.uk/today/hi/today/newsid_8064000/8064967.stm

Palgrave Access All Areas

Palgrave sent a link to their dictionary of economics which, the email informs me, can be accessed for free through May!

link here

Behavioural and Experimental Economics Down Under

Thanks to Colm for point to this podcast on experimental and behavioural economics of cooperation

http://upclose.unimelb.edu.au/episode/197

Reason for Optimism - having someone to turn to

Having friends or family to turn to is one thing we are not short of in Ireland. When I run out of money, I know I will have Kevin D to rely on. The headline figures from Gallup reported in Foreign Affairs show Ireland have the highest rates of social capital measured in this way.

http://www.foreignpolicy.com/story/cms.php?story_id=4832

Timeline of Behavioural Economics

Nice timeline of behavioural economics from Foreign Policy (via Nudge).

http://www.foreignpolicy.com/story/cms.php?story_id=4833

The Economics of Attention

Your attention is a scarce resource. In the Information Economy, this is more critical than ever. Before I elaborate on the economics of attention, I want to motivate its importance based on previous posts about scarcity in resources that are not land, labour, capital or enterprise. We've heard about the knowledge economy, information economics and time-allocation. While knowledge, information and time are important, it may be time to turn our attention to, well... attention - the new scarce resource.

To illustrate how economists think about 'non-traditional scarce resources', I'll begin with a discussion on time use (or time-allocation). This resource is the closest in essence to attention (with knowledge and information being more similar in their nature; also, attentive use of time is needed to acquire knowledge and sift through information). Time-allocation is the first-stage decision in various production functions; on top of this comes the application of attention. As time-use has been discussed quite a bit on this blog, it's a good place to start. Here's a paper about student time use and academic performance; here's one about whether the recession is making students study harder.

More recently there was a link to the presentation at Google by Zimbardo and Boyd on time perspectives. In the MetaPsychology review of Zimbardo and Boyd's book, the point is emphasised that time cannot be replenished - in contrast to other goods, such as gold, diamonds, etc. Therefore, you have to be more careful about how to spend your time. Zimbardo and Boyd ask: "Why do we often spend our money more wisely than our time?"

I agree with Michael Daly that the ability to recognise our time perspectives and to switch between perspectives efficiently is important (see a brief summary of the perspectives here). Aaron Swartz suggests that "time perspective” is a concept which Zimbardo has essentially come up with himself, but which he feels (not without some justification) is rather important.

I'm inclined to agree - after reading about and working with the consideration of future consequences scale (CFC) a lot - "time perspective" seems to offer a more comprehensive theory of how we interact with "time". There of course may be scope to use both the CFC and the Zimbardo Time Perspective Inventory in a research project - a recent article by Adams and Nettle in the British Journal of Health Psychology does just that.

In addition to time-allocation and time perspectives, 'attention' plays an important role in how human behaviour produces outcomes. The most illustrative example I can think of is the recent debate on student time use and online social networking. The question that we debated was "does Facebook hurt your grades?". The conclusion offered by Aryn Karpinski (at Ohio State University) is that her research does not suggest that Facebook directly causes lower grades, merely that there's some relationship between the two factors. "Maybe [Facebook users] are just prone to distraction. Maybe they are just procrastinators".

An attempt has been made to replicate the results of Karpinski's research. Eszter Hargittai, associate professor of communication studies at Northwestern University and a fellow this year at Harvard's Berkman Center for Internet & Society, says the following: "We found no evidence that Facebook use correlates with lower academic achievement". More details on this are available here.

The main point I want to make is based on the opening comment in this post: that attention is a scarce resource. While students may allocate their time across activities such as study and online social networking, how much attention are they giving to each activity? Are they so zoned into Facebook that that they can't cope with the Twitter Mania, but when it comes to study is the intensity a lot less? Is designated study time interrupted by SMS text messages, tweets and the like? Or is there just less concentration applied to the activity of study?

On his MindBlog, Derek Bownds states that concentration is the issue of our time(s) (sic). He mentions a NYT article by John Tierney on the science of concentration. A clip from this is below:

"You can lead a miserable life by obsessing on problems. You can drive yourself crazy trying to multi-task and answer every e-mail message instantly...Or you can recognize your brain’s finite capacity for processing information, accentuate the positive and achieve the satisfactions of... the focused life."

With attention and concentration such critical issues in the production functions for study, research and a whole range of activities that feed into the knowledge economy, I have taken a renewed interest in mindfulness - something which Michael has mentioned on the blog. A number of times. Liam also linked to a lecture by Kabat-Zinn on mindfulness - originally presented to staff at Google.

The framework I am most interested in, however, is what this blog post is essentially about - the economics of attention. Attention economics is an approach to the management of information that treats human attention as a scarce commodity, and applies economic theory to solve various information management problems. It's not new - Herbert Simon was perhaps the first person to articulate the concept of attention economics when he wrote:

"...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it" (Simon 1971, p. 40-41).

Simon noted that many designers of information systems incorrectly represented their design problem as information scarcity rather than attention scarcity, and as a result they built systems that excelled at providing more and more information to people, when what was really needed were systems that excelled at filtering out unimportant or irrelevant information (Simon 1996, p. 143-144). We have such systems now - you can skip the ads on TV if you want! You can also block out email spam.

