5 Temmuz 2012 Perşembe
Why are Olympic Games always more expensive than planned?
Rare are the big sports events that stay within budget, and those that do are criticized as being too "commercial." I would suspect this is because organizers try to submit a budget that seems appealing, knowing that it is the lower end. Of course, by now everyone should realize this, especially legislators, but they may like the idea and care less about the cost and thus may be willing to go along with the mis-representation. Once additional funds are needed, legislators are either to go along anyway or they are forced to accept given all the money that was sunk into the project. And they think about the benefits that come with such events, which is actually not true (previous posts: 1, 2)
Wladimir Andreff has a better take at this than my random thoughts. In the case of the Olympic Games, he notes that the only recent games that did not suffer from a "winner's curse" by overbidding was Los Angeles 1984, which was the only candidate at the time (there was a big financial mess for Montreal 1976 that discouraged other candidates). So it would look like having competition drives candidates to pretending they need too low budgets. The recommended solution is to get rid of candidates altogether: have the games at fixed locations (one for Summer and one for Winter), as I have called for before.
Wladimir Andreff has a better take at this than my random thoughts. In the case of the Olympic Games, he notes that the only recent games that did not suffer from a "winner's curse" by overbidding was Los Angeles 1984, which was the only candidate at the time (there was a big financial mess for Montreal 1976 that discouraged other candidates). So it would look like having competition drives candidates to pretending they need too low budgets. The recommended solution is to get rid of candidates altogether: have the games at fixed locations (one for Summer and one for Winter), as I have called for before.
4 Temmuz 2012 Çarşamba
How effective is a moral appeal in discouraging exam cheating
Several programs have introduced honor codes, especially MBA programs. Students promise not too copy, plagiarize or otherwise cheat, and in response the program administration does not put much in place in terms of surveillance. Simple game theory tells you that if there are few controls, this cannot work. And given that students try to cheat even when they are checked on, imagine what happens when there is no one to watch them. By the way, what influences cheating?
Michał Krawczyk looks at an experiment where students were told cheating was wrong and then took at test. Statistical analysis is then used to figure out who still cheated, which is preferable to notoriously unreliable self-reports. It turns out that a one-time appeal to moral values is not a good deterrent. Also, self-reports of cheating, about the current experiment or in the past, are highly unreliable. Finally, the boys cheat more. No surprise here.
Michał Krawczyk looks at an experiment where students were told cheating was wrong and then took at test. Statistical analysis is then used to figure out who still cheated, which is preferable to notoriously unreliable self-reports. It turns out that a one-time appeal to moral values is not a good deterrent. Also, self-reports of cheating, about the current experiment or in the past, are highly unreliable. Finally, the boys cheat more. No surprise here.
3 Temmuz 2012 Salı
Does it help to search for a job?
Getting unemployed workers to search with sufficient intensity has been for a long time an important aspect of active and passive labor market policies. For example, unemployment insurance benefits decrease over an unemployment spell or expire exactly for this reason. But for it to make sense, it would need to be established that search intensity actually matters for the probability of finding a job. It seems obvious, but there are so many different ways to do this that some may turn out not to be that good and should thus not be required for eligibility to some programs.
Javier Vázquez-Grenno tries this for Spain, a country with an unusually high unemployment rate. He finds that immigrants have a higher search success, at least before the current crisis. Search intensity as measured by the number of search methods matters, and all methods improve the chances of employment, except one. Registering at the public employment office. That must be a big disappointment for all those who have maintained that these offices were the center part of lowering the unemployment rate. It does not seem to work at the microeconomic level, although it may still work at the macroeconomic one: after all, the office employees would probably be unemployed without that job.
Javier Vázquez-Grenno tries this for Spain, a country with an unusually high unemployment rate. He finds that immigrants have a higher search success, at least before the current crisis. Search intensity as measured by the number of search methods matters, and all methods improve the chances of employment, except one. Registering at the public employment office. That must be a big disappointment for all those who have maintained that these offices were the center part of lowering the unemployment rate. It does not seem to work at the microeconomic level, although it may still work at the macroeconomic one: after all, the office employees would probably be unemployed without that job.
Pigou Club news
From my inbox:
I thought you might be amused to see this. At Metrovino, a restaurant in Portland, Oregon where I run the bar, we needed a name for a drink we serve that's a slight variation on the Pegu Club (a classic gin cocktail). "Pigou Club" was the first thing to come to mind. I doubt many guests know what the name alludes to but it makes me happy and the drink has become one of our bestsellers. A photo of the menu is attached. The recipe and background are here.
Also, by the way, Australia has joined the club, amidst significant controversy.
