Paid Research Internships Geary Institute

There are a limited number of paid research internships positions available researching on projects relating to the Behaviour and Health stream of research in the Geary Institute. We encourage applications from graduates in a range of fields including psychology, economics, sociology and related fields. Subject to the development of a work programme, succesful candidates will work as part of a designated research team and will be expected to contribute to all aspects of the projects including survey design, literature reviewing and report preparation. All interns will have access to the seminar and training programme in Geary as well as being actively encouraged to prepare job and PhD applications.

Details of the projects are available on the website below. Respondents will be paid on the initial research assistant salary scale. Contract durations are from between 3 and 12 months.

http://geary.ucd.ie/behaviour

Interested candidates should send their CV to emma.barron@ucd.ie

Science policy & tutus

The National Science Foundation is about as likely to become a leader in innovation, says inventor and entrepreneur Dean Kamen, as a sumo wrestler is of fitting into a tutu. Speaking this morning to a distinguished group of scientists and educators, Kamen delivered a blunt message: Don't try to do innovation yourself. Instead, give little guys like me the resources to get the job done, and then get out of the way.
Since SFI is to some extent modelled on the NSF this may have implications for science research policy in Ireland. Thats assuming that vested interests don't get to call the shots.
http://blogs.sciencemag.org/scienceinsider/2009/08/dean-kamen-tutu.html#more

Pat Liddy

Pat Liddy is a well-known figure in Dublin having been a prolific tour-guide, artist, article writer and various other roles connected to Dublin over the last 30 years.

He will lead a tour of Dublin City Centre on September 20th at 2pm (further details will be posted), aimed at people working around our research projects in Ireland. In particular, he will give us a discussion of how tenement dublin built up, the local history of some of the schools and hospitals in Dublin and many other features that will be of interest to people working on topics such as the determinants of health in Ireland, education participation and so on. The idea in putting this together is that researchers working on these topics will benefit from actually seeing the contexts of how Dublin evolved and getting a more spatial and historical sense of the topics they are studying. It is a personal initiative rather than official one.

Spaces are limited so let me know if you would like to come along.

Irrational Fear of Risk

William Reville has a piece in today's Irish Times about the fear of risk

NBER Paper: Anchoring Fiscal Expectations

NBER Working Paper;

Anchoring Fiscal Expectations

Eric Leeper

---- Abstract -----

In this lecture, I argue that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary policy and monetary institutions. Making fiscal transparency comparable to monetary transparency requires fiscal authorities to discuss future possible fiscal policies explicitly. Enhanced fiscal transparency can help anchor expectations of fiscal policy and make fiscal actions more predictable and effective. As advanced economies move into a prolonged period of heightened fiscal activity, anchoring fiscal expectations will become an increasingly important aspect of macroeconomic policy.

Behavioural Economics Students

I know that some students who took the class both in psychology and economics last year still look at this blog for reasons known only to themselves. I would be grateful if any of them who are still interested in the topics covered who have encountered real world examples where some of the material applies could get in touch by email.

Loneliness

Loneliness is going to one of the defining issues of an aging society with a population that has been more mobile than any before. I am very familiar with his work but have not yet read Cacioppo's new book, but the link is here and it is certainly one for upcoming discussion. It is great to see such a renowned economist as Edward Glaeser giving the topic such coverage.

A number of data-sets in Ireland can be used to examine loneliness, including the European Social Survey and the Survey of Health Aging and Retirement in Europe. I will put up a proper reading list for Ireland at a later time.

Religion is Good for your Health

Stumbling and Mumbling blog pick up on the Angus Deaton religion paper

link here

A link to the paper is below. As said in the conclusions, don't rush out to mass just yet. The association is likely due to very long-lasting effects of religion on habits and dispositions.

Deaton - Aging, Religion and Health

Garth Brooks: A Celebration of Risk Preferences?

(from The Dance)
And now I'm glad I didn't know
The way it all would end the way it all would go
Our lives are better left to chance I could have missed the pain
But I'd of had to miss the dance

Unfortunately, no good youtube video to accompany this but I'm sure everyone remembers it. Though it should be born in mind that Garth Brooks is expressing these sentiments after the fact. Had he been offered the chance to reduce uncertainty prior to the event, most models would predict that he would have chosen to do so. Having said that, if he was given the knowledge in advance but not the means to change the outcome, then he may have been better off not knowing. Also, if he was told it would turn out badly he would need to have at least some sense that other courses of action wouldn't turn out worse. He may also be simply telling us that the intensity of his preferences for the benefits derived from the early part of the sequence were so strong that even though the end was bad, the overall sum of benefits were higher than for alternative courses of action. Listening to the song here in the background though, I sense that he might also be telling us that an element of risk actually makes things feel better than simply taking the safe option.

Looking at it slightly more deeply, he is telling us that he is glad he didn't know the outcome because he wouldn't have chosen the initial course of action, and thus he would not have experienced the good part at the start. This is trickier and not something he should sing if he is a rational actor. See Shane Frederick's excellent lecture that explains these types of preferences using the philosophy of identity and choice developed by Derek Parfit.

Though let me stop now lest I risk killing a great song!

Third DEW Conference

Event: Third DEW Policy Conference

Venue: Radisson SAS Royal Hotel, Golden Lane, Dublin (http://www.radissonblu.ie/royalhotel-dublin/location)

Date and Time: November 2nd, 2pm to 5.30pm

The third DEW conference will take place on November 2nd between 2pm and 5.30pm in the Radisson SAS Royal Hotel, Golden Lane in Dublin city centre. The conference continues the general themes from previous events surrounding the Irish economic position. Speakers to include David Blanchflower (Dartmouth College), Colm Harmon (UCD), John McHale (NUIG), Patrick Honohan (TCD), Karl Whelan (UCD). A full agenda will be posted on this site in September and at the UCD Geary Institute and Irish Economic Association sites.

Due to the usual issues of venue size and logistics we would appreciate if people could register as soon as possible by emailing emma.barron@ucd.ie

Social Capital and Innovation - ter Weel and Akcomak

How do social capital and government support affect innovation and growth? Evidence from the EU regional support programmes

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Akcomak, Semih (akcomak@merit.unu.edu) (UNU-MERIT)
Ter Weel, Bas (b.terweel@merit.unimaas.nl) (UNU-MERIT)
Additional information is available for the following registered author(s):

Bas ter Weel
Ibrahim Akcomak

This research investigates the role of social capital and government intervention in explaining the differences of innovation output and economic growth for regions of the European Union from 1990-2002. Using several measures of social capital and innovation, and the European Union’s Objective 1, 2 and 5b figures for EU regional support, the estimates suggest that EU funding is not significantly contributing to economic outcomes, while social capital is. Investigation of a possible complementary relationship between social capital and government support reveals that regions with higher levels of social capital are more likely to effectively gain from EU regional support programmes. This result implies that aside from the benefits associated with the direct effect of social capital on economic outcomes, social capital appears to be a critical prerequisite for the effective implementation of government programmes. From a policy perspective, it appears to be important to stimulate education to foster human capital formation. When combined, human capital and social capital are likely to yield stronger effects for effective policies which increase economic outcomes

Yale Lectures on Game Theory

In a continuing example of the rather amazing trend of giving away whole lecture courses from elite institutions entirely free, Benjamin Polak's Yale lecture course on Game Theory is available below. For those who have done or are doing my behavioural economics course, I would particularly recommend Lecture 17 on ultimatums and bargaining.

http://academicearth.org/courses/game-theory

Featured Researcher: Adam Jaffe

The work of Brandeis Professor and NBER Fellow Adam Jaffe is well worth reading in connection with the ongoing debate on Science policy. His IDEAS page is below. His work examines evaluation of research funding in a number of areas.

link to IDEAS page

An example of his approach is below (may require subscription)

The ‘‘Science of Science Policy’’: reflections on the important questions and the challenges they present

Adam B. Jaffe

Abstract

Developing the ‘‘Science of Science Policy’’ will require data collection and analysis related to the processes of innovation and technological change, and the effects of government policy on those processes. There has been much work on these topics in the last three decades, but there remain difficult problems of finding proxies for subtle con-
cepts, endogeneity, distinguishing private and social returns, untangling cumulative effects, measuring the impact of government programs in a true ‘‘but for’’ sense, and sorting out national and global effects. I offer observations on how to think about these issues.

Toward a debate on Science and Technology Policy in Ireland

There has been a large amount of activity in recent weeks debating the extent to which the government should support science and technology in the universities, and the likely impact that such spending will have on the wider economy and society and through which particular channels.