"Attention economics" today is largely concerned with the problem of getting consumers to engage with advertising (sellers compete for scarce attention). However, it would be worth developing a stream in attention economics that relates to academic production functions, the knowledge economy, health behaviour and well-being. A final thought: we should all be careful with those little drops of dopamine. And bear in mind that business is going to get your attention using style, for style is what competes for our attention amidst the din and deluge of the new media (see Richard A Lanham - The Economics of Attention).


Simon, H. A. (1971), "Designing Organizations for an Information-Rich World", written at Baltimore, MD, in Martin Greenberger, Computers, Communication, and the Public Interest, The Johns Hopkins Press, ISBN 0-8018-1135-X.

Men Behaving Badly

I felt suitably chastened after reading this. Illustrative quote includes: "In a fascinating and innovative study, Coates and Herbert (2008) advance the notion that steroid feedback loops may help explain why male bankers behave irrationally when caught up in bubbles." Someone send me a paper if I am wrong but I do not see compelling evidence yet that companies with more women at the top (controlling properly for other aspects of the work environment) behaved more cautiously during the last financial boom period. The final paragraph in the article seems more intuitive to me, namely the short-run assymetric nature of incentives distorted financial behaviour. Once again though, very difficult to test in the wild particularly as companies may adopt such structures in response to other companies adopting them.

http://www.voxeu.org/index.php?q=node/3572

Coates, J. M. and J. Herbert, “Endogenous Steroids and Financial Risk Taking on a London Trading Floor,” Proceedings of the National Academy of Sciences 105, 2008, 6167-6172.

How Do You Feel About the Recession?

Liam asked recently: why do recessions feel bad?

He mentioned fear of the future, sadness due to the loss of posessions, and anger. In a recent blog-post, Derek Bownds suggests that money doesn't make us happy, certainty does (based on an Op-Ed piece from Daniel Gilbert in the N.Y. Times). Hence, uncertainty aversion?

Catherine Rampell - Shift to Saving

An interesting NYT article, echoing some points touched on by Gerard O'Neill in his talk at Geary on the legacy of high savings rates that may result from the current downturn

link here

Broadband Penetration

The position of Ireland in international broadband penetration really is a big problem. The OECD figures that came out the other day really should be hopping around the media here. I havent seen any coverage yet but the figures really are poor.

link here

Short-Term and Long-Term Jobs

A recent CES-IFO paper contributes to the hysteresis/scarring literature again showing that short-term posts have causal effects on obtaining longer term posts.

here

Sex Hormones do not effect economic behaviour

Thanks to Peter for pointing this out

“The study reinforces the importance of conducting carefully controlled randomized studies”, added Magnus Johannesson at Stockholm School of Economics. “Previous studies looking at correlations between sex hormones and economic behavior have indicated that sex hormones are important. But such correlative evidence does not prove that sex hormones affect economic behavior. It may just reflect that sex hormones vary together with some other factor that affects economic behavior.”

Another possibility is that the previous correlative results are due to publication bias; the tendency of scientific journals to only publish so called “positive results” (and decline publishing countervailing evidence). “Publication bias is probably the worst problem of scientific publishing today. We were lucky to have a serious editor”, Johannesson concluded.

http://www.hhs.se/BusinessAndSociety/press/pressreleases/Pages/economicbehavior.aspx

JEEA - New Issue

The JEEA latest issue contains some very relevant papers on behavioural economics. Ive blogged about some of them before.

The paper on Behavioural Welfare Economics by Bernheim is a challenging read that attempts to outline normative structures for some of the recent empirical and conceptual advances in behavioural economics.

http://ideas.repec.org/a/tpr/jeurec/v7y2009i2-3p267-319.html

Second-to-fourth digit ratio predicts success among high-frequency financial traders

"We found that 2D:4D predicted the traders’ long-term profitability as well as the number of years they remained in the business. 2D:4D also predicted the sensitivity of their profitability to increases both in circulating testosterone and in market volatility. Our results suggest that prenatal androgens increase risk preferences and promote more rapid visuomotor scanning and physical reflexes."

PNAS article - Coates et al. (2009)

The Paradox of Decline in Female Happiness

Thanks to Chris Sibley for sending this on

http://www.nber.org/papers/w14969

Stephenson and Wolfers NBER Paper

Abstract
By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women's happiness has declined both absolutely and relative to men. The paradox of women's declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging -- one with higher subjective well-being for men.

Early Manifestations of Personality and Adult Health

Another study linking childhood personality to later health this time by Laura Kubzansky and colleagues in this months issue of Health Psychology:

"Children with high attention reported better self-rated health and fewer illnesses as adults; more distress-prone children reported worse self-rated health and more illnesses as adults."

Studies showing personality linkages to mortality (e.g. Friedman et al., 1993) have a strong design as they use an objective outcome measure and avoid many possible confounds in self-report measures. By using self-rated health or illnesses it's always possible that what we're seeing is distress prone people complaining more and rating their health as bad and illnesses as more frequent and severe. Controlling for adult personality and health behaviours helps to specify if early personality is important due to it's link to fundamental biological processes or due to it's influence on a trajectory of personlity and behaviour over the lifespan. I didn't see this in the Kubzansky study. However, it is supported by a series of studies point to childhood distress, neuroticism, instabiliy as risk factors for later illness and premature mortality and to conscientiousness, self-regulation, dependability etc. as protective. The biggest challenge at the moment is to test the potential causal linkages that may exist between personality, life-events and health. Potential pathways are outlined well in an article by Timothy Smith in Perspectives on Psychological Science.

