Vox Interview with Dean Karlan on Microfinance

a very informative interview with Dean Karlan on Microfinance

Among others, topics discussed include:

- expanding what we mean by microfinance

- whether microfinance should be just to provide credit for entrepeneurship

- interaction of gender and microfinance

- evaluating microfinance

- incorporating time inconsistency into programme design and evaluation

link here

Karlan's papers mainly deal with experimental interventions in development economics and incorporate models from behavioural economics. They are mostly available on his webpage below

link here

ESRI: Explaining Structural Change in Cardiovascular Mortality in Ireland 1995-2005: A Time Series Analysis

Explaining Structural Change in Cardiovascular Mortality in Ireland 1995-2005: A Time Series Analysis

Layte, Richard / O'Hara, Sinead / Bennett, Kathleen (Dept. of Pharmacology and Therapeutics, St. James's Hospital)

Abstract
Background: Deaths from circulatory respiratory causes among older age groups in Ireland fell sharply between 1995 and 2005 as did the seasonality of deaths from these causes.Objective:To examine whether a structural break has occurred in deaths from circulatory causes in Ireland between 1995 and 2005 and test whether this can be explained by changes in the prescribing of cardiovascular medications during the same period controlling for weather trends. Methods: Grouped logit Time series models were used to identify if and at which quarter a structural break occurred in Irish circulatory deaths between 1995 and 2005. Data on cardiovascular prescribing and temperature within the quarter were entered into the trend-break model to examine whether the structural break could be explained. Results: There was a reduction in circulatory deaths of 0.82%/quarter among men 1995-2005 which increased by 0.5%/quarter after the final quarter of 1999. The 25% excess winter deaths among men fell by 9% after Q4 1999. Among women the long term decline in deaths of 0.53%/quarter increased by 0.48% after Q1 2000 and seasonality was reduced by 6.8%. The structural break in trend and seasonality was higher among those aged 85+. Controlling for temperature, beta-blocker, ace-inhibitor and aspirin medications rendered the structural break indicator insignificant among all age groups for men. Diuretic, statin and calcium channel blocker medications could not explain the break point for men aged 75 to 84. Beta blocker, aspirin and calcium channel blocker medications explained mortality trends among all age groups among women. Ace inhibitor and statin could not explain trends amongst women aged 65-74 and nitrates and diuretics did not explain trends for any age group. Conclusions: Models suggest that cardiovascular prescribing significantly reduced circulatory mortality among men and women aged 65+ after 1999 in Ireland but the effect of prescribing was lower among women than men. Beta-blocker, ace inhibitor and aspirin medications were more successful than statin, diuretic and nitrates at explaining trends.

Scott-Long: Workflow of Data Analysis

Thanks to Martin for pointing this out to me. I have not read this yet but it look precisely what is needed for people starting empirical research.

link here

The Workflow of Data Analysis Using Stata, by J. Scott Long, is an essential productivity tool for data analysts. Aimed at anyone who analyzes data, this book presents an effective strategy for designing and doing data-analytic projects.

In this book, Long presents lessons gained from his experience with numerous academic publications, as a coauthor of the immensely popular Regression Models for Categorical Dependent Variables Using Stata, and as a coauthor of the SPOST routines, which are downloaded over 20,000 times a year.

A workflow of data analysis is a process for managing all aspects of data analysis. Planning, documenting, and organizing your work; cleaning the data; creating, renaming, and verifying variables; performing and presenting statistical analyses; producing replicable results; and archiving what you have done are all integral parts of your workflow.

Long shows how to design and implement efficient workflows for both one-person projects and team projects. Long guides you toward streamlining your workflow, because a good workflow is essential for replicating your work, and replication is essential for good science.

An efficient workflow reduces the time you spend doing data management and lets you produce datasets that are easier to analyze. When you methodically clean your data and carefully choose names and effective labels for your variables, the time you spend doing statistical and graphical analyses will be more productive and more enjoyable.

After introducing workflows and explaining how a better workflow can make it easier to work with data, Long describes planning, organizing, and documenting your work. He then introduces how to write and debug Stata do-files and how to use local and global macros. Long presents conventions that greatly simplify data analysis—conventions for naming, labeling, documenting, and verifying variables. He also covers cleaning, analyzing, and protecting your data.

While describing effective workflows, Long also introduces the concepts of basic data management using Stata and writing Stata do-files. Using real-world examples, Stata commands, and Stata scripts, Long illustrates effective techniques for managing your data and analyses. If you analyze data, this book is recommended for you.

Behavioural Economics Lectures

I am working again on the structure of the behavioural economics course and comments very welcome

link here

Last years course focused on developing the core of behavioural economics including lectures on rationality, emotion, identity, intertemporal choice and basic applications to public policy. I am currently hoping to extend the scope and restructure the course somewhat.

In particular, I am trying to zone in on the relevance of behavioural economics to core areas of economics. With this in mind, I have added lectures such as:

- a lecture on consumption, examining the main theories of consumption such as the life-cycle model and the evidence on how people behave and related behavioural theories

- a lecture on investment, examining psychological models of investment and their implications for financial regulation.

- a lecture on business cycles and growth. the business cycles aspect draws heavily from Akerlof and Shiller and looks at recent models of output volatility that incorporate behavioural explanations. The growth side is not well formed yet. I will incorporate work on technology adoption as well as new models of human capital development linking economics, psychology and neuroscience.

Comments welcome. Am happy to talk to people about working versions of these lectures if people have particular interest in any of the topics.

Vox on European Research Universities and Licensing

The extent to which research activity conducted in universities in Europe can generate an economic return is a subject of discussion from a number of perspectives. The low rate of licensing in the EU compared to US is discussed in this VOX page

link here

Risk Behaviour in Preschool Children

This has already been mentioned elsewhere, but it's a nice compliment to Kevin's post.

Risk-seeking behavior of preschool children in a gambling task

Bruno Moreira, Raul Matsushita, Sergio Da Silva

A recent neurobiology study showed that monkeys systematically prefer risky targets in a visual gambling task. We set a similar experiment with preschool children to assess their attitudes toward risk and found the children, like the monkeys, to be risk seeking. This suggests that adult humans are not born risk averse, but become risk averse. Our experiment also suggests that this behavioral change may be due to learning from negative experiences in their risky choices. We also showed that though emotional states and predetermined prenatal testosterone can influence children’s preferences toward risk, these factors could not override learning experiences.

Link

Dan Goldstein's advice for the academic job market

Dan Goldstein, who visited the Geary Institute earlier this year, edits Decision Science News. It is a website that does what it says on the tin and also a little more. For example, here is a piece by Dan drawing on his experience of interviews on the academic job market. Dan was applying to marketing departments but there are insights here that would go down well in any situation.

Gender Differences in Risk Behaviour: Does Nurture Matter?

Alison L. Booth, Patrick Nolen
Women and men may differ in their propensity to choose a risky outcome because of innate preferences or because pressure to conform to gender-stereotypes encourages girls and boys to modify their innate preferences. Single-sex environments are likely to modify students' risk-taking preferences in economically important ways. To test this, we designed a controlled experiment in which subjects were given an opportunity to choose a risky outcome - a real-stakes gamble with a higher expected monetary value than the alternative outcome with a certain payoff - and in which the sensitivity of observed risk choices to environmental factors could be explored. The results of our real-stakes gamble show that gender differences in preferences for risk-taking are indeed sensitive to whether the girl attends a single-sex or coed school. Girls from single-sex schools are as likely to choose the real-stakes gamble as boys from either co ed or single sex schools

http://d.repec.org/n?u=RePEc:esx:essedp:672&r=cbe

The Effect of Child Weight on Academic Performance: Evidence using Genetic Markers

von Hinke Kessler, Scholder, S
This paper examines the relationship between children’s weight and academic outcomes using genetic markers as instruments to account for the possible endogeneity of body size. We use medically assessed measures of body size which are more appropriate than the generally used BMI measures. OLS results indicate that leaner children perform better in school tests compared to their heavier counterparts, but the IV results, using genetic markers as instruments, show no evidence that fat mass affects academic outcomes. We compare these IV results to those using the instruments generally adopted in this literature. We show that the results are sensitive to the instrument set and argue that several of the commonly used instruments do not meet the exclusion restrictions required of a valid instrument.

http://d.repec.org/n?u=RePEc:yor:hectdg:09/25&r=edu

Journal Club List so Far

Thanks to Eimear for sending this on. As announced in his email, Alan will be taking over running the journal club so suggestions to him.