Some of this debate is a continuation of a long-standing discussion on two government strategy documents, the "Strategy for Science, Technology and Innovation" and the "Framework for Economic Renewal" (Smart Economy) document.

Discussion has also likely increased as a result of the opinion expressed in the McCarthy report that there was little evidence of value deriving from R+D activities. The McCarthy report opinion on university research funding is below.

"The two research councils, Irish Research Council for the Humanities and Social Science (IRCHSS) and Irish Research Council for Science, Engineering and Technology (IRCSET) provide funding for researchers in the form of post graduate scholarships, post doctoral fellowships, research fellowships and project based research. The Group supports the CEEU recommendation that the industry co-funding ratio should be increased for IRCSET’s enterprise partnership awards. Further, the Group is of the view that the allocation to the research councils to increase Ph.D. outputs should be reduced because of the uncertainty about the absorptive capacity of industry to employ fourth level graduates and the propensity of Ph.D. graduates to emigrate. The fifth cycle of the PRTLI scheme is due to run over the period 2010 to 2014. This scheme has been in operation since 1998 and there is insufficient evidence of the positive economic impact of the programme to date. Subject to any contractual commitments, this cycle should be cancelled. This will lead to savings in future years as spending on earlier cycles of PRTLI winds down without any new funding requirements arising in their place. The cancellation should also have imfor SFIfunding given that SFI researchers are housed in PRTLI funded infrastructure."

A number of economists have written critical articles about the current direction of S+T policy:

Eoin O'Leary

Karl Whelan

Kevin O'Rourke

Richard Tol

MIchael Hennigan

A number of further articles have defended large scale funding of university research

Luke O'Neill

Ferdinand von Prondzynksi

The importance of this debate cannot be understated, not least for people (many of whom read this blog) who have devoted most of their lives to research and teaching in university contexts. The charge of being a "vested interest" is frequently hurled at people who express opinions in this area. But anyone who works in a university or in research has a vested interest in this, and we have to try to deal with that and put forward coherent views that can be debated. If the charge is true that no-one working in research can express an objective view about how it should be funded and structured then we all should stop now.

It has also been agreed by many on both sides of the debate that if you simply start counting direct revenue generated from university patenting and licensing activities, that you are not going to find a good justification for funding research in universities, certainly not a healthy economic return. It seems to me obvious that Ferdinand von Prondzynski's point is correct that indirect rather than direct measures of benefits from research funding needed to be prioritised. To that extent, we need to start talking about issues such as:

- whether research funding in a university improves the quality and return to education in that university. Related to this, do students who are taught by and interact with top researchers become better equipped to work with cutting edge technologies and so on.

- the extent to which having research groups in Ireland that are embedded into international networks has value is something again I want to debate without assumption. many of us here base a huge amount of our working life on the (untested) assumption that working with international colleagues who are excellent in their field improves our work and improves the quality of knowledge in our respective fields in Ireland. the thing that impresses me when I see some of the better SFI-funded programmes is the international networks that such programmes open up to people in Irish universities. I have to admit that I have always viewed this as having huge value and this is my default assumption. having said that, to argue that a huge amount of money should be spent on developing these networks on the basis of an assumption would be silly.

- the extent to which multinational companies based location decisions on factors such as PhD researchers available, ability to draw from local research groups and so on.

- the extent to which indigenous companies can draw expertise and tools from research clusters based in universities. how much is this happening in Ireland at present?

- the extent to which research funding potentially improves non-market outcomes. For example, to what extent does funding Irish health research impact on hospital functioning and on the integration of global technologies into Irish healthcare. Every time this get's mentioned somebody makes a scoffing remark. My instinct (completely open to being tested and just an opinion) is that medical consultants who are conducting leading edge research (even if in specific areas) are constantly thinking about where modern health technologies are developing and are better equipped to integrate global technologies. Testing this in the Irish case would be very difficult but it is certainly a channel that we would be stupid to dismiss without thinking further about it.

From the point of view of economists, our role is not just to shoot down every claim that isn't 100 per cent backed up. It is also to examine potential channels that generate increases in human welfare and to think about testing them. We should try to put all of the chess pieces on the board before getting fully started on this.

Learning from Outsiders

James Markusen and Natalia Trofimenko have a recent paper on how local workers learn from foreign firms (NBER Version below)

Teaching locals new tricks: Foreign experts as a channel of knowledge transmission

Markusen, James R.
Trofimenko, Natalia

Gains from productivity and knowledge transmission arising from the presence of foreign firms have received a good deal of empirical attention, but theoretical micro-foundations for this mechanism are limited. Here we develop a model in which foreign experts may train domestic workers who work with them. Hypotheses are generated under the assumptions that workers learn from experts (the effect of using an expert is not strictly temporary) and that this learning is embodied in the workers rather than in the firm. We use fixed effects and nearest neighbor matching estimators on a panel of plant-level data for Colombia that identifies the use of foreign experts, to show that these experts have substantial and persistent positive effects (though not always immediate) on the wages of domestic workers and on the value added per worker.

Yale Lecture on Innovation

A fun Yale lecture on Innovation. It outlines techniques developed in a book called "why not" by Professor Barry Nalebuff. Nice overlap with behavioural economics. Includes some interesting product development ideas such as airport valet parking and pay-as-you-go insurance as well as auto-refinancing mortgages. The solution to grade inflation of putting the class grade distribution for each subject and the average GPA of the students taking each class on each transcript seems good to me at first glance. The part about how to peel a banana is a little outside the scope of behavioural economics but that is really cool (26 minutes in).

http://academicearth.org/lectures/why_not

David Madden - Working Paper

David Madden

http://www.ucd.ie/t4cms/wp09.10.pdf

Abstract: The distributional characteristic is a measure which can be used
in many applications in social cost-benefit analysis. In the application
here, the distributional characteristics of a number of broad aggregates of
goods are calculated for Ireland. These calculations can aid in assessing
the distributional implications of price and tax changes.


Keywords: Distributional Characteristic, welfare weight, tax reform.

JEL Codes: D12, I18, I32.


Corresponding Author: David Madden,
School of Economics,
University College Dublin,
Belfield,
Dublin 4,
Ireland.

Research Funding, Multinational Investment and Indigenous Business

If anyone is interested in testing the proposition below, let me know. I think that Professor Prondzynksi hits the nail on the head. However, nobody has conducted a serious statistical study rigorously examining the extent to which research funding causally impacted the development of multinational investment and indigenous start-ups in Ireland, and how the Irish experience compares internationally.

"For example, the IDA (Ireland’s inward investment agency) has stated several times that its recent successes in generating foreign direct investment have overwhelmingly dependent on and been based on our research investment and the existence of a serious research community in Ireland, as this was a vital factor for the companies contemplating Ireland. Similarly, indigenous start-ups increasingly tap into our research capacity."

Barney Frank on Economics

This is destined to be quoted in textbooks - a classic (from Mankiw Blog via David Wessel)

http://gregmankiw.blogspot.com/2009/08/barney-frank-on-economics-profession.html

Not for the first time, as an elected official, I envy economists. Economists have available to them, in an analytical approach, the counterfactual. Economists can explain that a given decision was the best one that could be made, because they can show what would have happened in the counterfactual situation. They can contrast what happened to what would have happened. No one has ever gotten reelected where the bumper sticker said, "It would have been worse without me." You probably can get tenure with that. But you can't win office.

Creating an Environment for Commercialisation

Ferdindand von Prondzynksi makes a strong case on his blog that the focus on direct immediate commercialisation of research findings is misplaced. The article is linked below.

http://universitydiary.wordpress.com/2009/08/21/research-economics-and-trench-warfare/

This is a very timely contribution that helps to move the debate on. As evidenced by the quotes below, the focus of the argument is that research funding for universities creates an environment where research innovation can flourish if not by direct commercialisation itself but through outside actors drawing from the knowledge created. An example given in the article is the research triangle in North Carolina.

"What annoys me is that this debate is often being conducted around the idea that research should create jobs, meaning that there should be immediate spin-offs that generate large-scale employment."

"For example, the IDA (Ireland’s inward investment agency) has stated several times that its recent successes in generating foreign direct investment have overwhelmingly dependent on and been based on our research investment and the existence of a serious research community in Ireland, as this was a vital factor for the companies contemplating Ireland. Similarly, indigenous start-ups increasingly tap into our research capacity. In that sense, the complaint noted by Michael Hennigan that post-doctoral researchers don’t go into business but move on to other research projects is of no significance, in that researchers are rarely the right people to go into business – but they need to go on to help create further discovery that can then be used by those who have the business skills."

