Is ignorance bliss?

A recent add for a price comparison website has two women sitting on deck chairs in a resort. One is getting a massage from a tall muscular guy called Magnus and the other is just chilling out. Some text on the screen informs you that the woman getting the massage saved so much money from going to the website being advertised that she was able to afford to pay the guy for the whole afternoon. Some text also informs you that the other woman has overpaid for her room. However, both look pretty happy. Its fair to say that the woman getting the massage probably looks a bit happier but, in general, they both look like they are having a good holiday. The add even prompts the question on the screen "Is ignorance bliss?".

My first reaction on seeing this was firstly how cool it was to have adds so clearly informed by current debates in areas like behavioural economics. My second reaction was that its not really clear what the answer is. One reading of the add is that its a bit overboard to go looking through lots of websites when planning a holiday. Ultimately, satisficing rather than optimising might be fine - just go somewhere that meets some criteria you have and is within your budget - whether you get some expensive drinks thrown in for free or save enough money on the room to get an afternoon's massage is ultimately not really the point of going on holiday. I am definitely not the demographic for the add and my response is probably not representative of their targeted customers. But it is, in general, an interesting question as to whether we miss what we didn't know was available. The add finishes by saying that ignorance isn't bliss - "Magnus is bliss" - in other words that the lost opportunity is a negative thing for the overall holiday.

There is a fascinating debate similar to this at the moment as to how we should interpret the fact that women have not gotten happier despite large increases in opportunity (see e.g. the NBER paper The Paradox of Declining Female Happiness). One response is that ignorance might be bliss in one sense but ultimately there is a procedural happiness that comes from knowing you have made the best of your opportunities. Maybe this is the type of happiness the add is trying to tap in to.

Development Economics Summer School

If you are interested in development economics & could do with an intensive course in it, this course at U.Laval (Quebec) during the summer might just be the thing for you. And you get to have fun in Quebec.

International Reaction to the Election

RTE do a round-up of the international reaction to the election. The message over the world seems to be that the Irish have put in a steady government. There also seems to be widespread support for the idea that a reduction in the EU component of the bailout interest rate is not an unreasonable thing to discuss.

Dynamic Econometrics at IFS

These courses are excellent by all accounts. And no better way to spend St. Patrick's day in London.

Cemmap training course: Dynamic Econometric Models
Tutor: Walter Beckert, Birkbeck, University of London

17 - 18 March 2011, UCL (London)

Full details and booking information:
http://www.cemmap.ac.uk/courses.php?event_id=582
This course presents an introduction to econometric methods applied to the empirical analysis of dynamic economic processes. Next to classical applications in empirical macroeconomics and finance, the approaches surveyed in this course are also increasingly used in applied competition economics. The course starts with a review of the generalized method of moments approach to estimation that encompasses
almost all the models covered in the course. It then surveys the main econometric models for univariate and multivariate processes and various tools for diagnostic testing. The theoretical exposition is accompanied by a sequence of computer practicals that implement the various econometric models and techniques in applications which relate to competition analysis in the US petroleum industry. Stata will be used.

Studying Abroad and Labour Market Mobility

STUDYING ABROAD AND THE EFFECT ON INTERNATIONAL LABOUR MARKET MOBILITY: EVIDENCE FROM THE INTRODUCTION OF ERASMUS

Matthias Parey and Fabian Waldinger

Economic Journal, 121 (March) 2011, 194–222

We investigate the effect of studying abroad on international labour market mobility later in life for university graduates. We exploit the introduction and expansion of the European ERASMUS student exchange programme as an instrument for studying abroad. We find that studying abroad increases an individual’s probability of working in a foreign country by about 15 percentage points. We investigate heterogeneity in returns according to parental education and the student’s financial situation. Furthermore, we suggest mechanisms through which the effect of studying abroad may operate.