19th Feb :Early-Life Conditions and Later-Life Outcomes:

Currie & Hyson (1999): ‘Is the impact of health shocks cushioned by socioeconomic status? The case of low birthweight.’

26th Feb Libertarian Paternalism:

Thaler & Sunstein (2003): ‘Libertarian paternalism is not an oxymoron’
Klein (2004): ‘Oh yes it is’
Loewenstein & Haisley: ‘Oh no it is isn't... in theory, but would it work in practice?’

5th March Early-Life Interventions:

Heckman (2007): ‘The productivity argument for investing in young children' (http://www.nber.org/papers/w13016)

13th March Biomarkers:

Steptoe et al. (2004): ‘Effort–reward imbalance, overcommitment, and measures of cortisol and blood pressure over the working day.’
Jacobs et al., (2007): ‘A momentary assessment study of the relationship between affective and adrenocortical stress responses in daily life.’
Steptoe et al., (2005): ‘Tools of psychosocial biology in health care research’.

19th March Measuring Well-Being:

Kapteyn, Smith & Van Soest (2008): ‘Comparing life satisfaction’.

26th March Sociology, Identity and Economics:

Akerlof and Kranton: "An Economic Analysis of Identity and Career Choice"
Akerlof and Kranton (2002): "Identity and Schooling: Some Lessons for the Economics of Education"

2nd April Do smoking bans work?:

Shetty et al (2009): “Changes in U. S. Hospitalization and Mortality Rates Following Smoking Bans”.

9th April Happiness and causality:

Oreopoulos (2007): “Do dropouts drop out too soon? Wealth, health and happiness from compulsory schooling.”

16th April DRM:

Kahneman et al. (2004), ‘A survey method for characterizing daily life experience: the Day Reconstruction Method’.
Kahneman and Riis, ‘Living, and thinking about it: two perspectives on life’

23rd April Religion and Culture:

Guiso et al. (2003): “People’s opium? Religion and economic attitudes”.
Giuliano (2007): “Living arrangements in western Europe: Does cultural origin matter?”

30th April Gender differences and the labour market:

Olivetti and Petrongolo (2008): "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Pay Gaps"
Gneezy et al. (2003):“Performance in competitive environments: Gender differences”

7th May Health Gradients:

Smith et al. (2006): “The SES health gradient on both sides of the Atlantic”

14th May Decision making and risk:

Tversky and Kahneman (1974): “Judgment under uncertainty: Heuristics and biases”.

21st May Discrimination in Ireland:

McGinnity et al. (ERSI) (2009): “Discrimination in recruitment: Evidence from a field experiment”

28th May Angrist week:

Angrist (2004): “American education research changes tack”.

4th June Momentary assessment and the chronically ill:

Riis et al. (2005): “Ignorance of hedonic adaptation to hemodialysis: A study using Ecological Momentary Assessment”
Garling et al. (2009): “Impact of routine out-of-home activities on subjective well-being”

10th June Public Health:

Carlisle and Hanlon (2008): “‘Well-being’ as a focus for public health? A critique and defense”.

26th June R and D spending:
Goolsbee (1998): “Does Government R and D policy mainly benefit scientists and engineers?”
Lane (2009): “Assessing the impact of science funding”

2nd July Early-life shocks:

van den Berg, Lindeboom & Portrait (2009): “Long-run effects on longevity of a nutritional shock early in life: The Dutch potato famine of 1846-1847”

10th July Unemployment, recession and suicide:

Hintikka et al. (2009): “Suicide mortality in Finland during an economic cycle, 1985 -1995”

Kposowa (2001): “Unemployment and suicide: a cohort analysis of social factors predicting suicide in the US National Longitudinal Mortality Study”

17th July Privatisation and mortality rates:

Stuckler, King and McKee (2009) "Mass privatisation and the post-communist mortality crisis: a cross-national analysis"

24th July Weather, emotions and the stock market:

Hirshleifer and Shumway (2003) “Good Day Sunshine: Stock Returns and the Weather”.

Thaler and Posner Debate

While "plain vanilla" is one of the phrases that is banned from this blog, the debate between Thaler and Posner on the effectiveness of behavioural interventions in mortgage markets is well worth reading.

It is summarised on the Nudge blog here

I have a list of background readings to the debate on libertarian paternalism for the lecture series linked below. I will be building this up through the year

link here

The Irish Students Abroad

An article in yesterday's Irish Independent reports a jump in the numbers of Irish undergraduate and post-graduate students at college elsewhere in Europe. Apparently, the proportion of Irish students abroad almost doubled to 13.8pc between 2002 and 2006 (above the EU average of 2.6pc), according to the Eurydice Key Education Data report. It is also indicated that almost 18,000 Irish students were studying for primary degrees or post-graduate qualifications elsewhere in Europe in 2006. There are also about 5,000 Irish students in the US.

Surveying Migrant Groups: A comparison of sampling methods

Recent Research by McKenzie and Mistiaen published in Journal of Royal Statistical Society

Few representative surveys of households of migrants exist, limiting our ability to study the effects of international migration on sending families. We report the results of an experiment that was designed to compare the performance of three alternative survey methods in collecting data from Japanese-Brazilian families, many of whom send migrants to Japan. The three surveys that were conducted were households selected randomly from a door-to-door listing using the Brazilian census to select census blocks, a snowball survey using Nikkei community groups to select the seeds and an intercept point survey that was collected at Nikkei community gatherings, ethnic grocery stores, sports clubs and other locations where family members of migrants are likely to congregate. We analyse how closely well-designed snowball and intercept point surveys can approach the much more expensive census-based method in terms of giving information on the characteristics of migrants, the level of remittances received and the incidence and determinants of return migration. Copyright (c) 2009 Royal Statistical Society.

TED Blog and Conference

"Next time you see someone in a Ferrari, don't think: 'They're greedy." Think: "This is someone incredibly vulnerable and in need of love." - Alain De Botton,

Some interesting sessions at the recent TED conference. The blog has some videos such as Alain de Botton's talk.

The behavioural economist in me has led me in particular to want to know more about the following topics:

Karen Armstrong on Compassion (Armstrong's books on religion are outstanding)

Loretta Napoleoni on Terrorism and Criminality

Misha Glenny on Organised Crime

Paul Romer on Charter Cities - These ideas seem to getting mixed reviews on some of the websites but it has occupied a relatively high "mind-share" for me since I saw his video talks. Available on the side bar of this blog.

GMOs and Food Safety

Here is a nice article highlighting some of the dangers of genetically modified food. However, this article shows that the Obama administration doesn't seem to be too concerned about the purported dangers.

Days of our Lives

No, not the popular American sitcom that has been running on NBC since 1965. It's an article by Singer and Willett in the Psychological Bulletin on event history analysis for psychologists: "Modelling the Days of Our Lives: Using Survival Analysis When Designing and Analysing Longitudinal Studies of Duration and the Timing of Events".

Google Trends and Irish Unemployment: Searching For The "Dole"?

Liam recently mentioned some new research by Google that forecasts unemployment. The Google research notes that one of the strongest leading indicators of economic activity is the number of people who file for unemployment benefits. Google forecast initial claims (for unemployment benefit) using the past values of the time series, and then add Google Trends variables to see how much they improve the forecast. They find a 15.74% reduction in mean absolute error.