It is difficult to agree with the final conclusion below however. This is for a number of reasons. Firstly, it is not at all clear that the various SSTI and Smart Economy initiatives have the same vision as outlined above, and it is certainly worth continuing to debate what is being achieved in these initiatives and what is trying to be achieved. The professor is right to point out that this should not be done from the default position of assuming that research is a worthless activity but I think the amount of economists who hold that view is a lot smaller than he gives credit for. If we can agree that creating an environment where linkages both direct and indirect to universities lead to widespread societal and economic innovation driven in both directions (we learn in universities also by looking outwards), then it still is vital to ask what form these linkages are now taking and what role funding mechanisms play in this. What mechanisms best promote these linkages? Are the ones that we have in place optimal? What direct and indirect costs and benefits accrue when government agencies fund research? In general, it would be good to bring some of this debate to specifics and I am going to begin to start focusing some posts on specific questions related to this debate.

"The evidence is clear and is well known. It is time to stop pretending that we don’t have the facts. It’s time to be focused and determined, and to show consistency of purpose. Unless we like the idea of going back to the 1980s"

Fees Debate

I've opened a thread on the fees debate on Irish Economy blog.

link here

Innovation Taskforce

Submissions are invited to the Innovation Taskforce - link here

The Terms of Reference of the Innovation Taskforce are:

In the context of the Government’s Framework for Sustainable Economic Renewal, Building Ireland’s Smart Economy and the Strategy for Science, Technology and Innovation, and drawing on lessons from successful international and national models: to examine options to increase levels of innovation and the rates of commercialisation of research and development on a national basis with a view to accelerating the growth and scale-up of indigenous enterprise and to attract new knowledge-intensive direct investment; to bring forward proposals for enhancing the linkages between institutions, agencies and organisations in the public and private sectors to ensure a cohesive innovation and commercialisation ecosystem; to identify any specific policy measures which might be necessary to support the concept of Ireland as an International Innovation Development Hub including in the areas of legislation, educational policy, intellectual property arrangements, venture capital and immigration policy.

Working Groups
Given the potentially large Agenda facing the Group, the relatively limited reporting timeframe of 6 months and the significant expertise and experience of members, it has been decided that the best way to progress the Terms of Reference is through the establishment of a number of focussed Working Groups, which will consider certain aspects of the Work Programme. These Groups are tasked with developing proposals to be considered at plenary meetings and incorporated into a final Report

Group 1: Incentives, intellectual property and venture capital: identifying measures to increase innovation, commercialisation and entrepreneurship including changes to incentives, venture capital arrangements and IP strategies

Group 2: Commercialisation, technology transfer and converging technologies including examining institutional structures for R&D funding delivery, how to maximise commercialisation of research, increase technology transfer and promote innovation in converging technologies

Group 3: Achieving the Innovation Island - how to position and promote Ireland as the innovation island including attracting entrepreneurs, FDI, international start-ups and private sector R & D investment.

Group 4: International Innovation Development Hub (Dublin): supporting the development of the TCD/UCD Alliance including identifying necessary supporting policy measures.

Vox Article on funding Early Childhood Services

Elizabeth Cascio
Proponents of universal early education hope that such investments will yield long-term socioeconomic benefits. This column presents evidence that state governments funding public kindergartens in the US actually widened socioeconomic disparities across adults, as whites made gains that blacks did not. That result highlights the sensitivity of policy interventions to their means of funding and the structure of existing alternatives.

http://www.VoxEU.org/index.php?q=node/3885

The problem with Powerpoint

Anyone who has attended a seminar or been a student in the last 10 years can probably relate to this:
http://news.bbc.co.uk/2/hi/uk_news/magazine/8207849.stm

Unemployment & suicide

Another paper on the macro determinants of suicide:

Does unemployment increase suicide rates? The OECD panel evidence

Yong-Hwan Noh

Previous studies of whether unemployment increases suicide rates give mixed results. None of them controlled for an interaction between unemployment and income. This paper tests the hypothesis whether the relationship between unemployment rates and suicide rates vary according to the level of real per capita GDP. We use the cross-country panel fixed effects approach to exclude cross-sectional variations but exploit time-series ones. We support that higher income is associated with higher suicide rates. In particular, the evidence shows that the implied effect of unemployment on suicide rates is positive for countries with higher income. Actually, for countries with lower-income levels, there is a negative impact of unemployment on suicides.

Journal of Economic Psychology 30(4), August 2009, 575-582

On a theorem of Barry Manilow

Many years ago my doctoral supervisor remarked (I have no idea why) "You can't be happier than your wife". I subsequently repeated this remark to a feminist colleague in UCD who was less than amused. Anyway I often wondered about testing this idea. Now its been done:

I can’t smile without you: Spousal correlation in life satisfaction

Nattavudh Powdthavee

This paper tests whether one partner’s happiness significantly influences the happiness of the other partner. Using 10 waves of the British Household Panel Survey, it utilizes a panel-based GMM methodology to estimate a dynamic model of life satisfaction. The use of the GMM-system estimator corrects for correlated effects of partner’s life satisfaction and solves the problem of measurement error bias. The results show that, for both genders, there is a positive and statistically significant spillover effect of life satisfaction that runs from one partner to the other partner in a couple. The positive bias on the estimated spillover effect coming from assortative mating and shared social environment at cross-section is almost offset by the negative bias coming from systematic measurement errors in the way people report their life satisfaction. Moreover, consistent with the spillover effect model, couple dissolution at t + 1 is negatively correlated with partners’ life satisfaction at t.

Journal of Economic Psychology 30 (4), August 2009, 675-689

Openness - "a history of the Internet and its lessons for the future of business, politics, and society

That's the somewhat broad provisional title (though you can suggest your own to the author at his blog, linked above) of Johnny Ryan's new book. Johnny previously wrote ‘Countering Militant Islamist Radicalisation on the Internet: A User Driven Strategy to Recover the Web’ and The Next Leap: Competitive Ireland in the Digital Era, described as "Strategic Report on the Trends of Change in the Digital Sector, and Government Opportunities for Action, Based on the IIEA Digital Sector Stakeholders’ Consultation"

His new book is summarised thus:

The Internet is a centrifugal force, user driven and open. These three characteristics have asserted themselves throughout its history. Understanding them is the key to adapting to the new global commons, a political and media system in flux, and the future of competitive creativity.

Certainly the blog post paints an interesting picture - as well as one of the controversy about the word Openness - itself.

Executive Pay

Thanks to Seamus McManus for pointing to this article about executive pay and the efficiency of the market in setting executive pay levels

http://www.nytimes.com/2009/08/18/us/18bar.html

'The' Market for Higher Education: Does It Really Exist?

Interesting recent working paper by William Becker and David Round


'The' Market for Higher Education: Does It Really Exist?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Becker, William E. (beckerw@indiana.edu) (Indiana University)
Round, David K. (david.round@unisa.edu.au) (University of South Australia)
Additional information is available for the following registered author(s):

William Edward Becker Jr.
Abstract

Higher education, like any other commodity or service, has been viewed in a variety of economic frameworks. Little of this work, however, appears to have made any effort to define carefully the boundaries of the relevant market for higher education, which is the subject of this particular inquiry. Market definition is an essential preliminary step before any academic or policy investigation can properly be made into the forces that determine the behavior of the buyers and sellers of higher education, those who provide inputs into the education process, or those who fund or otherwise subsidize it. The authors spell out the key economic dimensions of a market, and illustrate their relevance for research that seeks to analyze the players and policies in the many distinct domestic and international markets that exist for the inputs and outputs of the higher education sector.

World Bank Working Paper on Measuring Expectations

Measuring Subjective Expectations in Developing Countries: A Critical Review and New Evidence

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Delavande, Adeline (RAND)
Gine, Xavier (xgine@worldbank.org) (The World Bank)
McKenzie, David (dmckenzie@worldbank.org) (The World Bank)
Additional information is available for the following registered author(s):

Xavier Gine
David McKenzie
Abstract

The majority of economic decisions taken by individuals are forward looking and thus involve their expectations of future outcomes. Understanding the expectations that individuals have is thus of crucial importance to designing and evaluating policies in health, education, finance, migration, social protection, and many other areas. However, the majority of developing country surveys are static in nature and do not contain information on the subjective expectations of individuals. Possible reasons given for not collecting this information include fears that poor, illiterate individuals do not understand probability concepts, that it takes far too much time to ask such questions, or that the answers add little value. This paper provides a critical review and new analysis of subjective expectations data from developing countries and refutes each of these concerns. The authors find that people in developing countries can generally understand and answer probabilistic questions, such questions are not prohibitive in time to ask, and the expectations are useful predictors of future behavior and economic decisions. The paper discusses the different methods being tried for eliciting such information, the key methodological issues involved, and the open research questions. The available evidence suggests that collecting expectations data is both feasible and valuable, suggesting that it should be incorporated into more developing country surveys.