IZA Paper: Stability of Time Preferences

Stability of Time Preferences
Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Meier, Stephan (sm3087@columbia.edu) (Columbia University)
Sprenger, Charles (csprenge@ucsd.edu) (University of California, San Diego)

Additional information is available for the following registered author(s):

Stephan Meier
Abstract

Individuals frequently face intertemporal decisions. For the purposes of economic analysis, the preference parameters assumed to govern these decisions are generally considered to be stable economic primitives. However, evidence on the stability of time preferences is notably lacking. In a large field study conducted over two years with about 1,400 individuals, time preferences are elicited using incentivized choice experiments. The aggregate distributions of discount factors and the proportion of present-biased individuals are found to be unchanged over the two years. At the individual level, the one year correlations in measured time preference parameters are found to be high by existing standards, though some individuals change their intertemporal choices potentially indicating unstable preferences. By linking time preference measures to tax return data, we show that identified instability is uncorrelated with socio-demographics and changes to income, future liquidity, employment and family composition.

Weekend Links

1. Becker and Posner Blog on Medical Screening and Overdiagnosis

2. VOX article by Patacchini and Zenou on peer effects in education

3. A plenum (a new word for me - roughly means "all" I think) of German economists offer suggestions on the European Debt Crisis

4. Via Mankiw, a conference for undergraduate economists at Georgetown.

5. (Via a link on Stumbling and Mumbling), Tim Harford offers some interesting thoughts on financial literacy education and regulation as forms of improving consumer outcomes.

Beauty in the academic labour market

The labour market returns to "beauty" have been studied by various authors. However it is not something that you might expect to be a feature of academia. But Hot or Not: How appearance affects earnings and productivity in academia by Sen, Voia & Woolley demonstrates a surprisingly large wage premium to academics judged "hot" by students in the well known ratemyprofessors.com site. Why? Because they're worth it, I suppose. No sniggering at the back, please.

Irish Election

Watching, as an Irish citizen with no great party-political affiliation, with some degree of pride the results coming in from the Irish general election. Following the largest economic reversal of any industrialised country, the main ruling party and the junior government partner have understandably been decimated electorally, with the junior party returning no seats at all and the main ruling party becoming the third largest party in the State from a position of being the largest for almost all the history of the State. However, the main beneficiaries are the main centre-right party and the main centre-left party who almost certainly will now form a government together with a commanding majority. There has been no move whatsoever to things like anti-European sentiment parties, anti-immigration parties, and so on. Both parties are in favour of reducing the deficit, with the largest party being probably more inclined to reduce it more quickly and with more emphasis on cuts rather than taxes. The election seems to be yielding some idiosyncratic independent candidates who have done surprisingly well but nothing that could be seen as ominous in terms of a move toward extremism in Irish society. I think in general, the election is showing a mature Western European democracy trying to come to grips in a sensible way with a major economic crisis. I looking forward to discussing many of their policies on this blog and other fora as the new government begins its tough job.

PhD Studentship Manchester

An interesting looking project and opportunity (thanks to Michael for sending on link)

PhD StudentshipExplaining The Link Between Income And Physical And Mental Health
The University of Manchester - Faculty of Medical & Human Sciences, Clinical & Health Psychology Research Group
Dr Alex Wood & Professor Graham Dunn

The objective of this fully-funded 4-year PhD project is to explore the relationship between low income and impaired physical and mental health.

The studentship provides full support for tuition fees, all associated research costs and an annual tax-free stipend at Research Council rates (£13, 590 in 2010). The project is due to commence October 2011 and is open to UK/EU nationals only due to the nature of the funding.

Why does low income relate to impaired physical and mental health? The risk could be due to three overlapping factors:

•Having low income in and of itself, and the associated low spending power.
•Relative income, such that having an income lower than the typical or mean income of a comparison group mean carries a psychological burden.
•Ranked position of income, such that having an income that ranks low within a community reflects low social position.
A huge amount of debate has focused on these possibilities, not least as each suggests different policies to reduce the health consequences of income disparity, a central concern for the government and public.

This project will provide the first direct test between these hypotheses. Analysis will be performed on several large datasets including the British Household Panel Survey, the Wisconsin Longitudinal Survey and the EMPIRIC database of people from ethnic minority backgrounds. Analysis involves predicting physical or mental health simultaneously from three variables: the actual income, the difference between the income and the mean of the comparison group (e.g., people in the same region or of the same ethnicity), and the rank of the income in the comparison group (plus covariates).

The project is inherently multidisciplinary, taking optimum methods of dataset-analysis originally developed in economics to apply a psychological mechanism to medicine.