The relevant data-source in Ireland is the Live Register. In the comments section of this earlier post, I discuss the various definitions of claims for unemployment benefit in Ireland. Unfortunately Google Trends only provides information on search volume in Ireland for "job seekers benefit" since near the end of the first quarter in this year. There is data on search volume in Ireland for "job seekers allowance" since the start of this year. For the latter term there is spike at the end of the first quarter this year, which may be related to the supplementary budget of April 7th.

There is a longer time series for search volume in Ireland related to the term "dole". This data is available since the end of 2007; there appears to be an upward trend in place since last summer, as shown below.

Why Study Time and Duration in Higher Education?

According to John Willett and Judith Singer, educational researchers stuying student dropout and teacher attrition typically ask whether specific events occur by particular points in time. In their article "From Whether to When..." (rotate clockwise to read), these authors argue that a more powerful and informative way of framing such questions is to ask when the transitions occur. They suggest that survival analysis (also known as event history analysis) lends itself naturally to the study of the timing of educational events.

Call for Papers: Health Economics Association of Ireland

Call for Papers: Health Economics Association of Ireland (HEAI)
Venue: The ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2

Date: 22/10/2009
Time: 12.30 to 5.00 pm

The Health Economics Association of Ireland (HEAI) holds regular meetings where work in progress by participants is presented and discussed. The papers presented typically focus on issues of relevance to Irish health policy makers, applying health economic techniques to Irish and European data.

The next HEAI meeting will be held at the Economic and Social Research Institute (ESRI) on Thursday 22nd October 2009, 12.30 – 5pm.

We are currently seeking submissions for the next HEAI meeting. If you would like to be considered, please submit a short abstract to either Anne Nolan (anne.nolan@esri.ie) or Samantha Smith (samantha.smith@esri.ie) by Friday
4th September 2009.

Eurostat and Sanco: Consumers in Europe

Worth reading from a behavioural economics perspective, this document quantifies a substantial amount of information about consumer markets in Europe including details such as extent of provide switching

link here

Credit Constraints and the Persistence of Unemployment

Via Economic Logic, an interesting new paper on the interaction of unemployment and credit constraints

Dromel, Kolakez and Lehman
link here


In this paper, we argue that credit market imperfections impact not only the level of un- employment, but also its persistence. For this purpose, we Örst develop a theoretical model based on the equilibrium matching framework of Mortensen and Pissarides (1999) and Pis-sarides (2000) where we introduce credit constraints. We show these credit constraints not only increase steady-state unemployment, but also slow down the transitional dynamics. We then provide an empirical illustration based on a country panel dataset of 19 OECD countries. Our results suggest that credit market imperfections would significantly increase the persistence of unemployment.

Romer - Charter Cities

Paul Romer's website detailing his ideas on the concept of Charter Cities is below. This is certainly something to keep an eye on.

link here

Scrapping Retirement Age

Again, the BBC carries a piece on the potential removal of the default retirement age.

link here

One of the age charities comments:

"We all know about the problems this country faces with pensions, and the best way of solving that is to encourage people to work a few years longer. It's good news for employers and for the economy, for people to stay on in work into their sixties."

The main employers groups calls the move "disappointing".

IZA Paper - Fertility Decline and the Heights of Children

From IZA Discussion Papers

Fertility Decline and the Heights of Children in Britain, 1886-1938
by Timothy J. Hatton, Richard M. Martin
(July 2009)

Abstract:
In this paper we argue that the fertility decline that began around 1880 had substantial positive effects on the health of children, as the quality-quantity trade-off would suggest. We use microdata from a unique survey from 1930s Britain to analyze the relationship between the standardized heights of children and the number of children in the family. Our results suggest that heights are influenced positively by family income per capita and negatively by the number of children or the degree of crowding in the household. The evidence suggests that family size affected the health of children through its influence on both nutrition and disease. Applying our results to long-term trends, we find that rising household income and falling family size contributed significantly to improving child health between 1886 and 1938. Between 1906 and 1938 these variables account for nearly half of the increase in heights, and much of this effect is due to falling family size. We conclude that the fertility decline is a neglected source of the rapid improvement in health in the first half of the twentieth century.

Ideas42 Harvard

While I have been active in trying to stamp down the growing and worrying use of phrases from Hitchhikers Guide emerging around here, the website below is well worth a look. The paper below on behaviourally informed financial regulation relates to some posts over the last few days

link here

behaviourally informed financial regulation

"ideas42 was established in June 2008 by Sendhil Mullainathan (Harvard University), Antoinette Schoar (MIT), Simeon Djankov (IFC), Eldar Shafir (Princeton), Jeffrey Kling (Brookings), and Michael Kremer (Harvard) as a Social Science Research and Development laboratory at Harvard University, with the goal of using scientific insights to design innovative policies and products, both domestically and internationally. The initial sponsors were Harvard University and IFC (World Bank Group).The origin of the name lies in The Hitchhiker's Guide to the Galaxy, a novel by Douglas Adams. There, Deep Thought - the most brilliant computer - is tasked with finding the meaning of life. "Alright," said Deep Thought. "The Answer to the Great Question..."

Google Talks: Siegel on the Mind

Wolfers: Vox Talks on Happiness Economics

An interview from Vox on Happiness Economics following Wolfers co-authored paper on happiness and inequality

link here

Debt Clock: Calling on Nerds

Anyone got a basic idea for how to put a debt clock for Ireland on the blog, namely a simple image that updates in real-time showing how much the country owes?

Structured Procrastination

One motive for blogging as written down by a Stanford Philosopher and originator of Philosophy Talk (which I have added to the side bar - a good set of shows)

link here

The Impending Demise of the University

Very interesting article but not sure if it warrants the title. I think increasingly students will want to work with all sorts of different ways of getting material in the course of a module. I also agree that a model where students get to learn from many different types of people other than academics is a good one. Resources such as MIT Online, for now, is helping if anything to strengthen the position of many other institutions. Its possible that a change in structure will make technology a threat to universities role as the main providers of post-school formal education but for now it feels like its strengthening that role if anything.

link here

Crooked Timber: Ethics and Economics

Crooked Timber has an interesting post on ethics and economics. Long overdue a discussion of this issue with relation to Irish economics syllabi also

link here

Behavioural Economics and Development Economics

I promised a few PhD students working on development economics that I would provide some details of papers and researchers at the interface of behavioural economics and development economics. What follows is very incomplete so please feel free to add some more if you know of them. The intersection raises a whole host of questions about theory, empirical research and policy and it would be worth talking about it more given that there are a number of projects here in both fields.

The Economist article "international bright young things" gives a good overview of some top class researchers at this interface

The paper by Angus Deaton that has been discussed here substantial "Randomisation in the Tropics" is a mind-blowingly interesting perspective from one of the world's leading economists, which concludes with optimism about the potential for integrating behavioural insights into bridging between structural models and empirical RCT and IV work

The MIT Poverty Lab and associated researchers including Esther Duflo (see e.g. link), and Abhijit Banerjee evaluate a substantial body of development RCT's that are increasingly being informed by behavioural economics.

Sendhil Mullainthan is conducting some of the most high-profile work at the intersection of these fields. See "Development Economics through the lense of Psychology" for an overview of some of the issues.

Improving Financial Capability in Ireland

The document below is very important as it spells out roughly the current approach to dealing with issues surrounding what we could loosly call behavioural biases in financial decision making in the Irish regulatory environment. The approach is a combination of monitoring of financial capability combined with financial education.

link here

Behaviorally Driven Financial Regulation

It was widely reported during the US election that Obama is sympathetic to incorporating behavioural economics into policy making and the appointment of Cass Sunstein as the head of his Office of Information and Regulatory Affairs is indicative of this.