Pay hazelnuts get monkeys (to cooperate)

Job Market Prospects for Economists

This may have been posted before but worth putting up again - would like to see more solid figures but good news for a lot of the people who read this blog

link here

Users Guide for Regression Discontinuity Designs

Regression Discontinuity Designs in Economics

David S. Lee
Thomas Lemieux

This paper provides an introduction and "user guide" to Regression Discontinuity (RD) designs for empirical researchers. It presents the basic theory behind the research design, details when RD is likely to be valid or invalid given economic incentives, explains why it is considered a "quasi-experimental" design, and summarizes different ways (with their advantages and disadvantages) of estimating RD designs and the limitations of interpreting these estimates. Concepts are discussed using using examples drawn from the growing body of empirical research using RD.

http://ideas.repec.org/p/nbr/nberwo/14723.html

Financial Vulnerability Assessed Using Microdata

Another NZ example, this time from the NZ Fed

Financial vulnerability of mortgage-indebted households in New Zealand - evidence from the Household Economic Survey

Aggregate household debt more than doubled between 2001 and 2008, alongside similarly rapid increases in house prices. Aggregate data, however, cannot tell us which types of households – by income and assets – have built up the most debt over the period, which is important for assessing their financial vulnerability. This article uses information from the Household Economic Surveys (HES) for 2001, 2004 and 2007 to provide some evidence on this issue. The survey evidence suggests that, overall, financial vulnerability in the household sector did not greatly increase over the period of strong house price rises this decade. Simple modelling suggests that some households would, however, be vulnerable to simultaneous large shocks to house values, interest rates and employment.

Pay Peanuts Get Monkeys

A paper below by NZ Economist Glenn Boyle argues that disparities relative to outside options matter.

Link Here

Abstract
In most countries, academic pay is independent of discipline, thus ignoring differences in labor market opportunities. Using some unique data from a comprehensive research assessment exercise undertaken in one such country -- New Zealand -- this paper examines the impact of discipline-independent pay on research quality. I find that the greater the difference between the value of a discipline's outside opportunities and its New Zealand academic salary, the weaker its research performance in New Zealand universities. The latter apparently get what they pay for: disciplines in which opportunity cost is highest relative to the fixed compensation are least able to recruit high-quality researchers. Paying peanuts attracts mainly monkeys.

Completing an Economics PhD in Five Years

Thanks to Christian for pointing out this paper published in the AER today (by Stock, Finegan and Siegfried). Endogeneity concerns aside, finishing your PhD within the designated time is positively affected by:

- larger 1st year PhD classes
- shared offices
- being male
- whether someone went to a top tier university for undergrad

Factors that have a negative effect are:

- doing your PhD with a top tier instution
- high attrition in the 2nd year
- pre-thesis research work requirement
- having an undergrad degree in economics

The authors conclude that "many considerations unique to individual students and faculty that we cannot measure—such as ambition, motivation, persistence, organizational skills, the creativity of students, and interest in students’ success as well as mentoring and motivational skills among graduate faculty—matter more than the myriad characteristics we were able to measure, which collectively account for less than 15 percent of the variation in completion among students."

Some insights on how non-cognitive personality constructs (such as ambition, motivation, persistence and organisation) apply to graduate education are provided in the Educational Assessmnet Journal (2005) by Patrick Kyllonen, Alyssa Walters and James Kaufman from the Princeton Educational Testing Service. We discussed this research on the blog before: here.

Stock and Siegfried (2006) reported on time-to-degree for economics Ph.D.'s in the United States in the AEA Papers and Proceedings. That research motivated me to consider that the duration of the Ph.D. process (or time-to-degree) may be a source of comparability problems in self-rated skills matching for Ph.D. graduates (see a previous post on skills-matching here).

The idea is that the more the individual has committed to the process of atatining a Ph.D., the more he or she will want to view the outcome of that process favourably. Taking a year longer during Ph.D. training implies a very particular opportunity cost. There is a precedent for this type of comparability-bias in the anchoring vignettes literature.

Buckley (2007) used the anchoring vignettes technique to investigate the "rose-coloured glasses" effect, which refers to parents reporting higher levels of satisfaction with a school solely or partially as a justification for the effort expended in the choice process. The analogy to 'time-to-degree' is about the amount of time expended in the Ph.D. process. (See a previous discussion of Buckley's research here).

The Time Paradox: The New Psychology of Time That Will Change Your Life

by Philip Zimbardo and John Boyd
Free Press, 2008
Review by Marion Ledwig, Ph.D.

Extract from review:

The authors of this milestone-volume on what kind of effect our attitude towards time has on our whole psychological well-being and life with its twelve excellent chapters are the professor emeritus at Stanford University and past president of the American Psychological Association Dr. Philip Zimbardo and his former graduate student at Stanford University and currently the research manager at Google Dr. John Boyd.

The full review is available here.

There's a video below which shows Zimbardo and Boyd giving a talk about the book at Google. Here's a link to the Talks@Google website.

Reevaluating Learning - NBER Summary Duflo

From the NBER site, an examination of factors that improve student outcomes from Esther Duflo. The review is based on experimental evaluations of changes in remedial education, classroom organisation and teacher incentives, among others

http://www.nber.org/reporter/2009number1/duflo.html

From National Time Accounts to National Time Banking

A week from tomorrow, Michael Daly will speak on "From National Time Accounts to National Time Banking" at the Making an Impact event taking place in the Helix, DCU, 26th May at 7.45pm. If you would like to apply for complimentary tickets, you can email research@hea.ie. More details about the event are available here. Gerard O'Neill recently linked to a presentation that Micahel has put together on time banking - available here.