The successful candidate will benefit from an extensive support network based in the Clinical & Health Psychology Research Group with co-supervision from within Biostatistics. Training in database analysis, panel analysis techniques and research study design will be provided.

Given the breath of psychology and biomedical training covered by the research, the PhD will provide an ideal platform to progress onto an academic research career path or into public policy consultation/management.

Applicants should hold (or expect to obtain) a minimum upper-second honours degree (or equivalent) in psychology, one of the biomedical sciences, economics or a related area. Previous experience of analysing large datasets and knowledge of either cognitive, social or health psychology would be an advantage.

Please direct applications in the following format to Dr Alex Wood (alex.wood@manchester.ac.uk):

•Academic CV
•Official academic transcripts
•Contact details for two suitable referees
•A personal statement (750 words maximum) outlining your suitability for the study, what you hope to achieve from the PhD and your research experience to date.
Any enquiries relating to the project and/or suitability should be directed to Dr Wood at the address above.

Applications are invited up to and including Monday 4 April 2011.

http://www.psychsci.manchester.ac.uk/research/groups/clinicalandhealth/

Gmail Priority Inbox

Talked a bit here about how to manage email. I have been using gmail lately, and have found the stars and folders system simple and robust, and it has helped somewhat. The priority inbox system is currently on trial on my account. Will give it a go. Interested in talking online or offline to people here who have developed nice ways of keeping their account under control. And I will take this opportunity to apologise to anyone who reads this who has emailed me without reply! I think I get almost everything but feel free to resend if I haven't gotten back. I would say my most common reason for not replying to an email is that I am intending to write something that takes a bit of effort so put it aside for when I get more time and then it gets lost in the pile. Putting stars on things has definitely helped on that.

Poor Economics Website

A lot of data tools and graphics on this website that will be of interest to people working on development economics topics. It is the companion website to the book "Poor Economics" by Banerji and Duflo.

Dellepiane and Hardiman Working Paper: Ireland's Triple Crisis

Governing the Irish Economy: A Triple Crisis

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Sebastian Dellepiane (University of Antwerp)
Niamh Hardiman (University College Dublin)
Abstract

The international economic crisis hit Ireland hard from 2007 on. Ireland’s membership of the Euro had a significant effect on the policy configuration in the run-up to the crisis, as this had shaped credit availability, bank incentives, fiscal priorities, and wage bargaining practices in a variety of ways. But domestic political choices shaped the terms on which Ireland experienced the crisis. The prior configuration of domestic policy choices, the structure of decision-making, and the influence of organized interests over government, all play a vital role in explaining the scale and severity of crisis. Indeed, this paper argues that Ireland has had to manage not one economic crisis but three – financial, fiscal, and competitiveness. Initial recourse to the orthodox strategies of spending cuts and cost containment did not contain the spread of the crisis, and in November 2010 Ireland entered an EU-IMF loan agreement. This paper outlines the pathways to this outcome.

Brownlow: Fabricating Economic Development

A paper by Graham Brownlow from the ESR edition just before Christmas:

"Abstract: Much of the literature, regardless of academic discipline, presents the publication of Economic Development in 1958 as analogous to a “big bang” event in the creation of modern Ireland. However, such a “big bang” perspective misrepresents the sophistication of economic debates prior to Whitaker’s report as well as distorting the interpretation of subsequent developments. This paper reappraises Irish economic thinking before and after the publication of Economic Development. It is argued that an economically “liberal” approach to Keynesianism, such as that favoured by T. K. Whitaker and George O’Brien, lost out in the 1960s to a more interventionist approach: only later did a more liberal approach to macroeconomic policy triumph. The rival approaches to academic economics were in turn linked to wider debates on the influence of religious authorities on Irish higher education. Academic economists were particularly concerned with preserving their intellectual independence and how a shift to planning would keep decisions on resource allocation out of the reach of conservative political and religious leaders."

Insanity of the day : Employment Control Framework

This blog recently highlighted a post on how the Employment Control Framework is seriously damaging research in universities through an entirely counter-productive piece of bureaucratic madness. A further good discussion of this, by Ferdinand von Prondzynski, is here.

Fact of the day

Working on a paper on migration and health. Most interesting statistic of the day (from OECD 2009) is that 3 per cent of the world's population live outside of the country they were born in, or about 190 million people.