A recent debate in the US is very instructive to keep an eye on for those interested in the debate about behavioural economics and policy. There is currently a proposal to develop a new consumer protection agency aimed at home loans, credit cards and other financial products with powers well beyond those currently existing in the system. Industry representatives from many of the US's largest banks and financial agencies are pressing vigorously to kill this idea.

link here

As well as the industry disagreeing with this idea, the complexity of the various agencies overseeing financial regulation is also leading to turf wars emerging among the various agencies, as detailed in the NYT article below.

link here

Discounting and Climate Change

"Discounting for Climate Change"
Author(s):
Anthoff, David / Tol, Richard S J / Yohe, Gary W. (Wesleyan University, Middletow)

Abstract:
It is well-known that the discount rate is crucially important for estimating the social cost of carbon, a standard indicator for the seriousness of climate change and desirable level of climate policy. The Ramsey equation for the discount rate has three components: the pure rate of time preference, a measure of relative risk aversion, and the rate of growth of per capita consumption. Much of the attention on the appropriate discount rate for long-term environmental problems has focussed on the role played by the pure rate of time preference in this formulation. We show that the other two elements are numerically just as important in considerations of anthropogenic climate change. The elasticity of the marginal utility with respect to consumption is particularly important because it assumes three roles: consumption smoothing over time, risk aversion, and inequity aversion. Given the large uncertainties about climate change and widely asymmetric impacts, the assumed rates of risk and inequity aversion can be expected to play significant roles. The consumption growth rate plays multiple roles, as well. It is one of the determinants of the discount rate, and one of the drivers of emissions and hence climate change. We also find that the impacts of climate change grow slower than income, so the effective discount rate is higher than the real discount rate. Moreover, the differential growth rate between rich and poor countries determines the time evolution of the size of the equity weights. As there are a number of crucial but uncertain parameters, it is no surprise that one can obtain almost any estimate of the social cost of carbon. We even show that, for a low pure rate of time preference, the estimate of the social cost of carbon is indeed arbitrary—as one can exclude neither large positive nor large negative impacts in the very long run. However, if we probabilistically constrain the parameters to values that are implied by observed behaviour, we find that the expected social cost of carbon, corrected for uncertainty and inequity, is approximate 60 US dollar per metric tonne of carbon (or roughly $17 per tonne of CO2) under the assumption that catastrophic risk is zero.

Socioeconomic Status and Higher Level Education in Ireland

A paper by Delma Byrne at the ESRI linked here

Abstract
In this paper I investigate the extent to which the Irish higher education system promotes inclusion or diversion in relation to social selectivity. In doing so, stratification processes are examined for two educational outcomes: inequality in the type of higher education institution attended (institutional differentiation) and the level of qualification pursued at higher education (qualification differentiation). The paper considers the individual and school level influences on these two educational outcomes and concludes that the Irish system is inclusive, but class disparities remain in terms of both institutional differentiation and qualification differentiation. Class disparities are largely mediated through educational attainment at the individual level and diversion is particularly evident in relation to the non-manual and skilled manual groups. Furthermore, school effects have a particular influence on those who do not obtain their preference of higher education course.

Varian on Using Google to Forecast Unemployment

Anyone want to try this for Ireland?

link here

Destitution and Care

The image below has stuck with me since I first read it. It seems as strong a description of an awful life of suffering as I have read. Worth remembering the role of parental care, political stability and good healthcare in promoting well-being. Perhaps because they are so obvious, we don't discuss them enough.

"At about 1.30am a thirteen year-old boy was found suffering in front of Nakanoshima Public Hall by a policeman. The youth was treated at a hospital but died at 2pm the same day. He had taken rat poison. Just before his death he faintly related the tragic story of his short life. He gave his name as Kazuo Yamamoto. He became an orphan through war ravage and was sent to an orphanage in Tokyo. Leaving the orphanage, he had been making his living cleaning shoes before coming to Osaka. His last words were "I wanted to die because of a headache". He had no belongings with him."

Japanese News Item, 1954 - From the Oxford Book of Death

Behavioural Health Economics

This is from a little while ago - happy to chair a journal club if anyone interested.

Jeffrey Liebman, Richard Zeckhauser

NBER Working Paper No. 14330
Issued in September 2008
NBER Program(s): HC HE PE
The NBER Bulletin on Aging and Health provides summaries of publications like this. You can sign up to receive the NBER Bulletin on Aging and Health by email.

---- Abstract -----

The behavioral revolution in economics has demonstrated that human beings often have difficulty making wise choices. The most widely chronicled difficulties arise for decisions made under conditions of uncertainty, those whose consequences unfold over significant amounts of time, and decisions made in complex environments. Unfortunately, these are precisely the elements involved when individuals choose a health insurance policy, or decide whether to consume health care services. In this paper, we argue that traditional economic models of insurance are woefully insufficient for analyzing the tradeoffs inherent when giving consumers responsibility for making health care choices. We show that behavioral economics provides a stronger normative justification for many features of our existing health care policy than do the models of traditional economics. We then demonstrate that policy analyses of the wide range of subsidies that permeate the health care system change substantially when viewed from the behavioral perspective. In closing, we discuss how recent policy trends can be fruitfully assessed using a behavioral lens.

When Does Libertarian Paternalism Work?

New NBER Working Paper

Bruce Ian Carlin, Simon Gervais, Gustavo Manso

NBER Working Paper No. 15139
Issued in July 2009
NBER Program(s): CF LE PE POL
---- Abstract -----

We develop a theoretical model to study the effects of libertarian paternalism on knowledge acquisition and social learning. Individuals in our model are permitted to appreciate and use the information content in the default options set by the government. We show that in some settings libertarian paternalism may decrease welfare because default options slow information aggregation in the market. We also analyze what happens when the government acquires imprecise information about individuals, and characterize its incentives to avoid full disclosure of its information to the market, even when it has perfect information. Finally, we consider a market in which individuals can sell their information to others and show that the presence of default options causes the quality of advice to decrease, which may lower social welfare.

Education economics

A nice talk on Australian radio about the use of incentives in education including conditional cash transfers (paying kids to attend school) & class sizes with Andrew Leigh (ANU).

http://www.abc.net.au/rn/lifematters/stories/2009/2632197.htm

The non-effect of one's education on health

Does compulsory education lower mortality?

References and further reading may be available for this article. To view references and further reading you must purchase this article.

Valerie Albouy and Laurent Lequien

Recent studies have claimed to show a significant causal impact of education on health status. Their empirical strategy usually relied on changes in compulsory schooling laws.

Using a French longitudinal dataset, we focus on the effect of school leaving age on mortality at later ages. The two identifying shocks are the Zay and Berthoin reforms, which respectively raised the minimum school leaving age to 14 and 16 years. We implement a non-parametric regression discontinuity design, comparing cohorts born immediately before or after the reforms, and a parametric two-stage approach using information from a larger part of our sample.

None of these approaches reveals a significant causality of education on health. Despite the fact that these reforms increased education levels, and that subsequent declines in mortality are observed, none of these declines appears to be significant. We conclude with a discussion on possible limitations of these two reforms as identifying devices.

Journal of Health Economics Volume 28, Issue 1, January 2009, Pages 155-168

The non-effect of parents education on health

Parental education and child health: Evidence from a schooling reform

This paper investigates the impact of parental education on child health outcomes. To identify the causal effect we explore exogenous variation in parental education induced by a schooling reform in 1947, which raised the minimum school leaving age in the UK. Findings based on data from the National Child Development Study suggest that increasing the school leaving age by 1 year had little effect on the health of their offspring. Schooling did however improve economic opportunities by reducing financial difficulties among households.

References and further reading may be available for this article. To view references and further reading you must purchase this article.