Measuring the Financial Sophistication of Households

Important paper on predicting common costly investment mistakes

http://ideas.repec.org/p/nbr/nberwo/14699.html

Education drive for unemployed youth

http://www.rte.ie/news/2009/0518/education.html

The Department of Social and Family Affairs is encouraging Ireland's 25,000 young unemployed to upskill. Will this encouragement be effective or do the government need to take more effective measures?

Jim O'Leary on Unemployment

Jim O'Leary on Unemployment again

Income Transfers and Child Health

A recent VOX paper argues for the efficacy of well-designed income transfers in promoting child health. How much should 0.07 of a standard deviation on things like maths scores be viewed as a success for a policy that costs so much money. If improving child test scores and mental health among poor children is the aim, how does such success compare, for example, to direct family based interventions?

"First, we find that an extra $1,000 of child benefits leads to an increase of about 0.07 of a standard deviation in the math scores and the Peabody Picture Vocabulary Test, a standard measure of language ability for young children ages four through six.
These findings are of the same magnitude as the Dahl and Lochner (2008) study mentioned earlier, which helps to corroborate their result.

Second, we examine the impact of child benefits on indicators of mental and emotional wellbeing using standardised psychometric scores available in the NLSCY. We find that more child benefit income leads to lower aggression in children and decreases in depression scores for mothers.

Finally, for physical health we find little evidence of improvements related to increased child benefits—although we do find a decrease in families reporting their children have been hungry due to lack of food."

http://www.voxeu.org/index.php?q=node/3567


The general issues on parental transmission are teased out well in the paper below by Currie

http://www.nber.org/papers/w13987.pdf

IRCSET Scholarships Second Round

IRCSET Scholarships have been called again:

http://www.ircset.ie/Default.aspx?tabid=68

Behavioural Economics and Mortgage Arrears

As people begin in Ireland to lose their jobs in areas where properties are overvalued and perhaps unlikely to recover, we need to think further about the behavioural effects of such sharp declines in wealth. An abundance of behavioural evidence would suggest that people may not be handling this optimally and given the potential for stressful emotions to distort judgment and decision-making even further, it is worth thinking about potential failures in this market.

Its worth also looking at the financial advice from the two main places that people might go to. Behavioural economics reading would lead me to be somewhat sceptical of the role of pure information like this in helping people make decisions.

IFSRA Page

Money Advice Page

Wolfram Alpha

Wolfram Alpha is an amazing looking web application for the guy who created Mathematica. It is described as a computational knowledge engine.It can basically tell you or calculate tons of stuff in many domains.Its very hard to describe but the introductory video is very impressive. It is being launched later today.

http://www.wolframalpha.com/index.html

Daughters and Voting Patterns

The Columbia Stats blog is good value and is one of our "listed blogs" below. A discussion that has particularly caught my attention is the debate about the effects of child gender on political patterns. I really hope an industry doesnt emerge regressing anything that can be measured on child gender, but at first glance there are very interesting issues here.

here

here

Pete Lunn on Behavioural Economics and Crisis

Pete Lunn gives his views on the implications of the current crisis for the status of economic orthodoxy

http://www.thersa.org/fellowship/journal/features/features/descent-of-rational-man

Graduate Employment

Gerard O'Neill puts forward a proposal for a tax rebate on hiring graduates. The key features are below.

-Every business in the country that is up to date with their tax returns receives a graduate voucher, which they must start using between now and the end of 2009.
- If they choose to use the voucher, they have to employ a graduate (third level or plc) who is not already in employment or has graduated in the past year and been unemployed since.
the company can then use the voucher to offset, say, 50% of the graduate's salary, up to a limit of, say, €24,000.
-The offset would take the form of a straightforward tax rebate: in other words, the employer would submit their normal monthly PAYE tax return, deducting 50% of the graduate salary for that month (€1,000 at maximum level).
- The voucher is valid for one year from the date of employment of the graduate.
- It would be a policy decision whether to extent it for, say, another year - after that, recovery should have set in and thus the scheme is no longer required

http://www.turbulenceahead.com/2009/05/worthwhile-investment.html

Socioeconomic Status and the Developing Brain

Recent paper in TICS

Socioeconomic status and the developing brain
Daniel A. HackmanandMartha J. Farah

Center for Cognitive Neuroscience, Department of Psychology, University of Pennsylvania, 3720 Walnut Street, Room B51, Philadelphia, PA 19104-6241, USA


Abstract

Childhood socioeconomic status (SES) is associated with cognitive achievement throughout life. How does SES relate to brain development, and what are the mechanisms by which SES might exert its influence? We review studies in which behavioral, electrophysiological and neuroimaging methods have been used to characterize SES disparities in neurocognitive function. These studies indicate that SES is an important predictor of neurocognitive performance, particularly of language and executive function, and that SES differences are found in neural processing even when performance levels are equal. Implications for basic cognitive neuroscience and for understanding and ameliorating the problems related to childhood poverty are discussed.