Developing undergraduate research and inquiry

Developing undergraduate research and inquiry
Mick Healey and Alan Jenkins: June 2009

Extract: "The Academy (http://www.heacademy.ac.uk/) is very pleased to present this piece of work, commissioned as part of the series looking at the relationship between teaching and research. Mick Healey and Alan Jenkins build on their already substantial contribution in this area by focusing on undergraduates’ engagement in research and inquiry... They suggest here a fundamental conceptual shift from the notion of students as a passive audience for the research output of individual academics, to the idea of students as active stakeholders in a research community in which their experience of research within the core curriculum mirrors that of their lecturers...

In particular, the paper stems from the United States undergraduate research movement, which started by providing research opportunities for selected students in selected institutions. We argue, as does much recent US experience, that such curricular experience should and can be mainstreamed for all or many students through a research-active curriculum. We argue that this can be achieved through structured interventions at course team, departmental, institutional and national levels. The argument is complemented by a large selection of mini case studies, drawn particularly from the UK, North America and Australasia."

Causality in the Social Sciences

The table of contents of the forthcoming Oxford University Press book "Causality in the Social Sciences" is below.

PART I - Introduction
1: Phyllis McKay Illari, Federica Russo, Jon Williamson: Why look at Causality in the Sciences?

PART II - Health Sciences
2: R. Paul Thompson: Causality, Theories, and Medicine
3: Alex Broadbent: Inferring Causation in Epidemiology: Mechanisms, Black Boxes, and Contrasts
4: Harold Kinkaid: Causal Modeling, Mechanism, and Probability in Epidemiology
5: Bert Leuridan, Erik Weber: The IARC and Mechanistic Evidence
6: Donald Gillies: The Russo-Williamson Thesis and the Question of whether Smoking Causes Heart Disease

PART III - Psychology
7: David Lagnado: Causal Thinking
8: Benjamin Rottman, Woo-kyoung Ahn, Christian Luhmann: When and How Do People Reason about Unobserved Causes?
9: Clare R Walsh, Steven A Sloman: Counterfactual and Generative Accounts of Causal Attribution
10: Ken Aizawa, Carl Gillet: The Autonomy of Psychology in the Age of Neuroscience
11: Otto Lappi, Anna-Mari Rusanen: Turing Machines and Causal Mechanisms in Cognitive Science
12: Keith A. Markus: Real Causes and Ideal Manipulations: Pearl's Theory of Causal Inference from the Point of View of Psychological Research Methods

PART IV - Social Sciences
13: Daniel Little: Causal Mechanisms in the Social Realm
14: Ruth Groff: Getting Past Hume in the Philosophy of Social Science
15: Michel Mouchart, Federica Russo: Causal Explanation: Recursive Decompositions and Mechanisms
16: Kevin D. Hoover: Counterfactuals and Causal Structure
17: Damien Fennell: The Error Term and its Interpretation in Structural Models in Econometrics
18: Hossein Hassani, Anatoly Zhigljavsky, Kerry Patterson, Abdol S. Soofi: A Comprehensive Causality Test Based on the Singular Spectrum Analysis

PART V - Natural Sciences
19: Tudor M. Baetu: Mechanism Schemas and the Relationship Between Biological Theories
20: Roberta L. Millstein: Chances and Causes in Evolutionary Biology: How Many Chances Become One Chance
21: Sahotra Sarkar: Drift and the Causes of Evolution
22: Garrett Pendergraft: In Defense of a Causal Requirement on Explanation
23: Paolo Vineis, Aneire Khan, Flavio D'Abramo: Epistemological Issues Raised by Research on Climate Change
24: Giovanni Boniolo, Rossella Faraldo, Antonio Saggion: Explicating the Notion of 'Causation': the Role of the Extensive Quantities
25: Miklos Redei, Balazs Gyenis: Causal Completeness of Probability Theories-results and Open Problems