Maarten Lindeboom, Ana Llena-Nozal and Bas van der Klaauw

Journal of Health Economics Volume 28, Issue 1, January 2009, Pages 109-131

Intrinsic Incentives and Evaluation

Related to the last post, I give a lecture in Behavioural Economics on alternative theories of motivation other than financial incentives.

Lecture Here

The intrinsic incentives literature has stressed the extent to which individual's intrinsic motivations to perform their tasks can be crowded out if they are excessively monitored or made to comply with different types of identity-conflicting beurocratic tasks.

In the context of a more behaviourally driven model of researcher and academic productivity, it is worth considering the potential effect of using incentives, punishments and centralised allocation models on the desire of individual researchers and academics to push to perform at very high levels. Related to this, the extent to which cultural and peer environments drive individual academic and researcher performance needs to be thought of a lot more also. A comment on a previous post suggests that just allowing academics to function without any accountability processes or centralisation will create better outcomes than costly central mechanisms that potentially create distortions and crowd out motivation. As against that though, what if people are gaming the system and are not that motivated to perform? What if whole institutions that are receiving public money are not producing anything of value other than lobbying? And perhaps more crucially to the current debate, what if researchers are very intrinsically motivated but have no interest in wider commercial or policy implications of their work? In some circumstances this may create outcomes and Im sure people will reference many geniuses who work oblivious to any practical applications. But is it really a sufficient model of human motivation to power lower level technological and research innovations?

Bruno Frey has written on this topic in a number of papers. Operationalising in the context of the current situation made pose challenges but these forces should not be dismissed.

Research Questions Arising from the McCarthy Report

The McCarthy report raises questions about a number of areas of Irish life, not least of which the area that most people who read this blog are involved in, third and fourth level teaching and research.

Some of the questions that need to be answered on the back of the reports recommendations include:

(i) Is the target of doubling the number of PhD students graduating from Irish universities from the 2003 base a good one? This was first set down in the Strategy for Science Technology and Innovation. The McCarthy report acknowledges that the target is being reached but questions the merits of achieving this task. In particular, it argues that most of this cohort stays in either academic or the public sector and that 20 per cent leaves the country all together. This itself leads to a host of questions about whether increasing the number of PhD graduates in the public sector is a bad thing and whether migration or return migration of PhD graduates is a bad thing.

(ii) The McCarthy report is also sceptical about the economic value of programmes funded under schemes such as the SSTI and PRTLI processes. Once again, it is difficult to ascertain where this skepticism derives from. I cannot read from the current evidence in Ireland whether SFI, PRTLI and related schemes have yielded a return and much more thinking is needed about how one should evaluate this question.

(iii) A related issue is how we should assess the benefits of research funding in future years in terms of improving the standards of teaching, research and innovation in the college system and in generating an economic return. The suggestions made by the report of using basic cost-benefit analyses leave a lot to be desired in my view. We need to begin to think about how to estimate the causal effect of this funding on the outcomes that are being discussed. From there, it will be more plausible to place an economic valuation on the schemes being implemented. Estimates of causal effects need to take into account displacement and crowding out but also need to examine positive spillover effects. There are clearly a lot of difficulties in doing this. Time variation in research funding is heavily correlated with many other factors that might alter outcomes under consideration. Also, researchers and research groups are not (one would hope) randomly selected making even well-controlled OLS type estimates of the effect of research funding on productivity difficult but there are several papers (please blog) that have surmounted these obstacles in other contexts.

(iv) Underlying all of this is some clarity about what the metrics are that should be assessed when evaluating the productivity of research funding. What are the objectives of financing research at a national level in Ireland? Do we wish to improve the volume and quality of research publications coming from academic organisations? Do we wish to increase the numbers of licenses, disclosures, patents and so on? Can these outputs be measured and used as metrics to evaluate the success of research initiatives? To what extent should evaluation exercises take into account the potential that a small number of very successful ventures may account for a large part of the return from research funding. Also, related to the above, how should some of these exercises take into account that such ventures may have been funded anyway by private sources were the public sources not available?

(v) What is the real evidence on the returns to scale and specialisation in research funding. A common opinion expressed is that a small country like Ireland can only compete in a small number of areas. This has justified a view that research funding should focus on large, specialised research clusters with sufficient mass to produce credible international level research. Yet a counter-view is that a country as small as Ireland should not be trying to do this at all but rather should be trying to become reasonably proficient in several areas with a view to facilitating technology transfer rather than trying to shift the technology frontier. This seems like a very difficult question to answer but in some sense we have over 10 years of potential data from dozens of different funding rounds. It must be possible with sufficient access to data and research application to work out a basic function that relates success on a number of outcomes to scale of investment.

(vi) Is research focus damaging teaching? What is the general role of institutions and incentives in mediating between teaching and research? The McCarthy report stressed the importance of more contact time for undergraduates while, in fairness, acknowledging the need for something akin to a workload model to acknowledge the research contribution of academic staff. Some have seen the report as confirming a view that undergraduates have lost out from the increasing focus on research intensivity. This is nowhere near settled in my view regardless of the anecdotes that both sides can muster. My opinion and intuition is that students benefit from being around people who are active research contributors to their field but that there does need to be institutions and incentives that promote the potential student benefits of having research active staff. I have blogged actively about and practice having research intensive activities for undergraduates including internships, research components to their degree and so on.

Its not clear to me at present that anything can fully be said about the potential effects of the McCarthy proposals on research in Ireland other than if implemented they will certainly reduce funding for research and transfer the remaining funding more toward industry research. There are several months remaining before any of these proposals will be acted on and it would be good if people who cared about this area attempted to verbalise more clearly the issues at stake to improve what is currently a very poor quality discussion. I cant see how any sector can claim that they should receive no funding cuts given the scale of our economic deficit. Yet, I also don't believe that the assumptions about research made in the report should be accepted without being looked at properly.

NBER Paper: Valuing Air Pollution with Happiness Data

Recent NBER Working Paper . This is well worth a spin at the journal clubs. The use of this methodology has become increasingly common and I would be interested to see a discussion about the merits and demerits of the approach.

Valuing Public Goods Using Happiness Data: The Case of Air Quality

Arik Levinson

NBER Working Paper No. 15156
Issued in July 2009
NBER Program(s): EEE PE
---- Abstract -----

This paper describes and implements a method for estimating the average marginal value of a time-varying local public good: air quality. It uses the General Social Survey (GSS), which asks thousands of people in various U.S. locations how happy they are, along with other demographic and attitude questions. These data are matched with the Environmental Protection Agency's Air Quality System (AQS) to find the level of pollution in those locations on the dates the survey questions were asked. People with higher incomes in any given year and location report higher levels of happiness, and people interviewed on days when air pollution was worse than the local seasonal average report lower levels of happiness. Combining these two concepts, I derive the average marginal rate of substitution between income and air quality – a compensating variation for air pollution.

New York Times Personal Debt Feature

The New York Times has a very interesting feature on personal debt from a little while back linked here

The piece draws attention in the US context to a number of problems arising due to personal finance decisions gone awry including;

- students in large amounts of debt

- negative equity among homeowners

- older individuals in high amounts of debt due to medical expenses

- older individuals currently broke due a combination of equity release, wealth reductions and home price reductions

Gerard O'Neill rightly points out that the actual number of homes with mortgages on them is smaller than many would think and that the majority of these homes are not in negative equity. I would add to this that most Irish students finance themselves through a combination of parental income and part-time jobs and that current levels of student debt are nowhere near those seen in the US. Furthermore, we do not seem to have a well developed market in Ireland where older people borrow money for very specialised medical treatment.

Yet, there is a concern that many people overstretched themselves strongly on credit cards and related financial innovations over the course of our economic boom and in serious financial dilemmas at present with consequent effects on psychological distress and health patterns. I am currently conducting some research attempting to put some figures on the extent of serious household level financial distress but its not an easy task in Ireland as foreclosures are a rare event meaning that many people may be effectively bankrupt without being officially bankrupt or even subject to foreclosure proceedings.