Estimating the Social Value of Higher Education

A recent IZA paper

Estimating the Social Value of Higher Education: Willingness to Pay for Community and Technical Colleges
by Glenn C. Blomquist, Paul A. Coomes, Christopher Jepsen, Brandon C. Koford, Kenneth Troske
(March 2009)

Abstract:
Much is known about private returns to education in the form of higher earnings. Less is known about social value, over and above the private, market value. Associations between education and socially-desirable outcomes are strong, but disentangling the effect of education from other causal factors is challenging. The purpose of this paper is to estimate the social value of one form of higher education. We elicit willingness to pay for the Kentucky Community and Technical College System directly through a stated-preferences survey and compare our estimate of total social value to our estimates of private value in the form of increased earnings. Our earnings estimates are based on two distinct data sets, one administrative and one from the U.S. Census. The difference between the total social value and the increase in earnings is our measure of the education externality. Our work differs from previous research by eliciting values directly in a way that yields a total value including any external benefits and by focusing on education at the community college level. Our preferred estimate indicates the social value of expanding the system substantially exceeds private value by approximately 50 percent.

Leaving Certificate

I attended a talk recently by David Lubinksi who has been working on major studies of gifted individuals. One point that is made in his work is that people who are gifted in spatial intuition and likely to be the inventors and designers of the future are missed in standard aptitude tests. His website is below so that you can read his papers first hand. It got me thinking very clearly again about the use of the Leaving Certificate as a screening mechanism for college. I have generally been in favour of not tinkering with this too much. I admit that part of this comes from my own experience of coming from a working class neighborhood and being (by cohort standards) academically bright. Well meaning interview boards would likely have rejected me faster than a straight academic dogfight such as the Leaving Certificate represents and, in general, Ireland seems to me too small a country to have a system where committees would have a bearing on who gets into publicly funded universities.


Website


However, over time I have become increasingly frustrated to think that some of the potentially most productive people in society are being held back because they cant summon up the motivation to conjugate Gaelic verbs or are puzzled as to why anyone should care about the rantings of old Irish poets or why Cathy is in love with Heathcliff. To follow Lubinski and people with this mindset, how many people with gifted spatial intuition and related abilities are we missing out each year due to this process? If the Government is serious about promoting STEM achievement, should we consider an alternative track for gifted students to signal their abilities other than a general exam process. For example, should Engineering, Mathematics and Science subjects also be allowed to allocate places based on something similar to scores on domain relevant aptitude tests? The precise nature of the tests needed is outside my expertise but assuming for a moment that one can measure these traits, would it then also be mad to suggest that the ones who are really in the top of the distribution would be identified earlier and given more support?

Related to this, I am working at present on a detailed memo to follow on the research internships memo that I posted last year. This memo examines the literature on support systems for very high ability undergraduate college students, including things like offering them mentorship, extra courses, scholarships abroad and so on. I will be posting on this over the next few months. We have had a lengthy and productive access debate in Ireland but far less debate on how to deal with exceptionally talented individuals. While some of the latter issue is also an access issue, there is a lot more to it and we should try to use this blog to tease out some of the issues. Comments welcome.

What is Socionomics?

According to Wikipedia, in 1979, Robert Prechter postulated that social mood drives financial, macroeconomic and political behavior, in contrast to the conventional notion that such events drive social mood. His description of social mood as the driver of cultural trends reached a national audience in a 1985 cover article in Barron's. Prechter coined the term "socionomics" and in 1999 published an exposition of socionomic theory, The Wave Principle of Human Social Behavior.

Since then, the counter-intuitive premise of the socionomic hypothesis -- that in contexts of uncertainty, endogenous processes (not exogenous causes) create patterns of social behavior -- has gained attention in academic journals (see below), and in research funded by the National Science Foundation.

The Socionomics Institute links to studies, papers and articles that illustrate and explore the socionomic perspective.

Prechter, Robert R., Jr. (2001). "Unconscious Herding Behavior as the Psychological Basis of Financial Market Trends and Patterns," Journal of Psychology and Financial Markets (now Journal of Behavioral Finance), vol. 2 no. 3, pp. 120-125.

Olson, Kenneth R. (2006). "A Literature Review of Social Mood," Journal of Behavioral Finance, vol. 7, no. 4, pp. 193-203.

Prechter, Robert R., Jr., and Wayne D. Parker (2007). "The Financial/Economic Dichotomy in Social Behavioral Dynamics: The Socionomic Perspective," Journal of Behavioral Finance, vol. 8 no. 2], pp. 84-108.

Reminder: iQ Prize of €10,000 to Help A Good Idea

I mentioned before that Irish firm iQ Content are offering €10,000 for a good business idea. They are offering the iQ Prize for the country’s best new tech idea. The idea can be anything that’s internet-based; more details are available from www.iqprize.ie (no strings attached). There are 76 entries so far and 3 days to go. The closing date is Tuesday May 12th. See the video below to hear Morgan from iQ Content discuss why the competition was set up.

How Applied Research Can Help To Revive The Economy

Damien Mulley links to the new Enterprise Ireland blog on research commercialisation. The blog mentions that Enterprise Ireland are currently working on getting this year’s applied research forum organised (to be held on June 18th). The website is live and posters have gone out to the colleges to advertise it. The main focus is on how applied research can help to revive the economy.

Also, Enterprise Ireland has commissioned a special award called 'One to Watch'. The 2009 winner will be announced at this year's Applied Research Forum. The winner of 'One to Watch' 2008 was Dr. Declan Dagger from Trinity College Dublin. Dr. Dagger and his team developed a new personalised e-learning tool to tackle the challenges presented by the fact that no two people learn the same way. A new company called Empower the User has since been formed around the technology with Dr. Dagger in the position of CEO.

ESRI: Ireland in Recession

The Cork Economics Blog mentions that there is a new page on the ESRI website providing links to academic research of relevance for understanding the ongoing recession in Ireland.