PART VI - Computer Science, Probability, and Statistics
26: Isabelle Guyon, C. Aliferis, G. Cooper, A. Elisseeff J.-P. Pellet, P. Spirtes, A. Statnikov: Causality Workbench
27: Jan Lemeire, Kris Steenhaut, Abdellah Touhafi: When are Graphical Models not Good Models
28: Dawn E. Holmes: Why Making Bayesian Networks Objectively Bayesian Make Sense
29: Branden Fitelson, Christopher Hitchcock: Probabilistic Measures of Causal Strength
30: Kevin B Korb, Erik P. Nyberg, Lucas Hope: A New Causal Power Theory
31: Samantha Kleinberg, Bud Mishra: Multiple Testing of Causal Hypotheses
32: Ricardo Silva: Measuring Latent Causal Structure
33: Judea Pearl: The Structural Theory of Causation
34: Sara Geneletti, A. Philip Dawid: Defining and Identifying the Effect of Treatment on the Treated
35: Nancy Cartwright: Predicting 'It Will Work for Us': (Way) Beyond Statistics

PART VII - Causality and Mechanisms
36: Stathis Psillos: The Idea of Mechanism
37: Stuart Glennan: Singular and General Causal Relations: A Mechanist Perspective
38: Phyllis McKay Illari, Jon Williamson: Mechanisms are Real and Local
39: Jim Bogen, Peter Machamer: Mechanistic Information and Causal Continuity
40: Phil Dowe: The Causal-Process-Model Theory of Mechanisms
41: M. Kuhlmann: Mechanisms in Dynamically Complex Systems
42: Julian Reiss: Third Time's a Charm: Causation, Science, and Wittgensteinian Pluralism
Index

Personality Traits and Economics

The Borghans et al (2008) Journal of Human Resources paper is cited over 200 times at this stage and is likely to be one of the most cited papers ever published in the journal (the famous Blinder decomposition paper has over 2000 citations but is nearly 40 years old). Almlund, Duckworth, Heckman and Kautz have written another extensive paper developing the literature on personalilty and economics linked here.

Lehigh University Irish Economy Conference April 7/8

Lehigh University will host a conference on the Irish Economy on April 7-8. Full details are available on this website.

Lane - Irish Economic Crisis

Philip Lane's recently released paper on the Irish economic crisis is available on this link:

"Ireland is in the midst of a severe crisis. While the global financial crisis has affected all economies to varying degrees, it has been especially severe in Ireland with a cumulative nominal GDP decline of 21 percent from Q4 2007 to Q3 2010. This ranks Ireland among the worst-affected countries in terms of output performance during this period (Lane and Milesi-Ferretti 2010)."

School tracking, social segregation and educational opportunity: evidence from Belgium

J. HINDRIKS, M. VERSCHELDE, G. RAYP, K. SCHOORS
Educational tracking is a very controversial issue in education. The tracking debate is about the virtues of uniformity and vertical differentiation in the curriculum and teaching. The pro- tracking group claims that curriculum and teaching better aimed at children's varied interest and skills will foster learning efficacy. The anti-tracking group claims that tracking systems are ineffcient and unfair because they hinder learning and distribute learning inequitably. In this paper we provide a detailed within-country analysis of a specific educational system with a long history of early educational tracking between schools, namely the Flemish secondary school system in Belgium. .... Combining evidence from the PISA 2006 data set at the student and school level with recent statistical methods, we show first the dramatic impact of tracking on social segregation; and then, the impact of social segregation on equality of educational opportunity (adequately measured). It is shown that tracking, via social segregation, has a major effect on inequality of opportunity...

PhD Fellowship Restrictions to Residents

According to the Nature blog "The Great Beyond", it was announced today that Spain will restrict one of its main PhD fellowship programmes to current Spanish residents. Various countries in Europe have various rules on this. To the best of my knowledge (e.g. application form for IRCHSS here) the Irish programmes are open to non-Irish people who are EU citizens and there was even experimentation with making them available to non-EU citizens, which does not seem to operate anymore. This is something we really need to debate in Ireland and across Europe.

For the Irish case, given that money is being made available to fund PhD students, is it necessarily better that this would go to Irish residents or to EU residents instead of being opened up? If a bright Chinese student wins the competition, doesn't that yield benefits in terms of attracting bright people to Ireland? Ed Glaeser (talking in a general sense rather than specifically about this) argues that the best way for cities to grow is to attract bright people and let them do their thing. Restricting bright people from applying for your PhD funding is not a great way of achieving this. This is particularly serious in Europe compared to America as even the best universities in Europe have far more limitations in the extent to which they can provide their own funding to PhD students compared to US universities.