Oral Histories of Life in 20th Century Ireland

The RTE News Programme linked below discusses an oral history programme being conducted in county clare to examine life during 20th century Ireland

link here

Prize Bonds: You can Never lose

Most people who grew up in Ireland will remember this slogan or something very similar. The An Post prize bonds are a favourite for many people distrustful of anything that involves downside risk. The case for buying Prize Bonds is made here.

My favourite example from the website is the paragraph below.

"Prize Bonds are a flexible, secure, state guaranteed investment. You have the opportunity to win a Jackpot prize of €1,000,000 on the last Friday of every month. With a minimum purchase of €25, that's a huge return on your investment."

A version of prize-bonds seems to have captured attention on the Nudge blog and even the Wall Street Journal. "

Policy Design and Evaluation

Very little of the debate surrounding the McCarthy report has focused on actual economic evidence, and the report itself does not contain any references to scientific articles in Economics.

This is not necessarily a criticism of the report. But it should be remembered that the name "Bord Snip" is a joke name and not the title of the report, which is actually Report of the "Special Group on Public Service Numbers and Expenditure Programmes".

Given the title of such a document, people who lived in a cave and read only this blog and surfaced the odd time for seminars might have expected intense discussion about the precise effect of class sizes on student attainment, or references to randomised trials examining the cost-effectiveness of different types of social welfare systems.

What the report delivered was solid, old-style, common-sense suggestions for where budgets in different departmental divisions had become too fat along with solid recommendations for reducing this. The report is written in very plain English and the authors are in no sense open to allegations of fudging their task or being vague.

It does leave open questions on what should be the status of modern economic analysis in the future shape of public sector development in Ireland. The report leans heavily toward the implementation of traditional solid CBA analysis linked to performance reviews, laudable in themselves but certainly something that could be done without any knowledge of recent literatures in econometrics, behavioural economics, programme design and so on.

The question people who are working in these fields need to ask is whether the work going on in these areas should be having more influence on the discussions on policy in Ireland in areas such as pensions, taxation, aging, health, education, social welfare, transport and so on. I have been fortunate enough to debate these issues with many people in business and policy and views range from a strong belief that policy design is being crippled by a failure to engage properly with new thinking in economics to a view that anything beyond solid accounting and strategic management of targeted policies is a waste of money.

Obviously, my own view leans toward a belief that the new literatures in economics are teaching us a lot about the policy issues that an aging population in Ireland and Europe will face. The bring together of economics, psychology, public health and related fields linked to people who have expertise in the implementation and oversite of policy has, in my view, the potential to dramatically improve the way policies are developed and delivered. At present, such literatures are at the very margins of conciousness for most of the people charged with developing and implementing policy. Economics became a very strong force in countries like Ireland as acceptance emerged of principles of regulation and market systems emanating from the academic literature. The current academic literature is increasingly dominated by accounts of agents with imperfect information and bounded rationality but, as yet, with very small policy impact even internationally (though clearly Thaler and Sunnstein are becoming increasingly discussed and the latter now has a policy position). For people who read this blog, the question is whether behavioural economics is a meaningful career path outside of academia. Will the policymakers, evaluators, business leaders and so on in the next few years be as influenced by the current literature as the older generation were by their literature? A lot will depend on how the US literature and policy landscape develops but a lot more thinking is also needed here.

Stop Worrying about the Recession: You're Scaring the Children

This and other anti-recession slogans are part of an add campaign sponsored by an anonymous US donor

link here

College Accountability

Coming up with ways of making colleges accountable for the money they spend is something that has been long debated across many literatures. The Economix blog discusses this in a number of places including a discussion of a recent report on this issue. Using degrees awarded per money received is an interesting place to start but, as acknowledged, has a pretty strong set of flaws. Obviously, one would prefer some measure of the quality of education given per money received.

http://economix.blogs.nytimes.com/2009/07/21/investing-in-colleges/

Some of the key quotes are fascinating and likely indicative of a potential response to such research in Ireland. I have seen several hundred if not thousand of potential performance indicators that could be used in a university context and Im not sure I have ever seen one that couldn't be gamed in a way to achieve the target while not being in the spirit of what the target is about. There are certainly many in academia who argue that imposing these types of indicators crowd out intrinsic motivation but against that having no accountability also creates bad incentives. If anyone has a resolution to this dilemma, it would be good to hear!

From Economix:
“Some say there’s no way in this business to gauge quality,” said Mr. Kelly, a senior associate at the National Center for Higher Education Management Systems. “For most of the folks on the academic side of things, that’s typically their big rub. They say, ‘Yeah, we can just turn higher education into Wal-Mart.’ The truth is, Wal-Mart may be good for a lot of people.”

Some states — those that ranked well on Mr. Kelly’s productivity metric, of course — have been pleased with the research.

“Folks from Colorado and Florida love it,” he said. “It gives them ammunition to go to their legislatures and say, ‘We’re doing as good as anyone else with our resources! Please don’t cut our funding anymore!’”

The Econometrics of Program Evaluation

An article in the latest edition of the Journal of Economic Literature provides an expert analysis of some of the issues we have been discussing recently. Abstract below:


Recent Developments in the Econometrics of Program Evaluation

Guido W. Imbens and Jeffrey M. Wooldridge

Many empirical questions in economics and other social sciences depend on causal effects of programs or policies. In the last two decades, much research has been done on the econometric and statistical analysis of such causal effects. This recent theoretical literature has built on, and combined features of, earlier work in both the statistics and econometrics literatures. It has by now reached a level of maturity that makes it an important tool in many areas of empirical research in economics, including labor economics, public finance, development economics, industrial organization, and other areas of empirical microeconomics. In this review, we discuss some of the recent developments. We focus primarily on practical issues for empirical researchers, as well as provide a historical overview of the area and give references to more technical research.

Link

Predicting Results by Mere Recognition

Thanks to Dave for pointing me towards some interesting research on the use of fast and frugal heuristics. In this case, simple name recognition provides a relatively efficient algorithm for predicting the results of matches at Wimbledon

link here

Father Guido's Five Minute University

In the wake of the McCarthy report, I thought this video posted on Organisation and Markets offers a very practical solution to cutting costs in higher education

Scrapping Retirement Age

An interesting feature by the BBC on the new UK government report on aging. Hints strongly at a scrapping of traditional retirement age laws

link here

Kelly and O'Grada: The Poor Laws

A new UCD Economics Working Paper by Morgan Kelly and Cormac O'Grada examines the effect of the Old Poor Law

link here

Blog Development

Much of the material that is used to update this blog derives from internal journal clubs, seminars and meetings and so on. The external sources mostly used are IZA, NBER, Academic Journals listed on the side, Blogs listed on the side, emails sent from readers, some good newspapers such as the New York Times. If anyone has any suggestions for web sources that we are underutilising then let me know.

Behavioural Economics and Macroeconomics

Thanks to Keith for pointing out the following links from this weeks Economist

On the status of Financial Economics post-crash

http://www.economist.com/displaystory.cfm?story_id=14030296

What went wrong with Economics?

http://www.economist.com/opinion/displaystory.cfm?story_id=14031376

Behavioural Economics and Monetary Economics

I just came across this today - Janet Yellen from 2007

http://www.frbsf.org/news/speeches/2007/0928.html

"With respect to the Federal Reserve’s dual mandate, behavioral research supports the view that inflation is costly, although very modest inflation might help protect against downward nominal wage rigidity. Behavioral macroeconomic models also provide theoretical underpinnings for the view held by most policymakers that, in the short run, monetary policy can and should strive to stabilize the real economy."