Less Focus on Outcomes

Tom Collins, Professor of Education in Maynooth quoted in today's Times argues that outcome-focus shouldn't distract from the real tasks of education.

link here

Evidence Based Policy: Andrew Leigh

Andrew Leigh examines the extent to which randomised controlled trials are the way forward for policy in Australia

"In Australian policy debates, the term „evidence-based policymaking‟ has now become so meaningless that it should probably be jettisoned altogether. The problem in many domains is not that decision makers do not read the available literature, it is that they do not set up policies in such a way that we can learn clear lessons from them. In employment policy, the
early 1990s recession saw Australia spend vast amounts on active labour market programs, without producing a skerrick of gold-standard evidence on what works and what does not. In Indigenous policy, there are as many theories as advocates, but precious few randomised experiments that provide hard evidence about what really works."

We have already debated extensively the papers by Deaton, Heckman, Imbens and others outlining the pros and cons of RCT's as a policy tool. Across health, education, social welfare, crime, aid and other policy areas in Ireland it is certainly long past time to ask exactly what we are trying to do with many of our policies and whether they could be improved with these approaches. Institutional innovation in an environment where budgets are closing must partly take the form of using academic knowledge directly in policy.

Scaling Up Policy Experiments

One of the conclusions from our research meeting today is that scaling up of research-driven policy experiments represents one of the key potential ways that health and economic research can have direct benefits.

Below is William Easterly talking about scaling up in development

link here

Luke O'Neill on McCarthy Report

Professor Luke O'Neill in TCD criticises the McCarthy report in the Irish Times today

http://www.irishtimes.com/newspaper/opinion/2009/0818/1224252768970.html

His article was picked up by Karl Whelan on the Irish Economy blog

The exchange highlights again the need to get some serious discussion going on the aims of science policy in Ireland and the potential return. Some people are arguing that pure short-term commercial pay-off should be the key metric, which seems ludicrous. For example, we need also to think about the potential return from having more PhD trained people working in the public and private sectors. While the trajectory at present has been for Irish PhD's (and indeed in Europe more generally) to move toward the public sector, we do not know whether this is neccesarily a bad thing. We started in Ireland from a very low base in terms of number of people with PhD qualifications working in the public sector and I dont think we should accept that increasing PhD trained people in this sector is not a good thing to do from a productivity perspective without having a proper debate.

One interesting debate that is beginning to emerge is the extent to which the Irish research funding environment should specialise and the extent to which funding should be conditional on non-academic considerations such as potential commercialisation, policy relevance and so on. In one version, research funding should be allocated to the very best people (say defined by publications) who are willing to locate in Ireland regardless of field or strategic relevance. In this way, we increase the prestige of the universities and put students in contact with leading minds. In another version, the research funders stipulate that certain areas (e.g. in Ireland energy research) are given extra priority because of their strategic relevance. Also, institutions are encouraged to specialise more and in general the funding agencies support increasing the capacities of particular groups in particular areas. This will allow potentially for greater capacity to compete for non-exchequer funds and also increase the likelihood of genuine innovation. Critics in Ireland have argued that the areas chosen are the wrong ones (e.g. Richard Tol has argued that much of the energy research agenda is misdirected). Also, critics have argued against the process by which these priorities are decided. Furthermore, the McCarthy report has argued that there is too much money devoted to administration and that the commercial activity has been too low.

We are not going to solve this issue in one blog post, but I do agree with Shane O'Mara's comment on the Irish Economy blog that we need to consider potential indirect effects (see e.g. paper on earnings effects of going to a good research university http://ideas.repec.org/p/iza/izadps/dp4043.html) when assessing the impact of research funding. He also posts to a Welcomme Trust report on the economic value of medical research, which I will comment properly on a later stage - link here

RTE Feature on Unemployment in Cork

Some interesting interviews with people claiming unemployment payments in Cork

link here

Instrumental Variables in the Economist

The Economist picks up on the debate about the use of IV in economics

link here

CEPR Paper on What Economics Should Learn

A good paper from Luigi Spaventa asking what economics needs to learn from the fact that "embarrassingly few" economists were warning of growing systemic financial risks prior to the beginning of the unraveling of the financial system.

CEP Paper: Doubling Spending on the Physical Sciences: Freeman and Van Reenen

What if Congress Doubled R&D Spending on the Physical Sciences?

Richard Freeman and John Van Reenen

Abstract
Many business, academic, and scientific groups have recommended that the Congress substantially increase R&D spending in the near future. President Bush’s American Competitiveness Initiative calls for a doubling of spending over the next decade in selected agencies that deal with the physical sciences, including the National Science Foundation. We consider the rationale for government R&D spending in the context of globalization and as an investment in human capital and knowledge creation with gestation times far longer than Federal funding cycles. To assess the impact of a large increase in R&D spending on the science job market, we examine the impact of the 1998- 2003 doubling of the NIH budget on the bio-medical sciences. We find that the rapid increase in NIH spending and ensuing deceleration created substantial adjustment problems in the market for research and failed to address long-standing problems with scientific careers that are likely to deter many young people from choosing a scientific career. We argue that because research simultaneously produces knowledge and add to the human capital of researchers, which has greater value for young scientists because of their longer future career life span than to older scientists, there is reason for funding agencies to tilt their awards to younger researchers.

Keywords: Basic Science, R&D, labor markets for scientists, globalization
JEL Classifications: J23, J45, 030

What motivates scientists to commercialise?

The current edition of "Research Policy" has a number of papers on determinants of scientists moving into commercial activity

The determinants of academic research commercial performance: Towards an organizational ambidexterity perspective
Pages 936-946 Yuan-Chieh Chang, Phil Y. Yang, Ming-Huei Chen

Academics or entrepreneurs? Investigating role identity modification of university scientists involved in commercialization activity
Pages 922-935 Sanjay Jain, Gerard George, Mark Maltarich

What drives scientists to start their own company?: An empirical investigation of Max Planck Society scientists
Pages 947-956. Stefan Krabel, Pamela Mueller

Economists critique of SSTI

Some economists have been critical of the SSTI and Smart Economy policies.

Eoin O'Leary from UCC penned a critique that was published in the Times a few weeks ago - link here

The key to the point made by Dr O'Leary (illustrative quote below) is related to the general Hayekian view that bureaucracies, including scientific ones, do not have sufficient information and incentives to generate sustainable profits compared to entrepreneurs, whose livelihood depends on the outcomes of their efforts.

"Entrepreneurship has been largely written off. Yet risk-takers are always more likely than bureaucrats to make worthwhile decisions as their livelihood depends on it. Why should we doubt the creativity of the Irish, which has achieved worldwide recognition in business, sporting and artistic fields? This, allied to the resourcefulness of the many foreign nationals now making a living here, is the real key to our survival"

Others like Karl Whelan have argued that the benefits from university technology transfer may be overrated. Karl links to a very interesting presentation by Richard Lester at MIT arguing that universities should try to strengthen their role in helping local businesses adapt and use existing technologies.

link here

The paper by Lester "Universities, Innovation and the Competitiveness of Local Economies" is a very useful document. "This paper shows how universities can support local economic development through their contributions to local industrial innovation processes."

Miller et al NESTA paper on Innovation and Well-Being

More on the link between innovation and well-being

here

The Cambridge University Press book 'Technology and Well-Being' is available here

Richard Tol on "Ireland's Flagging Innovation Policy"

Richard Tol of ESRI talks below on his views on innovation policy in Ireland.

"The government must subsidise innovation, but at the moment it is spending money in the wrong fields and in the wrong way."

"The targets areas for SFI research do not build on Irish success stories in business either. Ireland is home to a number of world-beating companies, but in ‘old fields’ like food, packaging and aviation. These companies do innovate, but in business models and processes, rather than in shiny new things."

link here

Gerard O'Neill on Smart Economy

It is characteristic of a healthy society when intelligent people from different sectors begin to debate openly using clear language.