Related to this, if a bright Irish person gets accepted to a PhD programme abroad and at home, is it necessarily better for the Irish taxpayer if that person takes the home programme due to funding instead of being funded to take the programme abroad, particularly in cases where the programme abroad is better than the home programme? It really is an open question as to whether it would have been better had the 10 years or so of IRCHSS/IRCSET scholars gone away to whereever they would have got accepted, rather than doing their PhD to a large degree in Irish institutions. One model could be for every country to restrict some of its funding to natives but then to allow the natives to go to the best programmes they get accepted to.

A lot of the model now seems to be to retain bright natives and view foreign postgrads as effectively a cost. Does it make as much sense to think about viewing foreign postgrads as something worth subsidising and viewing native students going away as yielding more benefits than if they stayed at home?

Another way of putting this is that it is tempting to think that Spain is effectively free-riding by doing this. But perhaps it is inadvertently doing the opposite and instead pushing the brightest people in the rest of Europe from Spain to other countries.

Goldthorpe Seminar Tuesday 22nd 1pm

Oxford's Professor John Goldthorpe will present in the Geary Seminar room tomorrow at 1pm. Dr. Goldthorpe's work on social class is extremely influential and this is a seminar that anyone in Geary with a broad interest in social inequality should attend.

Dr John Goldthorpe, University of Oxford

Tue, February 22, 1pm – 2pm

Geary Seminar Room (map)

'Back to Class and Status: or Why a Sociological View of Social Inequality Should be Reasserted'

Geary Summer Internships

I will be available to supervise a small number of summer internship positions in the Geary Institute this summer, from late June onwards.

Candidates will receive 200 euro weekly stipend for the internship, which will last approximately 8 weeks, and will participate fully in the research activity of the Institute. The Institute has housed many talented students and researchers over the last decade and this is a good opportunity to gain valuable paid experience in a busy research environment. Successful candidates will be fully trained in key research areas and will be given wide scope to develop their own research interests through interaction with Institute staff. Candidates must be registered for a full or part-time recognised academic programme. Due to current restrictions on the issuing of work permits for Ireland, and the associated costs, available positions are only available to candidates legally entitled to take up paid employment in Ireland

Candidates ideally will be undergraduate or Masters students working in psychology, economics or cognate areas. We will give strong preference to candidates (i) with very high grades (ii) strong quantitative skills (iii) strong intrinsic interest in research (iv) strong desire to gain relevant research experience (v) specific interests in behavioural economics. Candidates should send a CV and cover letter outlining how you might benefit from being here to Emma.Barron@ucd.ie before March 31st 2011. Candidates who have already submitted a CV and cover letter to the general intern programme will be considered but you should feel free to resubmit your CV if it has been updated. We will let people know in the first week of April. We regret that limited funding means we cannot help in any way with relocation or accommodation costs.

Projects will include, but are not limited to: helping to design experiments to test the effect of the automatic enrollment provision in the new pension framework on overall participation; assisting in the building of a historical health database to pinpoint key drivers of 20th century Irish mortality rates (see key paper here); designing surveys to examine the economic determinants of well-being (see example of this work here); designing experiments to ascertain how people interpret economic quantities (see example of this work here).

The University

University College Dublin is a large and diverse university whose origin dates back to 1854. There are over 20,000 students based in five colleges. The University strives to achieve the highest standards in the advancement of knowledge through research and scholarly publications. It communicates that knowledge to successive generations of students through excellence in teaching. The University also makes an active contribution to the interests and development of the wider community - regional, national and international. The university is situated on a large modern campus about 4km to the south of the centre of Dublin. Further information on the University is available at www.ucd.ie .

The Geary Institute

The Geary Institute (formerly the Institute for the Study of Social Change) was established at University College Dublin in 1999 as a centre for political, economic and sociological research. The activity of the Institute is organised around research programmes involving researchers from the Schools of Economics, Politics and International Relations, Law, Public Health and Population Science from throughout the University, from other research groups in Ireland, and key strategic partnerships throughout Europe and the US. The Irish Social Science Data Archive (ISSDA) is also part of the Institute, an invaluable resource for the social science community in Ireland. The Institute is housed within a new building on the Belfield campus which provides up to date facilities for graduate students, staff and research visitors, as well as a seminar room, library, boardroom and common room. The Institute is directed by Professor Colm Harmon and the Institute Manager is Susan Butler. See www.ucd.ie/geary for more information.