The Effect of Adolescent Health on Educational Outcomes: Causal Evidence using Genetic Lotteries between Siblings

Fletcher, Jason M. & Lehrer, Steven F.
There has been growing interest in using specific genetic markers as instrumental variables in attempts to assess causal relationships between health status and socioeconomic outcomes, including human capital accumulation. In this paper we use a combination of family fixed effects and genetic marker instruments to show strong evidence that inattentive symptoms of ADHD in childhood and depressive symptoms as an adolescent are linked with years of completed schooling. Our estimates suggest that controlling for family fixed effects is important but these strategies cannot fully account for the endogeneity of poor mental heath. Finally, our results demonstrate that the presence of comorbid conditions present immense challenges for empirical studies that aim to estimate the impact of specific health conditions.

http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2032%20-%20Lehrer%20-%20Genetic%20Lotteries.pdf

Kling on why unemployment is higher than expected

An interesting view linked here

"The heterogeneous labor force means that it is very hard to reallocate labor from sectors that decline. Forty years ago, there were lots of industries that employed men with only a high school education. Today, there are fewer such industries, so that when the construction sector and the automobile sector shrink, the job losers have almost nowhere to go. These guys aren't going to turn into school teachers or nurses next month--or ever. It would be nice if the stimulus were actually creating construction jobs, but the reality is that the net increase in state construction projects is probably infinitesimal, as the states wind up juggling their budgets to keep Medicaid going."

Principles of Policy Design and Evaluation

Below is the relevant section from the McCarthy Report on principles that should guide policy design and evaluation in Ireland. It is important that this blog discusses the extent to which the econometric and behavioural literature in this field can actually improve public policy. The work of Heckman on the evaluation of public programmes and the nature of life-cycle inequality is particularly important in my view.

From Chapter 2 of Volume 1.

(i) Every proposed new spending programme should be accompanied by a Public Service Performance Charter, which sets out clearly the business case for the programme, the resources that will be required and output / impact indicators that can be used to measure success or failure of the programme;

(ii) Cost-Benefit Analyses (CBAs) should be conducted for all significant programme proposals, both current and capital, and should be routinely published. All such analyses should routinely include the true cost of the proposed spending including capital, accommodation, overheads and accrued pension costs; and an assessment of other lower-cost means of achieving the same policy objective;

(iii) All capital projects above €30m should be subject to a ‘look-back’ evaluation within a reasonable period of their entry into use to check realised costs and benefits as against the original CBA projections;

(iv) All expenditure programmes should have a ‘sunset clause’ after which the scheme is wound down, unless the programme shows clear positive results on the basis of a rigorous evaluation exercise, including VFM & Policy Reviews. We need a decisive move away from the existing system whereby resources are assigned once and, in effect, retained indefinitely with little regard to results or alternative priorities;

(v) Particularly in the case of grant schemes, the cash allocation should be capped at the outset, so that the Exchequer exposure is limited to the amount envisaged by the Government. The Group understands that Government accounting arrangements already provide for “cash limiting” of this nature;

(vi) The annual Estimates of Expenditure should be produced on a programme-by-programme basis, fully consistent with the Annual Output Statements and our proposed Public Service Performance Charter, with full allocation of administrative and staffing costs; and

(vii) The competency should be developed to allow expenditure programmes to be challenged and tested, on the basis of independent and publicly-available evaluation of value-for-money and effectiveness. This competency should be developed through enhanced VFM & Policy Reviews that are more tightly woven into the resource allocation process, and through a stronger role for an independent body such as the Comptroller & Auditor General (C&AG). In the same way that the Appropriation Accounts are audited by the Comptroller & Auditor General (C&AG) each year, the Annual Output Statement should be subject to independent audit / verification by the C&AG in respect of the outputs actually delivered in the previous
year; the efficiency and effectiveness of delivery; and the quality and measurability of the outputs selected for the year ahead. This initiative would also facilitate the Dáil Committees in the exercise of their independent role in holding Government expenditure up to scrutiny.

City Journal Podcasts

Some very interesting contributions on the link below including interviews with Ed Glaeser and Gary Becker

link here

Rational thinking in healthcare

In this New York Times article (July 15th), Peter Singer professor of bioethics at Princeton University, writes comprehensively about rationing in healthcare. Asking some of the most difficult questions and formulating opinion with provocative research from Joseph Doyle (MIT) amongst others.

One concluding remark of particular note:

"The QALY is not a perfect measure of the good obtained by health care, but its defenders can support it in the same way that Winston Churchill defended democracy as a form of government: it is the worst method of allocating health care, except for all the others. If it isn’t possible to provide everyone with all beneficial treatments, what better way do we have of deciding what treatments people should get than by comparing the QALYs gained with the expense of the treatments?"

Quizdom

UCD has been piloting the use of the audience feedback tool developed by this group. It allows interactive polls to be conducted in talks and lectures. Worth looking at particularly if presenting or teaching on experimental or behavioural work

http://www.quizdom.co.uk/

Development Experiments Scrutinised

Aid Watch has a very strong post on the use of Experiments in Development Economics

link here

Retirement and Health

A major question for practically every industrial economy is the extent to which its aging population can support retirement payments. One solution has been to think about increasing the retirement age or certainly removing barriers for people who wish to work into their late sixties. I have never been given a compelling case for not trying to do this in a world where older life expectancy has increased by so much. Furthermore, there is growing evidence that retiring is bad for one's health. A recent IZA paper examines this empirically - link here

Social Security: Collect now or later

An interesting article in the New York Times about the potential financial benefits of waiting before starting to claim your payments.

link here

Neuroeconomics survey

NEUROECONOMICS - ACTUAL DIRECTIONS IN BEHAVIORAL ECONOMICS
Popescu, Bondrea & Constantinescu

Our article offers a survey of behavioral economics and in its actual directions such neuroeconomics, including his historical origins, results, and methods. Our central thesis is that the development of behavioral economics in important respects parallels the development of cognitive science. Neuroeconomics has further bridged the once disparate fields of economics and psychology. Such convergence is almost exclusively attributable to changes within economics. Neuroeconomics has inspired more change within economics than within psychology because the most important findings in Neuroeconomics have posed more of a challenge to the standard economic perspective. The single most important source of inspiration for behavioral economists has been behavioral decision research, which can, in turn, be seen as an integration of ideas from cognitive science and economics. Neuroeconomics has primarily challenged the standard economi c assump
http://mihaicovaci.intercer.org/site/37/images/28.pdf

Economics and Psychology Conference

This is just by way of update. Our second Economics and Psychology conference will take place on November 6th in Dublin. The exact venue will be confirmed shortly. I would like people to start thinking about their submissions. Particularly, if you are a PhD student and want to present feel free to get in contact for advice about preparing an abstract and presentation.

http://sites.google.com/site/econpsychireland/

Happy Planet Index

From an email from Juliet at the New Economics Foundation

The HPI measures the environmental efficiency with which, country by country, people live long and happy lives. The results turn our idea of progress on its head. The HPI reveals that around the world, high levels of resource consumption do not reliably produce high levels of well-being. Middle-income countries, such as those in Latin America and South East Asia tend to be the closest to achieving sustainable well-being whereas rich, developed nations fail to rank above the middle of the table of 143 countries.

You can explore the results in much more on our website www.happyplanetindex.org

Suggestions for Side-Bars

As you can see, we have been building back up the blog to partly act as a "resources" hub for people who work around this area. It includes things like links to funding bodies, seminar series, upcoming Institute events and we have been adding things like "resources for teaching economics" and so on. I am working on developing a forum for longer posts, as suggested by Kevin. Also, I have been emailing people with the idea of having a podcast series based on interviews and short presentations of ongoing research. Sections on "Resources for Economics PhD Students". "Resources for Psychology Students" and "Resources for Economics Students" will also appear pretty soon to reflect some of our main readers. If you read the blog and you have other suggestions for what would be useful please let me know.

Don't worry, we will also be working a bit more on the colour scheme.

HalfaLoaf.ie

The Irish Independent reports here today that a new forum-orientated social networking website has been set up for unemployed people.