Movie Attendance and Violent Crime

A QJE paper by Stefano Della Vigna puts forward the provocative result that (after controlling for temporal effects) the release of violent films actually reduces assaults. The reason for this is that although the films do stimulate aggression, they also keep aggressive people off the street and not only keep them off the street but do so at a time when they would quite likely be drinking and getting into trouble otherwise. Bear in mind that many of these films are disproportionately viewed by young men and that many of them have several million tickets sold for times that would be associated otherwise with drinking then the results become a lot more intuitive.

While this paper cannot say anything about the long-run effects of exposure to violent images, it is certainly a very interesting result and methodology and the idea has many potential applications.

http://www.econ.berkeley.edu/~sdellavi/

The theory extensions and practical applications of neuroscience

The 90's was officially designated the 'decade of the brain' usshered in by George Bush (ahem..) in July, 1990. What followed was an exponential increase in publications and attention (and attention publications) in the area of neuroscience. Science and nature became homes for the familiar 'light-up' fMRI brain images. Time magazine published 'a users guide' to the brain and a myriad of other such images dominated psychological media articles across the globe. Of course, this is great research and much of the coverage is warranted. However, one wonders to what extent this can be to the detriment of psychological theory and the study of behaviour in the laboratory and ecologically valid settings..

For instance, an article published last week in science asked 'Why can some people exert self-control whilst others have severe problems?'. The answer 'it's because the ventromedial prefrontal cortex encodes the value of a stimulus but the dorsolateral prefrontal cortex fails to down-modulate this value in line with your goals of course!! I think this is fantastic research and definitely adds an extra dimension to existing theory (the neural underpinnings). But I don't see entirely, how it extends the theory or how much of neuroscience research has lead to practical applications that couldn't be derived from the study of behaviour alone. If this is the case, investment largely in neuroscience or neuroeconomics (over psychology or economics)will constrain the development of the social sciences.

Take a recent article on practical implications of developments in neuroscience Neuroscience and education:
from research to practice . This article discusses the very novel idea of 'brain-based learning in school'.. prior to the article teachers must have trained another body part in the classroom.. Teachers can identify through behavioural tests if their students are right or left brained and then use this information to provide ‘left- and right-brain balanced’ learning...Another programme "Brain GymR prescribes a series of simple body movements “to integrate all areas of the brain to enhance learning”.".. still not seeing where the brain comes in aside from potentially assessing the neural effect of such a programme.

A third innovation "Whole-brain learning" is partially movement based and "enables students to access those areas of the brain previously unavailable to them." You are not trying a new movement therapy.. you are accessing a new brain area.. much better. Finally, the punch line "the effects of any type of training programme that changes behaviour will be reflected in the ‘remapping’ of neural networks." So we were doing brain-based learning all along!!

Is The Recession Making Students Study Harder?

University students in the UK study for two hours and 12 minutes more (per wek) now than they did two years ago, according to the Higher Education Policy Institute (HEPI). This institute surveyed 2,000 undergraduates on their degree workload, the size of their classes and their contact time with lecturers. The time UK students spend in lectures and seminars is the same as it was two years ago.

"Hepi found that on average the students, who were first and second years at universities in England, spent 29 hours per week studying for their degrees, compared to its survey two years ago when a similar cohort of 15,000 students told Hepi they spent 26.8 hours studying per week."

In 2007 Hepi found that students in England spend fewer hours studying than students elsewhere in Europe, with the average student in England putting in 25 hours per week compared with more than 30 in the Netherlands and 35 in France.

"Pam Tatlow, chief executive of the university thinktank Million+, said: "This is a very restricted survey of only 2,000 students with no indication of the response rate and just three questions asked, compared to previous reports which surveyed 15,000 students."

More details are available from the Guardian here. The Hepi report is available here.

Survey Data in Economics – Methodology and Applications

Call for Papers

On November 06-07, 2009, the Business Cycles Analysis and Survey Department of Ifo will organize a conference in Munich on the topic of survey data in economics. The conference is intended to discuss ongoing research on survey data and its application in economics.

The organizers welcome both theoretical and empirical contributions on survey data in economics, with a special emphasis on methodology and the usage of business survey data. Among the central issues that could be addressed in this conference are:

- methodology of business surveys
- dealing with non-response
- quantitative vs. qualitative responses
- behavioural aspects in surveys
- forecasting performance of survey data in business-cycle research
- econometrics of survey data
- usage of micro-data in empirical economics

More details available here.

The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment

Lindqvist, Erik (Research Institute of Industrial Economics (IFN))
Westman, Roine (New York University)

IFN Working Paper No. 794, 2009

We use data from the military enlistment for a large representative sample of Swedish men to assess the importance of cognitive and noncognitive ability for labor market outcomes. The measure of noncognitive ability is based on a personal interview conducted by a psychologist. Unlike survey-based measures of noncognitive ability, this measure is a substantially stronger predictor of labor market outcomes than cognitive ability. In particular, we find strong evidence that men who fare badly in the labor market in the sense of long-term unemployment or low annual earnings lack noncognitive but not cognitive ability. We point to a technological explanation for this result. Noncognitive ability is an important determinant of productivity irrespective of occupation or ability level, though it seems to be of particular importance for workers in a managerial position. In contrast, cognitive ability is valuable only for men in qualified occupations. As a result, noncognitive ability is more important for men at the verge of being priced out of the labor market.

Discrimination in Ireland: Evidence from a Field Experiment

From the ESRI - interesting!