Gerard O'Neill's posts attacking the idea that science policy, conceived of as providing large scale funding for basic technology research, are worth reading for an articulate account of this side of the debate. Gerard has been particularly influenced by the thinking of Amar Bhide and argues that more focus and support on basic application and combination of technologies will lead to higher returns for society than major scale investment in basic technology research and training of PhD and postdoc researchers.

link here

A few points on this are worth making:

- The SSTI target is to double the number of PhD's in Ireland. This will eventually lead to about 1,300 people per year receiving PhD's in Ireland. We don't yet have a sense of how large a number this. One sometimes gets a sense from the debate that 50 per cent of the population will be taking PhD's in the future and we should get some perspective on these numbers. Several blogs and newspaper articles (including letters from the Times) have been posting comments from PhD graduates to the effect that they regret taking their PhD and feel hard done by. Personally, I have never once for a minute regretted doing a PhD even when I was on postdoctoral contracts and trying to build a career and the majority of people I know who went this route feel the same. Again, only anecdote but there are two sides to the PhD story that need to be heard and the evidence is certainly not conclusive on either side of the debate as to whether to incentivise more people to pursue PhD education in Ireland.

- Also, the rhethoric around basic research in Ireland disguises the fact that much of even SFI, PRTLI funded research is relatively applied. Is it possible that a lot of what Bhide is talking about already characterises Irish research, which is far more applied in nature than would be the case in the very elite US universities.

- We do not know yet the extent to which training in scientific research groups will provide people with the types of skills to combine global technologies and add value to them to bring them to market. Figures looking at the percentage of PhDs going into industry (such as those cited in the McCarthy report) are interesting but we need to think more. For example, as a basic issue it is not neccesarily a bad thing to have PhD trained people going into the public sector. Also, merely counting the numbers masks an awful lot of the process, particularly with innovation.

- Science advocates are claiming that multinational corporations are coming to Ireland directly on the basis of university based research being conducted here. I'm sure we could fill a blog post with very good examples, but has anyone attempted to estimate this and examine the scope and size of research-contingent investments?

- Gerard argues that Irish universities are ineffective and poorly run. Again, I don't think this is established in any sense. Many people seem to have made up their mind that government policy in this area is flawed and that the universities will not be able to achieve many of the targets even with the resources. Nobody should have reached conclusions yet on any of this.

Sorry that most of the posts for now are of the "more evidence needed" variety but this will change over the next months. If anyone has suggestions for developing further aspects of this debate please let me know.

Science, Technology and Well-Being

A cross-over between many of the debates we have been having is the extent to which science technology will improve well-being. This issue is addressed by John Holdren in his address to the American Association for the Advancement of Science last year, printed in Science magazine. The Irish debate often veers into trying to threaten people to take up science subjects on fear of becoming obsolete. Motivation by fear may or may not be effective, but it has created some unsettling images in the minds of many in the general public. The view that scientific progress will be manipulated by an elite to benefit themselves aided by large-scale government subsidies and redirection of public educational resources is something that has lodged in the minds of many people who comment on various blog forums in Ireland. Going back to the previous discussion, understanding public trust in science and technology institutions may be more important than we think. Part of this process will need to involve a continuous debate about who pays for science and technology and who benefits.

The Holdren article below outlines the tasks that science will address over the next number of years and the importance of the scientific effort. This article gives a refreshing global sweep of the importance of the scientific effort. Much of the discussion is at a very broad level and it is directly intended as advocacy for promotion of science so the usual disclaimer about focusing on the specifics applies. Having said that, it is interesting to think about science and technology in the broad levels set down here, particularly as it pertains to the issues of human well-being. Some of the recommendations (but please read the article as a summary is always wrong in a sense) include the following.

- greater awareness of economic, socio-political and environmental conditions and processes in terms of the link between scientific inquiry and human well-being

- greater focus by scientists on the major threats affecting human well-being

- greater attention on promoting S+T literacy

- better undergrad training

link here

New JPE Paper on School Autonomy

Link here but access may be restricted

Clark (2009): Performance and Competitive Effects of School Autonomy
This paper studies a recent British reform that allowed public high schools to opt out of local authority control and become autonomous schools funded directly by the central government. Schools seeking autonomy had only to propose and win a majority vote among current parents. Almost one in three high schools voted on autonomy between 1988 and 1997, and using a version of the regression discontinuity design, I find large achievement gains at schools in which the vote barely won compared to schools in which it barely lost. Despite other reforms that ensured that the British education system was, by inter- national standards, highly competitive, a comparison of schools in the geographic neighborhoods of narrow vote winners and narrow vote losers suggests that these gains did not spill over.

Aghion - Lionel Robbins Lectures

Phillipe Aghion of Harvard is one of the planet's leading thinkers on designing policies for economic growth. He gave the LSE Lionel Robbins lectures. The link is here . Particularly striking is the attention given by Aghion in his third lecture on the role of trust, culture, values and social capital in promoting growth. This relates back to a previous discussion on this blog about the importance of understanding psychology in thinking about long-run growth processes. His first lecture contains a discussion of his work on what types of university funding policies best promote growth and innovation. There is still a lot of work that could be done with the type of data he is discussing in this work. The current models (including the paper posted yesterday) are quite simple with many still competing hypotheses as to the direction of causality. This will be a very interesting literature to follow.


"Professor Philippe Aghion
Designing Policies for Growth (19-21 Feb 2009)
The 2009 Lionel Robbins lectures were recorded on 19, 20 and 21 Feb 2007 in the Sheikh Zayed Theatre, New Academic Building at LSE

Over three lectures, Philippe Aghion will lay down the framework to think about growth policy design, discuss how policies inducing directed technical change can be designed to maximise sustainable growth, and finally investigate the relationship between market reforms and trust. Philippe Aghion is Robert C Waggoner Professor of Economics, Harvard University."

Geary Seminars

The current line-up for our seminar series is below. This is a provisional list. I would encourage everyone to engage fully with this series and we hope to continue the strong culture that our seminar programme has fostered over the last number of years. As you can see, there will also be a number of full and half-day events devoted to specific topics. Please sign up to the Geary Institute mailing list if you want to receive updates:

http://geary.ucd.ie/about-us/51-mailing-list

September 29th 2009. Eric Igou (University of Limerick) "Self versus other: On differences in predicting negative affective states".

October 2nd 2009. "Seventh Annual Irish Society of New Economists Conference" Co-organised by Geary Institute.

October 6th 2009. Wako Yushida (UCL). "Game Theory and Theory of Mind"

October 15th 2009. James P Smith (RAND Corporation). "Ulysses Medal Honorary Presentation".

October 13th 2009. Seamus McGuinness (ESRI). "Education Economics".

October 20th 2009. Roman Raab (NUIG). "State Pensions and Retirement Behaviour in Ireland".

October 27th 2009. Michael Daly (Trinity College Dublin). "Heridity Links Natural Hazards and Human Health: Apolipoprotein E Gene Moderates Self-rated Health in Earthquake Survivors.

November 2nd 2009: Third DEW Irish Economic Recovery Conference co-organised by Geary Institute.

November 3rd 2009: Arnaud Chevalier (Royal Holloway). "Quality Effect in Higher Education"

November 6th 2009: Second Economics, Psychology and Neuroscience Conference co-organised by Geary Institute.

November 10th 2009: Andrew Chesher (UCL and IFS, Director of CEMMAP). "Microeconometrics - TBA"

November 14th 2009: Geary Education Inequalities Symposium organised by Geary Institute.

November 17th 2009. Isabelle Ouellet-Morin (King's College, University of London) "Cortisol and Behaviour - TBA"

November 24th 2009. Richard Tol (ESRI) "Climate Change".

December 1st 2009: Thomas Crossley (IFS and Cambridge). "Microeconometrics - TBA"

December 8th 2009. Massimiliano Bratti (University of Milan) "Education and health-related behaviour:Evidence from the UK" (joint with Alfonso Miranda).

December 14th 2009. Second Geary Institute Health Symposium.

January 26th 2010. Richard Layte (ESRI). "Health Selection and Education Outcomes: Evidence from the Irish Longitudinal Study of Children".

February 2nd 2010. John O'Doherty (TCD). "Neuroeconomics - TBA"

February 16th 2010. Stephen Lea (University of Exeter). "Economic Psychology - TBA".

