January 5th Links

1. For those interested in maximum likelihood estimation techniques, Vincent Granville discusses the method of steepest ascent in relation to Google's search algorithm.

2. The Economist: "Only a few fast-developing countries, such as Brazil and China, now seem short of PhDs."

3. U.S. Council of Graduate Schools: The Ph.D. Completion Project

4. Yesterday it was announced that Irish property prices fell back to 2002 levels in 2010, according to reports from MyHome.ie and Sherry Fitzgerald; so it is interesting to read this SSISI paper (2007) by P.J. Drudy which "argues that Ireland’s housing problems stem in part from a particular philosophical orientation which supports the 'commodification' of housing".

5. The (U.K.) Royal Statistical Society "Get Stats" Campaign: 'giving everyone the skills and confidence to use numbers well'.

6. Researchers at Harvard have found a way of using the iPhone to measure people’s moods and have found a correlation between daydreaming and unhappiness.

7. The new Happiness Index to gauge Britain's national mood.

8. The regional impacts of Northern Irish HEIs.

9. Tom McKenzie and Dirk Sliwka: Universities as Stakeholders in their Students' Careers: On the Benefits of Graduate Taxes to Finance Higher Education.

10. CNN Money: Should companies offer sabbaticals?

11. Damien Mulley: "Failure" and Enterprise Culture in Ireland.

Google Refine: A power tool for working with messy data

A story on Mashable tells us that "if you live for data, slave over spreadsheets and constantly find yourself sifting through endless rows and columns of facts and figures, Google’s got a lovely new product just for you — and it’s free and open-source, too." The product in question is Google Refine: a tool for cleaning up data, and more. I watched the introductory video on this new piece of kit; it seems to be developed to a very high standard.

However, I would not recommend Refine to graduate students conducting empirical research. As we have mentioned before on the blog, in academic research it is crucial to keep a record of any changes made to a data-set using the syntax-editors available in most software packages. Nonetheless, Google Refine could be extremely useful for undergraduate projects or for data-analysts who only use Excel. One appealing feature for security-conscious users is that the program must be downloaded, which means that the data is never on the web.

For more sophisticated data-handling, the first thing that comes to mind is Scott Long's recent book on "The Workflow of Data Analysis". This is an excellent starting-point for anyone looking to go about best practice in their research. Also, Daniel Hamermesh has a paper on replication in economics, that is arguably a must-read for graduate students beginning a program in empirical economics. An IZA WP version of the Hamermesh article is available here: Replication in Economics. The most recent discussion of data-issues on this blog (including workflow, publication bias, replication, retractions and empirical controversies) is available here.

Economics at Yahoo!

I've blogged before about Hal Varian, Chief Economist at Google, and how his role in the organisation has been central to Google's business model. I have also mentioned pioneering work at Yahoo! Research on the effectiveness of online advertising, the battle between Google, Yahoo! and Bing in the economics of internet search, and the statement by Yahoo! Research that they routinely compete for talent with the top ten economics departments in the world.

However, it has only now come to my attention that Varian has a counterpart at Yahoo! The economist in question is Preston McAfee, on leave from the position of J. Stanley Johnson Professor of Business, Economics, and Management at the California Institute of Technology. At Yahoo!, Professor McAfee is Vice President and Research Fellow at Yahoo! Research in Burbank, CA, where he leads a group focused on microeconomics research. Here is a list of recent publications from the Microeconomics and Social Systems cluster at Yahoo!

Professor McAfee wrote Introduction to Economic Analysis, a free, open-source text that spans both principles and intermediate microeconomics. In 1994, the FCC in the USA auctioned access to a number of radio frequencies for new communications services, using an auction designed by Paul Milgrom, Robert B. Wilson, and Professor McAfee, and raised over $17 billion. This auction design was copied around the world. McAfee, Milgrom, Wilson and John McMillan (1951-2007) formed a company, Market Design, Inc., that advises governments on how to maximize the return from sales of radio frequencies, mineral rights, airports, and other assets.

Returning to Yahoo!, The Register magazine describe the company's Right Media exchange — a display advertising marketplace that matches advertisers with publishers and ad networks — as (by one measure) the largest exchange in the world, running over nine billion auctions each day. Finally, the Yahoo! Advertising Blog is also an interesting read; the current post - Mad Men No More - features a discussion by "advertising’s new guard" on how they are re-defining the industry.

How Google Does Business...