Abstract
This study breaks new ground in Irish research by providing direct evidence of discrimination using a field experiment that investigates discrimination in recruitment on the basis of ethnic and national origin. Two individuals, identical on all relevant characteristics other than the potential basis of discrimination, apply for the same jobs. Responses are carefully recorded, and discrimination or the lack thereof is then measured as the extent to which one applicant is invited to interview relative to the other applicant. In this experiment we test discrimination against 3 minority groups: Africans, Asians and Europeans (Germans), using distinctive names to signal ethnic or national origin, as is typical in experiments of this nature.
It was found that candidates with Irish names were over twice as likely to be invited to interview for advertised jobs as candidates with identifiably non-Irish names, even though both submitted equivalent CVs. We did not find significant differences in the degree of discrimination faced by candidates with Asian, African or German names. Strong discrimination was found against minority candidates across the occupations tested (lower administration, lower accountancy and retail sales).
http://www.esri.ie/publications/latest_publications/view/index.xml?id=2761

NBER Paper on Subprime Default Determinants

http://papers.nber.org/papers/w14625
Bajari et al (2009)

Abstract

The turmoil that started with increased defaults in the subprime mortgage market has generated instability in the financial system around the world. To better understand the root causes of this financial instability, we quantify the relative importance of various drivers behind subprime borrowers' decision to default. In our econometric model, we allow borrowers to default either because doing so increases their lifetime wealth or because of short-term budget constraints, treating the decision as the outcome of a bivariate probit model with partial observability. We estimate our model using detailed loan-level data from LoanPerformance and the Case-Shiller home price index. According to our results, one main driver of default is the nationwide decrease in home prices. The decline in home prices caused many borrowers' outstanding mortgage liability to exceed their home value, and for these borrowers default can increase their wealth. Another important driver is deteriorating loan quality: The increase of borrowers with poor credit and high payment to income ratios elevates default rates in the subprime market. We discuss policy implications of our results. Our findings point to flaws in the securitization process that led to the current wave of defaults. Also, we use our model to evaluate alternative policies aimed at reducing the rate of default.

HEA Report on Career Opportunities in Computing & Technology

This HEA report is available here.

"At an overall level, this research suggests that the challenges in encouraging more young people to consider a career in computing and technology are more extensive than what can be addressed in a single communications campaign. A number of individual challenges need to addressed in a variety of ways."

The report mentions that Higher level maths and certain science subjects (i.e. physics and chemistry) are seen by many students to be particularly difficult and requiring a level of work that is not conducive to the objective of maximising CAO points. (The same issue was raised by me this week on this blog). The report suggests that a key challenge lies in making these subjects more relevant to students, perhaps through more practical or relevant teaching methods, or developing interest from an earlier age, as per the objective of the Primary Science Initiative. In the aforementioned post from this week, I also flagged the challenge of making these subjects more relevant to students, and I suggested that moves towards compulsory Leaving Cert. Applied Maths and CBEL might be worth considering.

Also, the report documents that for many secondary students, their first exposure to career guidance comes in fifth year after having made their Leaving Certificate subject choices. This presents a further challenge for communication as it can mean that many may have already closed-off particular third level possibilities (for example, by switching to ordinary level maths or not selecting particular science-based subjects).

The Irish Social Sciences Platform

The Irish Social Sciences Platform (ISSP)is "an all-island platform of integrated social science research and graduate training focusing on the social, cultural and economic transformations shaping Ireland in the 21st century." ISSP will focus its efforts on investigating three broad themes of national importance – creating balanced development, sustaining communities and building the knowledge economy.

"A core undertaking of ISSP is the creation of a national social sciences graduate platform capable of delivering graduate research education. Graduate students will undertake taught courses, training workshops and summer schools, and have supervisory committees that span disciplines and partner institutions. The taught component will include modules on professional development,
methodology and specialist areas."

From Vox - John List on Field Experiments

John List being interviewed at the AEA meetings

http://www.voxeu.org/index.php?q=node/3522

(How) Does the Leaving Cert. Prepare You For The Labour Market?

At the ESRI Labour Market Conference last week, Philip O'Connell discussed how the educational profile of unemployed males has evolved such that the biggest increases (between 2006 and 2008) in unemployment for males occur for those with Leaving Certificate and PLC qualifications. In the recent New York Times interview with Obama (that Colm mentioned), the U.S. President states that "I think the big challenge that we’ve got on education is making sure that from kindergarten or prekindergarten through your 14th or 15th year of school, or 16th year of school, or 20th year of school, that you are actually learning the kinds of skills that make you competitive and productive in a modern, technological economy." So are graduates of Ireland's Leaving Cerificate (Leaving Cert.) and PLC programmes getting the skills they need for the modern economy? There is also the vocational Leaving Cert. and Applied Leaving Cert. to bear in mind - see link here.

As the majority of students take the conventional Leaving Cert., and what I have to suggest may benefit all students, I will orientate my comments on Leaving Cert. curriculum-reform to the conventional programme. It should be noted that Senior Cycle education (i.e. Transition Year and Leaving Cert. programmes) is currently the subject of a major review by the National Council for Curriculum and Assessment (NCCA), including curriculum re-structuring and re-balancing. One example is that the NCCA has developed a draft syllabus for a new subject in the area of social and political education, called Politics and Society. This could be an engaging optional subject for many Leaving Cert. students.