February 23rd 2010. Uwe Sunde (University of St. Gallen). "On the stability of risk and time preferences"

March 2nd 2010. Michel Boivin (Universite Laval). "School Readiness - TBA"

March 9th 2010. Orla Doyle (UCD Geary Institute) "Skills, capabilities and Inequality: Assessing School Readiness in Disadvantaged Communities"

April 20th 2010. Gaia Narcisso (Trinity College Dublin). "Microeconometrics TBA"

April 27th 2010. Gilberto Turati (Universita Cattolica del sacro Cuore, Milano) "Educational Economics - TBA"

Katz on the Race between Technology and Education

Lawrence Katz of Harvard is one of the leading thinkers in the economics of education.

Below is a link to a Vox interview where he discusses his ideas on the "race between technology and education".

link to audio

His IDEAS page containing his main working papers and journal articles is below

Link to IDEAS page

His new book with Claudia Goldin on the "Race between Education and Technology" is linked below

link here

Intergenerational Transmission of Savings: PSE Working Paper

"My Father was right": The transmission of values between generations

Luc Arrondel
Abstract

The influence of parents' savings behaviour on that of their children has often been remarked. This paper attempts to explain this "poids d'Anchise" via a unique French dataset collected by DELTA and TNSSofres in 2002, which contains both savings and subjective information for two or three generations of the same family. Parents' and children's risk and discounting preferences are significantly positively intergenerationally correlated. The correlation coefficients are around 0.25, so that the two preferences are nonetheless far from identical. In addition, the elasticity of children's wealth with respect to that of their parents is around 0.22. This correlation is corrected for the influence of age on wealth, and concerns only co-existing generations, that is before the most significant intergenerational transfers have taken place. The analysis of the raw correlations with a series of explanatory variables reveals that over 40% of this elasticity can be explained by the permanent incomes of the two generations. Each of education and preferences separately account for about 20%, and previous intergenerational transfers for about 13%. When permanent income is controlled for, the contribution of savings preferences is around 13%. The transmission of preferences therefore plays a non-negligible role in the intergenerational transmission of wealth inequalities, but is far from being the most important factor .

NBER Paper: Governance and Performance of Research Universities

Aghion et al (2009)

ABSTRACT
We investigate how university governance affects research output, measured by patenting and international university research rankings. For both European and U.S. universities, we generate several measures of autonomy, governance, and competition for research funding. We show that university autonomy and competition are positively correlated with university output, both among European countries and among U.S. public universities. We then identity a (political) source of exogenous shocks to funding of U.S. universities. We demonstrate that, when a state's universities receive a positive funding shock, they produce more patents if they are more autonomous and face more competition from private research universities. Finally, we show that during periods when merit-based competitions for federal research funding have been most prominent, universities produce more patents when they receive an exogenous funding shock, suggesting that routine participation in such competitions hones research skill.

IZA Paper - Understanding Economic Consequences of Public Health Trends

Understanding the Economic Consequences of Shifting Trends in Population Health
by Pierre-Carl Michaud, Dana P. Goldman, Darius N. Lakdawalla, Yuhui Zheng, Adam H. Gailey
(August 2009)

Abstract:
The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy − with a concomitant decrease in the public-sector's annuity burden − but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.

Complementarity between Cities and Skills - Glaeser and Resseger

The Complementarity between Cities and Skills (NBER 2009)
There is a strong connection between per worker productivity and metropolitan area population, which is commonly interpreted as evidence for the existence of agglomeration economies. This correlation is particularly strong in cities with higher levels of skill and virtually non-existent in less skilled metropolitan areas. This fact is particularly compatible with the view that urban density is important because proximity spreads knowledge, which either makes workers more skilled or entrepreneurs more productive. Bigger cities certainly attract more skilled workers, and there is some evidence suggesting that human capital accumulates more quickly in urban areas.

Science and Technology Teaching

The DCU president covers the debate on science and technology education on his blog.

Several commentators point to low levels of higher-level maths take-up, continuing low popularity of science/maths courses and so on as evidence of a crisis in Irish education that could damage national competitiveness.

Can we start putting some economic content on this debate in terms of the validity of the statements being made. For a start, what is the causal return to taking various types of science qualifications compared to other qualifications, both for the individual and socially? Is there strong evidence that multinationals base their location decisions on subject compositions within higher education institutions? Would people who do not initially choose to do these subjects perform better if they were incentivised to do so? What kind of interventions in this area are likely to have an actual social return in this domain? if taking maths and so on has such a high return why aren't more students motivated to do honours maths or to choose these courses in university?

The 2002 report of the taskforce on Physical Sciences mentioned in the above post contains a substantial number of recommendations for increasing the quantity and quality of science education. Most of it is driven by the belief that this will enable the Irish economy to "move up the value chain". Perhaps, but lets start engaging with this more critically and analytically.

link here

Building Ireland's Smart Economy

For those of you reading this who are interested in Irish economic issues, if you haven't read this document then you should. For better or worse, this is current medium-to-long run roadmap for Ireland.

link here

The main action areas are:

- Enterprise

- Innovation

- Environment and Energy

- Critical Infrastructure

- Efficient and Effective Public Services and Regulation


With respect to innovation, the strategy involves things like those listed below. It is way overdue that detailed scientific thinking is brought to bear on the likely effectiveness of these different inputs and indeed what outcomes they are aimed at.

- more favourable tax treatment for venture capital

- direct innovation stimulus funding

- revamping visa processes for researchers (this has been underway for a couple of years and has certainly improved things)

- fifth cycle of PRTLI

- Further development of SFI

- Development of summer schools

- Enhancing of functions of county enterprise boards

- Incentivising participation in relevant areas

- Development of a marketing campaign around the "innovation island"

Alcohol and cause-specific Mortality in Russia

Historical estimates suggest that the average Russian drinks about a bottle of vodka per week. In the current issue of the Lancet alcohol is identified as a cause of more than half of all Russian deaths at ages 15-54 years. But its not just vodka doing the damage, Russian men who have a life expectancy of 59, are documented to be using colognes, medical tintures and cleaning agents in less orthodox ways with severe consequences (eight-fold increase in premature mortality). Along with the main findings there is also some interesting attention given to the availability and display of such goods "..[the authors] visited a shop where the top shelf carried a row of eau de colognes, the next one bottles of anti-freeze and the one below that cleaning fluids. They all contained ethanol - the way they were displayed was testimony to the fact that they were being sold for their ethanol".

Three Leading Minds in 1938 on the Future of Mankind

(from wiki). The three quotes below are from the Westinghouse Time Capsule buried in 1938 that will be opened in 6939, if there is anyone still around.

Albert Einstein's message,
Our time is rich in inventive minds, the inventions of which could facilitate our lives considerably. We are crossing the seas by power and utilise power also in order to relieve humanity from all tiring muscular work. We have learned to fly and we are able to send messages and news without any difficulty over the entire world through electric waves. However, the production and distribution of commodities is entirely unorganised so that everybody must live in fear of being eliminated from the economic cycle, in this way suffering for the want of everything. Further more, people living in different countries kill each other at irregular time intervals, so that also for this reason any one who thinks about the future must live in fear and terror. This is due to the fact that the intelligence and character of the masses are incomparably lower than the intelligence and character of the few who produce some thing valuable for the community. I trust that posterity will read these statements with a feeling of proud and justified superiority.


Robert Millikan's message,
At this moment, August 22, 1938, the principles of representative ballot government, such as are represented by the governments of the Anglo-Saxon, French, and Scandinavian countries, are in deadly conflict with the principles of despotism, which up to two centuries ago had controlled the destiny of man throughout practically the whole of recorded history. If the rational, scientific, progressive principles win out in this struggle there is a possibility of a warless, golden age ahead for mankind. If the reactionary principles of despotism triumph now and in the future, the future history of mankind will repeat the sad story of war and oppression as in the past.

Thomas Mann's message,
We know now that the idea of the future as a "better world" was a fallacy of the doctrine of progress. The hopes we center on you, citizens of the future, are in no way exaggerated. In broad outline, you will actually resemble us very much as we resemble those who lived a thousand, or five thousand, years ago. Among you too the spirit will fare badly it should never fare too well on this earth, otherwise men would need it no longer. That optimistic conception of the future is a projection into time of an endeavor which does not belong to the temporal world, the endeavor on the part of man to approximate to his idea of himself, the humanization of man. What we, in this year of Our Lord 1938, understand by the term "culture" a notion held in small esteem today by certain nations of the western world is simply this endeavor. What we call the spirit is identical with it, too. Brothers of the future, united with us in the spirit and in this endeavor, we send our greetings.