2 Temmuz 2012 Pazartesi
Two millenia of growth in a couple of equations
Many scientists dream of finding a unified theory of something, a theory that would encompass others and explain, with a few equations, a large number of observations. Physicists in particular have been looking for fundamental equations. In economics, there is currently a drive among growth theorists to find a unified growth theory, although here the focus is not on a single equation, but rather a model. Indeed, one has to realize that explaining several thousand years of economic growth involves some complexity.
And now the physicists get interested in the topic. Andrey Korotayev and Artemy Malkov actually go beyond a simple one equation model and use some theory, linking surplus output to population growth à la Malthus. Up to 1970, population is hyperbolic, while GDP is quadratic-hyperbolic (in both cases levels, and not growth as the authors assert). They conclude from this that technological progress is expanding because of the larger number of inventors as population grows. That seems a bit simplistic, as one should also bear in mind that there are decreasing returns to inventing, as documented by rather constant long-run growth rates for total factor productivity in modern history despite an increasing share of a growing population dedicated to research and development. But one can get misled when one looks only at few indicators.
Compared to other physicists, Korotayev and Malkov are careful to use real numbers for output and draw on growth theory a little bit. However, they tout a bit too much high correlation coefficients between data and their forecast. Indeed, when both have a trend, the R2 will always be very high (not counting the fact that for some data points, the uncertainty about their measurement is considerable). And using a logarithmic scale for the graphs would also give a fairer visual assessment of the fit.
PS: I am rather surprised to see that physicists have such difficulties formatting correctly their equations.
And now the physicists get interested in the topic. Andrey Korotayev and Artemy Malkov actually go beyond a simple one equation model and use some theory, linking surplus output to population growth à la Malthus. Up to 1970, population is hyperbolic, while GDP is quadratic-hyperbolic (in both cases levels, and not growth as the authors assert). They conclude from this that technological progress is expanding because of the larger number of inventors as population grows. That seems a bit simplistic, as one should also bear in mind that there are decreasing returns to inventing, as documented by rather constant long-run growth rates for total factor productivity in modern history despite an increasing share of a growing population dedicated to research and development. But one can get misled when one looks only at few indicators.
Compared to other physicists, Korotayev and Malkov are careful to use real numbers for output and draw on growth theory a little bit. However, they tout a bit too much high correlation coefficients between data and their forecast. Indeed, when both have a trend, the R2 will always be very high (not counting the fact that for some data points, the uncertainty about their measurement is considerable). And using a logarithmic scale for the graphs would also give a fairer visual assessment of the fit.
PS: I am rather surprised to see that physicists have such difficulties formatting correctly their equations.
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5 Temmuz 2012 Perşembe
Why are Olympic Games always more expensive than planned?
Rare are the big sports events that stay within budget, and those that do are criticized as being too "commercial." I would suspect this is because organizers try to submit a budget that seems appealing, knowing that it is the lower end. Of course, by now everyone should realize this, especially legislators, but they may like the idea and care less about the cost and thus may be willing to go along with the mis-representation. Once additional funds are needed, legislators are either to go along anyway or they are forced to accept given all the money that was sunk into the project. And they think about the benefits that come with such events, which is actually not true (previous posts: 1, 2)
Wladimir Andreff has a better take at this than my random thoughts. In the case of the Olympic Games, he notes that the only recent games that did not suffer from a "winner's curse" by overbidding was Los Angeles 1984, which was the only candidate at the time (there was a big financial mess for Montreal 1976 that discouraged other candidates). So it would look like having competition drives candidates to pretending they need too low budgets. The recommended solution is to get rid of candidates altogether: have the games at fixed locations (one for Summer and one for Winter), as I have called for before.
Wladimir Andreff has a better take at this than my random thoughts. In the case of the Olympic Games, he notes that the only recent games that did not suffer from a "winner's curse" by overbidding was Los Angeles 1984, which was the only candidate at the time (there was a big financial mess for Montreal 1976 that discouraged other candidates). So it would look like having competition drives candidates to pretending they need too low budgets. The recommended solution is to get rid of candidates altogether: have the games at fixed locations (one for Summer and one for Winter), as I have called for before.
4 Temmuz 2012 Çarşamba
How effective is a moral appeal in discouraging exam cheating
Several programs have introduced honor codes, especially MBA programs. Students promise not too copy, plagiarize or otherwise cheat, and in response the program administration does not put much in place in terms of surveillance. Simple game theory tells you that if there are few controls, this cannot work. And given that students try to cheat even when they are checked on, imagine what happens when there is no one to watch them. By the way, what influences cheating?
Michał Krawczyk looks at an experiment where students were told cheating was wrong and then took at test. Statistical analysis is then used to figure out who still cheated, which is preferable to notoriously unreliable self-reports. It turns out that a one-time appeal to moral values is not a good deterrent. Also, self-reports of cheating, about the current experiment or in the past, are highly unreliable. Finally, the boys cheat more. No surprise here.