1. "What could be more baffling than a capitalist corporation that gives away its best services, doesn't set the prices for the ads that support it, and turns away customers because their ads don't measure up to its complex formulas?". Read how economics underlies every aspect of the Google business model: here in Wired.

2. AdWords is a pioneering variation on a second-price auction.

3. AdWords was such a hit that Google used auctions to place ads on other websites: AdSense.

4. Hal Varian, Chief Economist at Google, has been mentioned on the blog before: here and here.

5. "But the really gutsy move," Hal Varian says, "was using it in the IPO." In 2004, Google used a variation of a Dutch auction for its initial public offering.

6. The Google equivalent of the Consumer Price Index is called the Keyword Pricing Index. Here's a link about Fathom Online's version. Examples of very competitive keywords are 'flowers' and 'hotels'.

7. Quality Scores are important: a penalty is invoked when the ad quality is too low. In such cases, the company slaps a minimum bid on the advertiser.

8. Hal Varian says: "The people working for me are generally econometricians—sort of a cross between statisticians and economists". He's currently hiring a senior economist. The London office also has other opportunities.

Some Blog Links

1. A new report from the European Centre for the Development of Vocational Training: "The skill matching challenge: Analysing skill mismatch and policy implications". HT: Michael Egan. [The report is largely based on the contributions of Nigel O’Leary and Peter Sloane (Welmerc, School of Business and Economics, Swansea University), Seamus McGuinness and Philip O’Connell (ESRI – Economic and Social Research Institute, Dublin) and Kostas Mavromaras (NILS – National Institute of Labour Studies, Flinders University, Adelaide, Australia).]

"With global competition increasing, demographic change unfolding and rapid technological change intensifying, skill mismatch has come to the forefront of Europe’s policy debate (European Commission, 2008). Skill mismatch refers not only to skill shortages or gaps, but also to qualifications, knowledge and skills exceeding job requirements."

2. The U-S unemployment rate fell from 10 to 9.7 percent in January, but a Gallup poll out yesterday found that nearly one out of every five members of the country's workforce is underemployed. That's about 30 million Americans who are without jobs or unable to find full-time work.

3. NYT: "Economists fear that the nascent recovery will leave more people behind than in past recessions. Roughly 2.7 million jobless Americans will lose their unemployment check before the end of April... unless Congress approves the Obama administration’s proposal to extend the payments"

4. The Economist: God help the jobless

5. How business meetings are done at Google

6. Another Web 2.0 data-based (ad)-venture: Trendrr

Economists are wrong: well Google says so...

Some of you will have seen Dan Ariely's post on what google searches can reveal : very clever.
http://www.predictablyirrational.com/?page_id=17

Rather than pursuing the romantic angle, I put into Google "Economists are"
The three 3 top results are:
economists are split on inflation 907,000 results
economists are useless 793,000 "
economists are wrong 3,740,000 "

So there you have it. Most people think we are wrong. I'll get my coat.

The Datarati

The 'Datarati' refers to "a new generation of data gurus who have emerged on the online advertising scene. The 'Datarati' are responsible for using data to optimise the campaign performance of the world’s largest brand owners." I read about this group on the blog of Will Scully-Power, after discovering this blog-post: "Google’s Chief Economist Hal Varian on the Future of Data".

A quote is as follows:

“I keep saying the sexy job in the next ten years will be statisticians. People think I’m joking, but who would’ve guessed that computer engineers would’ve been the sexy job of the 1990s?"

The blog-post links to an article in the McKinsey Quarterly, which includes an audio-stream. We've mentioned Hal Varian quite a bit on the blog before, including this post with a link to a talk by Varian on the "Economics of Internet Search".

Also worth looking at is the interview with Varian conducted by Kenneth Train. This can be accessed on Kenneth Train's website (here). There are also some very interesting interviews with other Berkeley Economists, including George Akerlof, David Card, Daniel McFadden and Janet Yellen.

Economics 2.0

"For decades, many of the brightest graduates in economics sought their fortune in finance. In coming years, they will seek it in marketing, as the Internet gives all companies the information-rich environment once available only in financial markets."

That’s the prediction of Hal Varian, Chief Economist at Google, and economist at the University of California at Berkeley. Varian discusses why marketing is the new finance in this Wall Street Journal article from last year.

Below, Varian gives a lecture on the "Economics of Internet Search", from this year's Calit2-sponsored series, "Behavioral, Social, and Computer Sciences Seminar Series" - Friday, May 23, 2008. Following on from the last post about 'The Weather and Work', apparently "it's good for Google if the weather is bad, but not too bad..."