Innovation and Well-Being

A paper by Paul Dolan et al

link here

EconTalk Podcast on Start-Ups and Innovation

A useful recent interview of Paul Graham by Russ Roberts, accompanied by a reading list on entrepeneurship, innovation and the labour market

link here

The talk by Amar Bhide below is also worth listening to:

link here

Innovation

Over the next couple of months, I will be posting more frequently on this topic. See below for a large number of posts and resources from this blog over the last couple of years:

link here

The word itself is currently dominating debate about the future of research in Europe and this debate has a lot of implications for anyone studying and working in universities.

Some questions we want to start discussing include:

- Can we start putting some common understanding as to what this word means? For example, to what extent does the concept of innovation extend to public sector operations, in particular with respect to education and healthcare? At present, there is a danger that innovation will become synonymous with technology start-ups that make money. These are clearly one big part of what people mean by developing an "innovative" economy but lets keep the discussion broad. Also, with respect to Frankfurt's discussion of "bullshit"" lets try to delineate when using the idea of innovation is useful and when its just used as a PR concept. Also, we should probably agree that innovation does not neccesarily mean something universe-changing. Innovations may simply involve hospitals adopting better technologies that already exist, or schools changing the way they deliver a curriculum.

- With respect to the Irish case, what are the key issues with respect to innovation? We have posted before on Irish strategies to foster innovation. In particular the Strategy for Science Technology and Innovation, and the Smart Economy documents outline Irish government strategy in this area. Serious questions emerge in these strategies about the nature of the outcomes they are intended to foster. A large suite of different schemes and agencies are funded to develop research in higher level institutions and other groups. Part of the idea behind this strategy is that this will eventually lead to commercialisation of research ideas emerging from these research groups. In particular, start-up companies will emerge staffed partly by highly education graduates with advanced qualifications in areas like ICT, Engineering, Pharma, Biotech and so on. However, paradoxically we have not developed a research literature in Ireland that places a way of evaluating whether the money invested in these plans is paying off with respect to the types of outcomes envisioned. This takes place in the context of a heated debate about the nature and remit of universities with respect to teaching, research, public service, and commercialisation.

- In the Irish case, lets keep the European dimension in mind. There are a wide range of funding opportunities from EU sources for individuals and organisations.

- What is the interaction between technological innovations and wider social outcomes? We have discussed on the blog before some aspects where innovation intersects with behavioural economics. In particular, issues like well-being and adaption to technology, skill-biased technological change, technology adoption, incentives and creativity and so on are all areas that are worth exploring.

Life Expectancy and Economic Growth

Life Expectancy and Economic Growth


Matteo and Sunde
In this paper we investigate the causal effect of life expectancy on economic growth by explicitly accounting for the role of the demographic transition. In addition to focusing on issues of empirical identification, this paper emphasizes the role of the econometric specification. We present a simple theory of the economic and demographic transition where individuals' education and fertility decisions depend on their life expectancy. The theory predicts that before the demographic transition improvements in life expectancy primarily increase population. Improvements in life expectancy do, however, reduce population growth and foster human capital accumulation after the onset of the demographic transition. This implies that the effect of life expectancy on population, human capital and income per capita is not the same before and after the demographic transition. Moreover, a sufficiently high life expectancy is ultimately the trigger of the transition to sustained income growth. We provide evidence supporting these predictions using data on exogenous mortality reductions in the context of the epidemiological revolution.

Geary Working Paper - Experimental Tests of Expenditure Response

New Geary Working Paper reporting results on experiments on survey effects on expenditure estimates

link here

CARDI Grants

The CARDI Grants Programme Call 2 is now open.
The Centre for Ageing Research and Development in Ireland (CARDI) is delighted to open Call 2 of its grants programme.

It is inviting applications for grants to fund cross-border and inter-disciplinary research or to create networks of academics with the public, private and voluntary sectors to examine issues arising out of an ageing society in Ireland, north and south.

CARDI will be allocating €300,000 in Call 2, which closes on 2nd October 2009.

In Call 2 our research grants have been increased to €25,000 and our network grants will be funded up to a limit of €10,000. It is a precondition that applications must be both cross-border and inter-disciplinary.

More information about the grants, terms of reference , including an application form, can be accessed on www.cardi.ie/grantprogramme or email info@cardi.ie

If you would like a briefing meeting on your campus or for your organisation, we will be happy to make a presentation and answer questions. We are particularly interested in meetings involving people from different disciplines and sectors (eg academic, statutory, voluntary and community). Please email info@cardi.ie or ring our Belfast office: 0044 28 9069 0066.

Happiness and unhappiness in east and west: Themes and variations

thanks to nicola for pointing out the following recent paper.

Happiness and unhappiness in east and west: Themes and variations
Uchida Y, Kitayama S.
Kokoro Research Center.
Emotion. 2009 Aug;9(4):441-56.
Cultural folk models of happiness and unhappiness are likely to have important bearings on social cognition and social behavior. At present, however, little is known about the nature of these models. Here, the authors systematically analyzed American and Japanese participants' spontaneously produced descriptions of the two emotions and observed, as predicted, that whereas Americans associated positive hedonic experience of happiness with personal achievement, Japanese associated it with social harmony. Furthermore, Japanese were more likely than Americans to mention both social disruption and transcendental reappraisal as features of happiness. As also predicted, unlike happiness, descriptions of unhappiness included various culture-specific coping actions: Whereas Americans focused on externalizing behavior (e.g., anger and aggression), Japanese highlighted transcendental reappraisal and self-improvement. Implications for research on culture and emotion are discussed. (PsycINFO Database Record (c) 2009 APA, all rights reserved).

Abulek and Gruber - Choice Inconsistencies Among the Elderly

NBER Working Paper

The Medicare Part D Prescription Drug Plan represents the most significant privatization of the delivery of a public insurance benefit in recent history, with dozens of private insurers offering a wide range of products with varying prices and product features; the typical elder had a choice of roughly 40 stand-alone drug plans. In this paper we evaluate the choices of elders across this wide array of Part D options using a unique data set of prescription drug claims matched to information on the characteristics of choice sets. We first document that the vast majority of elders are choosing plans that are not on the "efficient portfolio" of plan choice in the sense that an alternative plan offers better risk protection at a lower cost. We then estimate several discrete choice models to document three dimensions along which elders are making choices which are inconsistent with optimization under full information: elders place much more weight on plan premiums than they do on expected out of pocket costs; they place almost no value on variance reducing aspects of plans; and they value plan financial characteristics beyond any impacts on their own financial expenses or risk.These findings are robust to a variety of specifications and econometric approaches. We develop an "adjusted" revealed preference approach that combines data from consumer choices with ex ante restrictions on preferences, and find that in a partial equilibrium setting, restricting the choice set to the three lowest average cost options would have likely raised welfare for elders under the program.

Guiso, Sapienza and Zingales - Moral Constraints on Strategic Defaults

“Moral and Social Restraints to Strategic Default on Mortgages”

Abstract

We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household would default if the equity shortfall is less than 10% of the value of the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50% of the value of their house. Besides relocation costs, the most important variables in predicting strategic default are moral and social considerations. Ceteris paribus, people who consider it immoral to default, are 77% less likely to declare their intention to do so, while people who know someone who defaulted are 82% more likely to declare their intention to do so. The willingness to default increases nonlinearly with the proportion of foreclosures in the same ZIP code. That moral attitudes toward default do not change with the percentage of foreclosures in the area suggests that the correlation between willingness to default and percentage of foreclosures is likely to derive from a contagion

Podcasts on Procrastination

Not aiming this at anyone in particular, but if you are having some problems with procrastination, then why not procrastinate a little further and delve into these podcasts on procastination and how to overcome it. Based on the research of the procrastination research group at Carleton University.

link here

Blog Development

I have added a substantial number of links to online audio and video resources. All of these links are to superb lectures and interviews with some of the thought leaders in the related areas to this blog. It raises again the question that we have talked about from time to time as to what the proliferation of such material implies for traditional methods of teaching. For example, if you wanted to learn now about behavioural economics, econometrics and related fields the side-bar has links to full lecture courses given in places like Yale as well as detailed interviews with thought leaders in the relevant fields. It would be very interesting to do something on the implication of online content and technology for traditional teaching methods. If anyone comes across interesting literature on this, particularly with reference to Economics, please post.

Other things I have added to the blog include a section on "resources for graduate students", which is mostly aimed at MA and early PhD Economics students and mostly for now focused on resources to start empirical projects. Again, let me know if you want me to put anything else up.