In the review of senior cycle education, there is a particular focus on the role of ICT in the review of subjects and the development of short courses. It is proposed that some of the short courses developed will have a significant ICT focus, for example: "Media Communications Technology". Curriculum, Assessment and ICT in the Irish Context: A Discussion Paper sets forth the NCCA vision for Information and Communication Technology (ICT) in curriculum and assessment in Irish primary and post-primary schools. "This document was developed to stimulate discussion and deliberation regarding the potential of ICT to support and extend the curriculum development and assessment work of the NCCA."

The comments I make below bear in mind exisiting developments in Senior Cycle curriculum strategy and are largely motivated to address the question - (how) does the Leaving Cert. prepare students for the labour market? This includes concerns about:
(i) those whose education stops at Leaving Cert.
(ii) those whose higher education options are restricted by Leaving Cert. subject choices
(iii) those who enter higher education but subsequently drop out and find they have to mostly use what they learned in their Leaving Cert.
(iv) those who might consider returning to higher education as a mature student

Some motivation for addressing these concerns is provided by Obama in the recent NYT interview: "My grandmother never got a college degree. She went to high school... She went to work as a secretary. But she was able to become a vice president at a bank partly because her high-school education was rigorous enough that she could communicate and analyze information in a way that, frankly, a bunch of college kids in many parts of the country can’t...we’ve got to — in our education-reform agenda — we’ve got to focus not just on increasing graduation rates, but we’ve also got to make what’s learned in the high-school and college experience more robust and more effective..."

The main suggestion that I want to propose is to re-orientate the Leaving Cert. curriculum to have four compulsory subjects: English, Maths, Applied Maths (geared towards information technology) and the “Chemistry and Biology of Everyday Life” (CBEL was discussed on the blog before - here). Having four compulsory subjects at Leaving Cert. (geared towards the needs of the economy) is suggested because (a) the economy is suffering a massive unemployment shock, and (b) there are many potential problems with subject choice at Leaving Cert., including the possibilities that:

- there is only partial information available until the student enters the college course of their choice (in other words, they may not know what they would really like to do)
- students may choose “high points” courses simply because they are “high points” courses (and not true preferences)
- another problem is exemplified by the applicant who decides to look only at courses within a certain points-band. For example, let us say that a student anticipates getting 340 points. He or she will scour the lists of last year's cut-off points, picking courses that "cost" 340 points or thereabouts, almost regardless of the content of the course

An article from Science describes the CBEL initiative as a potential solution to preference misalignmnet - at least in the specific subject domain of science. The article describes how some American universities have been trying to match science students to their interests. The course called “The Chemistry and Biology of Everyday Life” (CBEL) was developed using students’ interests in everyday life as the starting point for instruction. Of course, the American higher education system is largely non-specialised at entry to under-graduate level (see more on this here), which allows for initiatives such as CBEL post high-school. But why not have something similar for Leaving Cert. in Ireland, which builds on what students learned in the Junior Cert.? This would keep students exposed to science after the Junior Cert. (if they are not doing any science subjects as options).

One question arises which is obvious enough: "Where do we have time to fit in CBEL during 5th and 6th year?". This may be bring us onto some very difficult questions about the economic returns to certain courses of education at Leaving Cert. While Irish language is important for heritage (and knock-on effects on tourism), do we not get enough of that benefit by schooling students in the Irish language up until Junior Cert.? Why not have students take CBEL instead of Irish for Leaving Cert.? Those who want to study Irish at third-level (and I can see the need for this) could enter third-level courses that pick up where Junior Cert. Irish left off.

The fourth compulsory subject that I suggest is the Applied Mathematics course, geared strongly towards information technology. I suggest that this could be taken at Higher or Ordinary Level, but the hope would be that more students would take it at Higher Level compared to the existing (abstract) course on Maths. Take-up of the exisiting Maths course at Higher Level is extremely low, so it may be more realistic to accept that some students will continue to take the abstract Maths course at Ordinary Level (where they will still get a Maths work-out). But that they will persist with Higher Level in a new "applied" Maths course with real-world focus. This course could be useful for securing IT employment (especially for those whose education stops at Leaving Cert.) or for securing entry onto IT courses in higher education (and critically, performing well on those courses).

So the situation I suggest would be as follows - students have to take Maths, Applied Maths, CBEL and English. And then they would choose three additional courses. Looking at Leaving Cert. subject choice between 1997 and 2005 (based on anslysis I conducted on the blog before), we know that most students choose Geography, Business Studies, French and Biology for their optional subjects. The following are the most popular subjects, in order. (I should point out that after Accounting, the numbers taking any subject are quite low):

1. Geography
2. Business Studies
3. French
4. Biology
5. Home Econ.
6. History
7. Art
8. Construction
9. Physics
10. Chemistry
11. German
12. Accounting

I should also point out that there is a sizeable fall of about 50% in the numbers taking any subject after Home Economics. We can see that the top four (Geography, Business Studies, French and Biology) include one of Hist/Geog, one "Business" subject, one language and one science subject. I think that having (only) three of these "broad choices" alongside Maths, Applied Maths, CBEL and English would be a very rounded preparation before doing anything after second-level. And this might also be a better preparation for entering the labour market, which is what this argument is all about.

My hunch is that Geography, Business Studies, French, Biology and Home Econ are being chosen because they are easier exams to score more points from. I suspect that French is being chosen to get into NUI colleges, but that Home Econ would be a higher preference if the NUI language rule did not exist. Under the scope of my suggested curriculum-reform, Leaving Cert. students can still choose a language given that they have three optional choices. It could also be argued that having four (instead of three) compulsory choices might be fairer, in that it could be viewed as a more level playing-field.