Finger length

There are now many studies that show how the relative length of the ring and index fingers, known as the 2D:4D ratio, predict a variety of outcomes including susceptability to prostate cancer, sporting prowess, longevity and sexual orientation. It is believed that it reflects exposure to testosterone shortly after conception.
This newspaper article discusses how it predicts earnings amongst traders in the City. It would be interesting to see how it fares in a human capital model on a representative sample of the population. Since it is relatively easy to measure (as biomarkers go), hopefully it will be incorporated into datasets in the future.

Behavioral Economics and the Next Government

Barring a very unusual set of events, the next Irish government will be a Fine Gael/Labour coalition with Enda Kenny as Taoiseach. The party has put forward its plans for reforming government and addressing unemployment and, as Kevin pointed out, they seem willing to embrace some of the innovative ideas coming out of modern microeconomics, in particular devoting a reasonable amount of space to early childhood education including the PFL project which involves some of our colleagues here.

It would be worth the time and energy of the policy advisors to the new government to look at the literature emerging from behavioural economics for ideas on how to reform key aspects of the tax, welfare and pensions systems of the country. Both the Obama and Cameron administrations have put a lot of energy into taking on board insights from behavioural economics, and a new government will have the advantage of being able to observe successes and failures of countries farther down this road. One advantage of the tight economic situation facing the new government will be that it will force it to address issues head-on rather than ducking issues by handing out money. There is arguably a stronger momentum for real reform of the operation of the state now than in any previous time, with both a dramatic downturn and a substantially more educated population than before.

Some things that would really be worth having a full national debate on in Ireland include:

- The growing literature on the importance of default options in determining behaviour even in important life domains is perhaps the most relevant to policy. The literature on automatic enrolment plans, in part, motivated the current governments decision to move to a system of automatic enrolment for the private sector in 2014. This is one of the boldest moves in this direction anywhere in the world and it is worth examining closely the extent to which this achieves its desired objectives and lessons that might be learned for other aspects of policy. In particular, the design of universal health insurance systems may benefit from the results of these analyses.

- FG plans to move all employment-related services into a single point of contact. At first glance, this would have a lot of advantages from the point of view of reducing complexity and potentially improving the outcomes of unemployed people. Sendhil Mullainathan and colleagues summarise some of the potential insights from behavioural economics in designing the interfaces that uemployed people interact with.

- There is a growing literature on how behavioural economics could be applied to more flexibly design tax policies. I gave a few presentations on this during the last couple of years including here. The Irish tax system is far too complicated and every move the new government can make toward simplifying it will be a victory for common sense.

- I have provided reading lists on this topic before (e.g. here) and my teaching website has a lot of links. The book by Richard Thaler and Cass Sunnstein Nudge provides an accesible overview.

- In general, the financial health and stability of Irish households will be a key concern over the rest of this cycle. The development of the role of the financial regulator as being an advocate for sensible household financial decision making would be bulked up a lot by taking on board this literature as a complement to the traditional financial capability literature.

AEJ Journal Applied

The January edition of the AEJ: Applied is available on this link. The journal policy means that the data-sets and do-files used to create the results are made available. As well as promoting transparency, this is also potentially a very good resource for graduate teaching.

Effects of Childhood Chronic Conditions

Childhood chronic illnesses such as asthma became increasingly prevalent in the late 20th century and first decade of the current century, as did childhood obesity and childhood mental health problems. A complex question arises as to how to predict the effect of increasing childhood problems on later adult health. It is, of course, possible that a lot of kids will simply 'grow out' of the condition that they face, particularly for less debilitating forms of their condition. However, it is also possible that the rise in conditions such as asthma, type II diabetes etc., represents a very ominous development for the future of adult health in industrialised countries. Estimating dynamic health effects is really tricky for the reason familiar to most readers of this blog, namely that there are many confounding factors that influence both child health and adult health e.g. poor children may experience a whole range of disadvantages that, if unmeasured, might make a correlation between child and adult health look bigger than the actual causal effect. One attempt to get around this is the use of family fixed effects and within sibling designs. Some of the recent papers of Jason Fletcher in Yale are really worth reading for the use of these designs. His recent paper in the Journal of Health Economics on asthma provides some of the first credible estimates of the effects of childhood asthma on adult health. This is an undeveloped but really important literature and one that is growing in importance.