There is a section on upcoming conference deadlines, intended to act as a "nudge" for people who might be considering submitting material to these events. If the blog is a "nudge" vehicle, I suppose the basic things it should achieve are (i) making people aware of seminars (ii) aggregating relevant material from other blogs related to the interests of people who read this blog (iii) making details of funding opportunities for researchers available and providing reminders (iv) providing a simple way to update and aggregate links from the web to useful resources (v) providing reminders of upcoming events (vi) providing reminders of upcoming deadlines (vii) generating external interest from people who may be interested in applying some of the ideas discussed on the blog.

Compared to email lists, the blog has the advantage that people choose to come on, so it is an unobtrusive nudge. Making it publicly available helps in the sense that the blog has been improved in various ways by emails from people outside the research group it is based in. The development of links to other blogs facilitates this. Whether internal or external, if you want to help improve this site please get in touch.

Paul Romer TED talk

Paul Romer's TED talk on charter cities is available below.

link here

The paper on measuring economic growth from outer space is below

link here

The Retirement Consumption Puzzle: Actual Spending Change in Panel Data

The fall in consumption after retirement is frequently used to demonstrate the need to incorporate psychological theories into economics of consumption. A number of recent papers have been asking whether this fall is as large as previously thought. This paper below is a striking example of this.

NBER Working Paper
Michael D. Hurd
Susann Rohwedder

The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. In the low-wealth population where spending did decline at higher rates, the main explanation for the decline appears to be a high rate of early retirement due to poor health. We conclude that at the population level there is no retirement consumption puzzle in our data, and that in subpopulations where there were substantial declines, conventional economic theory can provide the main explanation.

Insight on U.S. Unemployment Trends

Tomorrow (or today, Irish time) sees the release of U.S. employment figures, which are expected to show a marginal increase in unemployment. Readers may be interested in visualising U.S. unemploymnent trends (by state, since 1990) using the new offering by "Google Public Data", as shown in the chart above. "Google Public Data" is discussed on the Google Research Blog here. The chart (above) shows Michigan, California, Louisiana, Vermont, and the U.S. average. (Misissippi is not shown though it follows a similar trend to Louisiana).

Of note, both Louisiana and California had above-average unemployment before 2000; but Michigan has fared relatively worse over the last decade. How did it go so wrong for Michigan when Louisiana (and Misissipi) and California previously suffered from the highest unemployment rates? This is a question that may see labour-economists swopping notes with trade-theorits and geographers.

Though Louisiana-State trends closely to Califorinia, Louisiana has a notable unemployment spike in 2005-2006, which corresponds to Hurricane Katrina (see some notes on Louisiana here). Despite an employment boost since Hurricane Katrina, Louisiana trends towards the national unemployment rate since summer 2008 (i.e. financial crisis). (Misissippi was also affected by Katrina but is omitted from the chart for reasons of parsimony).

Michigan's situation over the course of the last year is quite striking; the slope function of the state's unemployment increase is very steep. The outstanding (policy) question is: what is to be done about unemployment in Michigan; right now? From a research perspective, what can we learn from the 2005-06 unemployment shocks in Louisiana and Misissipi?

Be Careful with Your Control Variables!

I'm doing a session in the Geary Journal Club on being ''Careful with Your Control Variables'', at 3pm on Friday 9th October. The main paper is "The Phantom Menace", but there are two more that can be read for the session, as indicated below.

1. Kevin Clarke (Rochester): "The Phantom Menace: Omitted Variable Bias in Econometric Research", Conflict Management and Peace Science, 22:341–352, 2005

2. Chris Achen (Princeton): "Let’s Put Garbage-Can Regressions and Garbage-Can Probits Where They Belong", Conflict Management and Peace Science, 22:327–339, 2005

3. Oneal and Russett (Yale): "Rule of Three, Let It Be? When More Really Is Better", Conflict Management and Peace Science, 22:293–310, 2005

NBER Videos on the Use of Field Experiments in Economics

John List and Michael Kremer talk about the design and use of experiments in economics

link here

RAND Conference on Financial Decision Making

RAND have made the videos available from their recent conference on behavioural economics and financial decisions making. Speakers include Thaler, Benartzi, Mullainthan, Madrian and others.

link here

More Pretend Application Studies

Doing a session on the merits of the false application research methodology would be worthwhile. kevin has voiced strong opposition to it on a number of occasions. I suppose any time that a study uses deception and imposes a non-trivial cost on others, there needs to be discussion of whether the benefits of the study outweigh the costs. Some of the seminal uses of deception in psychology such as the "being sane in insane places" study arguably changed the way the world thinks about mental illness. We may be reaching a point though where the volume of such studies raises questions about the costs. On the other hand, the authors have relatively convincingly showed that homosexual males are discriminated against when applying for housing. Perhaps this is worth the cost of some wasted time processing fake applications?

Detecting Discrimination against Homosexuals: Evidence from a Field Experiment on the Internet
Ali M. Ahmed & Mats Hammarstedt
Economica, 2009
This paper presents the first field experiment studying discrimination against homosexuals on the housing market. The study is conducted on the rental housing market in Sweden using the internet as a research platform. Two fictitious couples, one heterosexual and one male homosexual, apply for vacant rental apartments advertised by landlords on the internet. Our findings show that homosexual males are discriminated against on the Swedish housing market, since the homosexual couple gets far fewer call-backs and fewer invitations to further contacts and to showings of apartments than the heterosexual couple. Copyright (c) The London School of Economics and Political Science 2008.

Wanted: Boat Captain

Via Andrew Leigh

Predicting Elections: Child’s Play!
John Antonakis and Olaf Dalgas

from Science

"In two experiments, children and adults rated pairs of faces from election races. Naïve adults judged a pair on competence; after playing a game, children chose who they would prefer to be captain of their boat. Children’s (as well as adults’) preferences accurately predicted actual election outcomes."

Digitisation with OneNote

I recently discovered a useful feature in OneNote (part of MS Office 07) which allows the extraction of text from images. This was always relatively easy for pdfs created from Word, TeX etc, but apparently OneNote uses OCR (Optical Character Recognition), same as the Gardai have on their traffic cameras, allowing you to select text from images such as faxes, pictures, and scanned photocopies. Handy for digitisation.

Well-Being Across Space and Time Session

Well-Being Across Space and Time Session at IARIW 2010 Conference (Session 6B) St. Gallen, Switzerland from August 22, 2010 to August 28, 2010 Deadline for paper submissions: August 31, 2009 JEL classification(s): C, D, I, J, OFurther information at: http://www.iariw.org/call2010.php

Kapteyn, Smith and VanSoest - Life Satisfaction

IZA Paper - Life Satisfaction

We analyze the determinants of global life satisfaction in two countries (The Netherlands and the U.S.), by using both self-reports and responses to a battery of vignette questions. We find global life satisfaction of happiness is well-described by four domains: job or daily activities, social contacts and family, health, and income. Among the four domains, social contacts and family have the highest impact on global life satisfaction, followed by job and daily activities and health. Income has the lowest impact. As in other work, we find that American response styles differ from the Dutch in that Americans are more likely to use the extremes of the scale (either very satisfied or very dissatisfied) than the Dutch, who are more inclined to stay in the middle of the scale. Although for both Americans and the Dutch, income is the least important determinant of global life satisfaction, it is more important in the U.S. than in The Netherlands. Indeed life satisfaction varies substantially more with income in the U.S. than in The Netherlands.

New Day Reconstruction Paper

Thanks to Michael for pointing this out

link here

Accounting for the Richness of Daily Activities
Mathew P. White 1 and Paul Dolan 2
1 University of Plymouth and 2 Imperial College, London
Address correspondence to Mathew P. White, School of Psychology, University of Plymouth, Drake Circus, PL4 8AA, Devon, United Kingdom, e-mail: mathew.white@plymouth.ac.uk.
ABSTRACT
ABSTRACT—Serious consideration is being given to the impact of private behavior and public policies on people's subjective well-being (SWB). A new approach to measuring well-being, the day reconstruction method (DRM), weights the affective component of daily activities by their duration in order to construct temporal aggregates. However, the DRM neglects the potentially important role of thoughts. By adapting this method to include thoughts as well as feelings, we provide perhaps the most comprehensive measure of SWB to date. We show that some activities relatively low in pleasure (e.g., work and time with children) are nonetheless thought of as rewarding and therefore contribute to overall SWB. Such information may be important to policymakers wishing to promote behaviors that are conducive to a broader conception of SWB.