HalfaLoaf.ie aims to help people who have been made redundant cope with their new way of life. HalfaLoaf.ie aims to provide information on social activities, as well as facilitating the discussion of business ideas and networking for job-seekers.

An Article on Job Re-Training in Yesterday's NYT

"In Michigan, where the unemployment rate in May was 14.1 percent, the nation’s highest, 78,000 people are enrolled in the state’s No Worker Left Behind program and 7,800 are on the waiting list...

...a little-noticed study the Labor Department released several months ago found that the benefits of the biggest federal job training program (the Workforce Investment Act) were “small or nonexistent” for laid-off workers...

...economists cited several reasons (for why) retraining might not be effective. Many workers who have lost their jobs are older and had spent their lives working in one industry. In need of a job right away, many pick relatively short training programs, which often have marginal benefits. Job retraining is also ineffective without job creation..."

The full article from the NYT is available here. Deatils of Michigan's "No Worker Left Behind" program are available here. Information about the Workforce Investment Act is available here. The study mentioned in the NYT article ("Workforce Investment Act (WIA) Non-Experimental Net Impact Evaluation") was conducted by Impaq International and is available here since December 2008.

Propensity score matching is used in the study to identify individuals in comparison groups who are similar to the individuals who participated in the WIA program. The study uses administrative data from 12 states, dividing the data for each state into three classes: base data, comprising WIA program participants; comparison data, providing information on individuals in other programs who are matched to treated cases; and outcome data, merged by individual identifier. The states in the study are Connecticut, Indiana, Kentucky, Maryland, Missouri, Minnesota, Mississippi, Montana, New Mexico, Tennessee, Utah, and Wisconsin.

ESRI Seminar - Does Money Matter for Schools

ESRI Research Seminar

"Does Money Matter for Schools?"

Sandra McNally, Helena Holmlund, & Martina Viarengo
Centre for the Economics of Education, London School of Economics and Political Science

There is considerable disagreement in the academic literature about whether raising school expenditure improves educational outcomes. Yet changing the level of resources is one of the key policy levers open to governments. In the UK, school expenditure has increased by about 40 per cent in real terms since 2000. Thus, providing an answer to the question as to whether such spending has an impact on educational outcomes (and whether it is good use of public money) is of paramount importance. In this paper the authors address this issue for England using much better data than what has generally been used in such studies. The authors are also able to test their identification assumption by use of a falsification test. The authors find that the increase in school expenditure over recent years has had a consistently positive effect on outcomes at the end of primary school. Back-of-envelope calculations suggest that the investment may well be cost-effective. There is also some evidence of heterogeneity in the effect of expenditure, with higher effects for students who come from economically disadvantaged backgrounds.

Venue: The ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2
Date and Time: Thursday 9th July 2009, at 4 p.m.

No booking required. All welcome.
Details of forthcoming ESRI Seminars can be found at www.esri.ie.

If you do not wish to receive our notification emails please email press@esri.ie
______________________________________

Doubling the number of PhDs?

Another article questioning current government strategy in this area

http://www.irishtimes.com/newspaper/finance/2009/0706/1224250103510.html?via=mr

Beyond the Central Tendency: Quantile Regression

I’m sure everyone has heard of this before but I’ve been reading up recently on quantile regression. This article by Chris Gowlland, Zhijie Xiao and Qi Zeng offers a nice overview of how the method has developed over the years.

Abridged Abstract from The Journal of Portfolio Mgmt. Spring 2009, Vol. 35, No. 3:

Quantitative investors frequently analyze factor performance using regression based on the familiar ordinary least squares approach. This is highly effective for understanding the central tendency within a dataset, but will often be less useful for assessing the behavior of datapoints close to the upper or lower extremes within a population. But from the perspective of active investors or risk managers, the datapoints at the extremes may be precisely the ones of greatest interest. For such applications, a more appropriate methodology is quantile regression...

Is behavioural economics doomed?

See David Levine's Max Weber lecture for the answer:
http://d.repec.org/n?u=RePEc:cla:levarc:814577000000000274&r=cbe

Smith - The Impact of Childhood Health on Adult Labour Market Outcomes

New IZA Discussion Paper

The Impact of Childhood Health on Adult Labor Market Outcomes
by James P. Smith
(June 2009)

Abstract:
This paper examines impacts of childhood health on SES outcomes observed during adulthood-levels and trajectories of education, family income, household wealth, individual earnings and labor supply. The analysis is conducted using data that collects these SES measures in a panel who were originally children and who are now well into their adult years. Since all siblings are in the panel, one can control for unmeasured family and neighborhood background effects. With the exception of education, poor childhood health has a quantitatively large effect on all these outcomes. Moreover, these estimated effects are larger when unobserved family effects are controlled.

Thaler - Making Mortgages Homer Proof

(Thanks to Keith for sending this) - Thaler has an NYT article arguing that mortgages need to be redesigned with behavioural principles in mind

article here

What effects migration of engineering and science graduates?

New IZA Discussion Paper

What Affects International Migration of European Science and Engineering Graduates?
by Andries de Grip, Didier Fouarge, Jan Sauermann
(June 2009)

Abstract:
Using a dataset of science and engineering graduates from 12 European countries, we analyse the determinants of labour migration after graduation. We find that not only wage gains are driving the migration decision, but also differences in labour market opportunities, past migration experience, and international student exchange are strong predictors of future migration. Contrary to our expectations, job characteristics such as the utilisation of skills in the job and involvement in innovation hardly affect the migration decision. When analysing country choice, countries such as the USA, Canada and Australia appear to attract migrants due their larger R&D intensity. Moreover, graduates with higher grades are more likely to migrate to these countries.

Heckman and Nietzsche

A recent comment article by James Heckman outlining ideas on why economic theory is not as incompatible with Nietzsche and related philosophy as is sometimes suggested

link here

Crime, punishment ,rugby

A key issue in modeling crime is whether imprisonment works in reducing crime and, if so, is it through the incarceration effect (they are banged up so can't commit further crimes) or through deterrence (they are put off crime post-imprisonment) ? The distinction is important because prisons are very expensive in general (& certainly in Ireland). Separating the two effects empirically is tricky.
A similar issue arises presumably with punishing misbehaviour in sport. Does red-carding someone work and, if so, how? Looking at the organized violence called rugby suggests that if there is an effect it is incarceration. If you gouge someone's eyes during a Lions match, a rational person must realize there is a strong chance of being caught. Likewise, Eric Cantona's assault on a fan looked pretty impulsive.

I havn't been able to find much research but this looks relevant:

"Crime, Punishment, and Recidivism Lessons From the National Hockey League"
W. David Allen
Among the fundamental elements of the sport of ice hockey are the on-ice rules violations occasionally committed by players and the penalties assessed for those violations. During the 1998-99 season, the National Hockey League (NHL) for the first time experimented with the deployment of two on-ice referees for a selection of games instead of the customary single referee, significant in that only referees have the authority to call penalties. In this article, that experimental 1998-99 season provides the empirical setting for a test of the economic model of crime, which suggests that economic agents allocate time to legal and illegal activity by considering the benefits and costs of these activities. Here, those economic agents are NHL players. Empirically, relatively nonviolent illegal activity appears significantly influenced by benefits and costs, but particularly violent acts appear to occur more randomly. Particularly violent penalties increase when a second referee is deployed, suggesting a dominant "apprehension effect" rather than a dominant "deterrence effect" of what amounts to an increase in the presence of police.
Journal of Sports Economics, Vol. 3, No. 1, 39-60 (2002)

Threat to Life and Risk-Taking Behaviors

This article reviews the literature focusing on the relationship between perceived threat to life and risk-taking behaviors. The review of empirical data, garnered from field studies and controlled experiments, suggests that personal threat to life results in elevated risk-taking behavior.

Ben-Zur & Zeidner (2009)