In the case of Ireland, it is really difficult to project the effects of child chronic illness forward. Some of us here have been working on ways of estimating the effects of the decline in acute shocks during the 1940s and there are a number of potential strategies on this side. However, we do not have any real nationally representative data on childhood chronic conditions that have followed children through time into adulthood. The recent child health study led by TCD offers the possibility of doing this type of work in the future. The chronic illness rates are in the document. My first impression is that they look low (10 per cent in total, with about half being respiratory with the vast majority - 92 per cent or so of the ten per cent - being described by the parents as being not debilitating). To quote the report: "These figures mean that just under 1% (0.7%) of all 9-year-olds had a chronic illness or disability that resulted in their being ‘severely hampered’ by it in their daily activities." This might be a very good sign but consistency of measurement across countries is an issue that plagues childhood chronic illness research. In general, this will be an interesting and vital area of research over the next 50 years.

Links 16-02-11

1. NBER Paper - Rethinking America's Illegal Drugs Policy

2. NBER Paper - A Survey of the Economic Effects of Migration

3. IZA Paper on Selection Effects (or lack of) in lab experiments

Is There Selection Bias in Laboratory Experiments? The Case of Social and Risk Preferences
by Blair L. Cleave, Nikos Nikiforakis, Robert Slonim
(February 2011)

Abstract:
Laboratory experiments are frequently used to examine the nature of individual preferences and inform economic theory. However, it is unknown whether the preferences of volunteer participants are representative of the population from which the participants are drawn or whether they differ due to selection bias. We examine whether the social and risk preferences of participants in a laboratory experiment represent the preferences of the population from which they are recruited. To answer this question, we measured the preferences of 1,173 students in a classroom experiment. Separately, we invited all students to participate in a laboratory experiment. We find that the social and risk preferences of students who attend the laboratory experiment do not differ significantly from the preferences of the population from which they were recruited. Moreover, participation decisions based on social and risk preferences do not differ significantly across most subgroups, with the exception that female participants are on average less risk averse than female non-participants, and male participants are more risk averse than male non-participants.

4. Cabinet office paper on financing early interventions

5. There is actually a heading on the Cabinet Office website called "The Big Society". Includes a subheading on the "Big Society Bank".

6. Stephen Kinsella's webinar on reducing unemployment

7. Frank Barry's suggestion for helping to reduce unemployment

PAA: Scarring and Selection Session

We have blogged before about the potential for both scarring and selection effects arising from major episodes like infectious outbreaks and famines. The session at PAA chaired by Angus Deaton will address this important issue.

Chair: Angus Deaton, Princeton University
Discussant: Angus Deaton, Princeton University
Discussant: Emilia Simeonova, Tufts University

1. Malaria Survivors during Early Life, Health at Old Age, and Stroke Mortality in Costa Rica • Gilbert Brenes-Camacho, Universidad de Costa Rica; Alberto Palloni, University of Wisconsin at Madison

2. Famine Exposure and Adult Height: Disentangling Stunting from Survival Selection • Cheng Huang, Emory University

3. Children’s Obesity Trajectories in the U.S. and England: Disparities by Family Immigrant Status • Melissa L. Martinson, Princeton University; Sara McLanahan, Princeton University

4. How Conditions in Early Life Affect Mortality by Age and Gender: Southern Sweden, 1830-1968 • Luciana Quaranta, Lund University

School league tables for Ireland?

There has been very little about education in the election campaign. This story suggests that Fine Gael plan to publish school league tables if they are in government.

Data visualization and development indicators

If you are interested in economic development, cross-country comparisons and data visualization this new facility from the World Bank is useful.

And to complete the toolkit a new stata module WBOPENDATA draws from the main World Bank collections of development indicators, compiled from officially-recognized international sources, and made available through the World Bank Open Data Initiative, and presents the most current and accurate global development data available, and includes national, regional and global estimates.
User's can download WBOPENDATA directly from within Stata by typing

ssc install wbopendata

Hat-tips to David Madden & Olivier Bargain respectively.