Michał Krawczyk looks at an experiment where students were told cheating was wrong and then took at test. Statistical analysis is then used to figure out who still cheated, which is preferable to notoriously unreliable self-reports. It turns out that a one-time appeal to moral values is not a good deterrent. Also, self-reports of cheating, about the current experiment or in the past, are highly unreliable. Finally, the boys cheat more. No surprise here.
3 Temmuz 2012 Salı
Does it help to search for a job?
Getting unemployed workers to search with sufficient intensity has been for a long time an important aspect of active and passive labor market policies. For example, unemployment insurance benefits decrease over an unemployment spell or expire exactly for this reason. But for it to make sense, it would need to be established that search intensity actually matters for the probability of finding a job. It seems obvious, but there are so many different ways to do this that some may turn out not to be that good and should thus not be required for eligibility to some programs.
Javier Vázquez-Grenno tries this for Spain, a country with an unusually high unemployment rate. He finds that immigrants have a higher search success, at least before the current crisis. Search intensity as measured by the number of search methods matters, and all methods improve the chances of employment, except one. Registering at the public employment office. That must be a big disappointment for all those who have maintained that these offices were the center part of lowering the unemployment rate. It does not seem to work at the microeconomic level, although it may still work at the macroeconomic one: after all, the office employees would probably be unemployed without that job.
Javier Vázquez-Grenno tries this for Spain, a country with an unusually high unemployment rate. He finds that immigrants have a higher search success, at least before the current crisis. Search intensity as measured by the number of search methods matters, and all methods improve the chances of employment, except one. Registering at the public employment office. That must be a big disappointment for all those who have maintained that these offices were the center part of lowering the unemployment rate. It does not seem to work at the microeconomic level, although it may still work at the macroeconomic one: after all, the office employees would probably be unemployed without that job.
Pigou Club news
From my inbox:
I thought you might be amused to see this. At Metrovino, a restaurant in Portland, Oregon where I run the bar, we needed a name for a drink we serve that's a slight variation on the Pegu Club (a classic gin cocktail). "Pigou Club" was the first thing to come to mind. I doubt many guests know what the name alludes to but it makes me happy and the drink has become one of our bestsellers. A photo of the menu is attached. The recipe and background are here.
Also, by the way, Australia has joined the club, amidst significant controversy.
2 Temmuz 2012 Pazartesi
Two millenia of growth in a couple of equations
Many scientists dream of finding a unified theory of something, a theory that would encompass others and explain, with a few equations, a large number of observations. Physicists in particular have been looking for fundamental equations. In economics, there is currently a drive among growth theorists to find a unified growth theory, although here the focus is not on a single equation, but rather a model. Indeed, one has to realize that explaining several thousand years of economic growth involves some complexity.
And now the physicists get interested in the topic. Andrey Korotayev and Artemy Malkov actually go beyond a simple one equation model and use some theory, linking surplus output to population growth à la Malthus. Up to 1970, population is hyperbolic, while GDP is quadratic-hyperbolic (in both cases levels, and not growth as the authors assert). They conclude from this that technological progress is expanding because of the larger number of inventors as population grows. That seems a bit simplistic, as one should also bear in mind that there are decreasing returns to inventing, as documented by rather constant long-run growth rates for total factor productivity in modern history despite an increasing share of a growing population dedicated to research and development. But one can get misled when one looks only at few indicators.
Compared to other physicists, Korotayev and Malkov are careful to use real numbers for output and draw on growth theory a little bit. However, they tout a bit too much high correlation coefficients between data and their forecast. Indeed, when both have a trend, the R2 will always be very high (not counting the fact that for some data points, the uncertainty about their measurement is considerable). And using a logarithmic scale for the graphs would also give a fairer visual assessment of the fit.
PS: I am rather surprised to see that physicists have such difficulties formatting correctly their equations.
And now the physicists get interested in the topic. Andrey Korotayev and Artemy Malkov actually go beyond a simple one equation model and use some theory, linking surplus output to population growth à la Malthus. Up to 1970, population is hyperbolic, while GDP is quadratic-hyperbolic (in both cases levels, and not growth as the authors assert). They conclude from this that technological progress is expanding because of the larger number of inventors as population grows. That seems a bit simplistic, as one should also bear in mind that there are decreasing returns to inventing, as documented by rather constant long-run growth rates for total factor productivity in modern history despite an increasing share of a growing population dedicated to research and development. But one can get misled when one looks only at few indicators.
Compared to other physicists, Korotayev and Malkov are careful to use real numbers for output and draw on growth theory a little bit. However, they tout a bit too much high correlation coefficients between data and their forecast. Indeed, when both have a trend, the R2 will always be very high (not counting the fact that for some data points, the uncertainty about their measurement is considerable). And using a logarithmic scale for the graphs would also give a fairer visual assessment of the fit.
PS: I am rather surprised to see that physicists have such difficulties formatting correctly their equations.
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