Month: April 2008
Sunspots forever
David Cass, formerly an economist at the University of Pennsylvania, has passed away. His contributions were notable:
He made singular
contributions to economic theory, including the introduction of the "Cass-Koopmans"
growth model, the discovery of the "Cass" criterion for Pareto efficiency in overlapping
generations models. With Karl Shell, he discovered the importance of extrinsic uncertainty (sunspots)
in economic dynamics. His work with many
coauthors on incomplete financial markets was extremely influential.
The main idea of sunspots models is that when multiple equilibria are present, expectations can determine which equilibrium comes to pass. This is a twist on rational expectations; under RE people expect the true model but Cass showed that what is the true model will depend on what people expect. If I recall correctly, Cass also helped figure out when problems with infinities will render growth models incoherent or invalid. Cass’s version of "high theory" is exactly what is out of fashion today but in the 1980s it was the rage. I believe some of his work will return in importance. Here is Cass on scholar.google.com.
Thanks to Chester Norman for the pointer.
Good paper titles
"Do Funds-of-Funds Deserve Their Fees-on-Fees? "
The answer, of course, is yes.
Russ Roberts asks about Beethoven’s slow movements
I was giving a talk and I referred to Beethoven’s slow movements as some of the most splendid creations of humankind. Russ asked me for a list, so I’ll nominate the following:
1. The Emperor Concerto. This warhorse is a much underrated piece of music, especially the slow movement. The best recording, and indeed one of the best classical recordings of all time, is Michelangeli-Celibidache.
2. Beethoven’s 9th. You could try the recordings by Abbado, Barenboim, or Klemperer, among others, for sublime takes on the slow movement.
3. The Late String Quartets, most of all Op.132 but indeed all of them. The slow movements are done best by Quartetto Italiano or the Busch Quartet, noting that the latter has inferior sound quality.
4. Hammerklavier Piano Sonata. Schnabel’s take on the slow movement is the most profound, but his outer movements are a mess. Gilels or Pollini are safer. The box of late piano sonatas by Solomon covers the slow movements beautifully as well; when push comes to shove that is my pick.
Richter-Rostropovich are the choice for the slow movements in the cello sonatas. And don’t forget Ivan Moravec playing the slow movement in the Appassionata.
Assorted links
1. Tim Harford and Dan Ariely, mano a mano on Amazon
3. Money does buy happiness; the ongoing collapse of the Easterlin paradox
The Mobi
The Mobi is Germany’s mobility bonus, funding that covers moving, relocation and retraining costs for unemployed Germans seeking work anywhere in the world.
Plagued by high unemployment due to the turmoil of
re-unification and rigid labour laws, Germany has been helping
its skilled and less-skilled jobless workers match up with
foreign employers searching for manpower.The country has also been offering financial support to
cover moving and transportation costs for the hordes of
unemployed Germans in search of jobs across the European Union,
and even as far away as Australia and Canada.
The mobility bonus strikes me as a move of desperation. The Germans have created a bloated welfare state and now they are paying people to get off the welfare rolls and get out. I wonder what Rawls would have said?
Even now, I see an opportunity for America:
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!
Kindle
It’s pretty good.
The worst part: On day one the screen froze and it wouldn’t even turn off. Natasha had to read the instructions and press on a battery point with a pin to reboot it. What if that happened to me on an airplane? Must I now always carry around a small, sharp pin?
The best part: For fiction — that is fiction I’m actually going to read — I would rather use this screen than a traditional book. It is somehow easier to have a more focused appreciation of the words without being distracted by the book as a whole.
The actual worst part: For non-fiction it is not fast enough for real scrolling, flipping through, browsing and reading. The machine is best for linear, sequential consumption of the text.
I’m not sure if this entry should go under the "Books" or the "Web/Tech" category.
The pointer is from Chris Masse
Very small countries
Here is James Surowiecki on the economic problems of Iceland. Google tells me that Iceland has about 316,252 people. Fairfax County is over three times more populous but it hardly receives any out-of-state attention. Of course Fairfax County has neither its own language nor its own culture (apart from a lunch tradition, that is) but for economic questions that should not matter much.
One question is whether we should be trading asset claims to the future creditworthiness of very small units. Let’s say there were tradeable shares in the future prospects of assistant professors. A low share price wouldn’t do much for your mid-contract review and maybe not for your mortgage prospects either. It seems that noise traders can wreak more havoc on small units, if only because volatility relative to retained earnings may be larger. Maybe the real problem is when the small units cannot self-insure; imagine the public uproar if the Icelandic government were caught selling itself short.
Why we shouldn’t boycott the Olympics in any way
A wheelchair-bound Chinese torch bearer has rocketed to national fame after fending off protesters in Paris, becoming a symbol of China’s defiance of global demonstrations backing Tibet.
Jin Jing, a 27 year-old amputee and Paralympic fencer has been called the "angel in a wheelchair" and is being celebrated by television chat shows, newspapers and online musical videos after fiercely defending the Olympic torch during the Paris leg of the troubled international relay.
Protesters denouncing Chinese policy in Tibet threw themselves at Jin. Most were wrestled away by police but at least one reached her wheelchair and tried to wrench the torch away. Jin clung tenaciously to what has become a controversial icon of the Beijing Olympic Games until her attacker was pulled off. Her look of fierce determination as she shielded the torch, captured in snapshots of the scene, has now spread throughout China, inflaming simmering public anger at the protests. "I thought we had lost in France, but seeing the young disabled torch bearer Jin Jing’s radiant smile of conviction, I know in France we did not lose, we won!" said one of tens of thousands of Internet postings about the incident.
Here is the story. Here are further ramifications and don’t worry they’ll be happy to give up their coal factories too.
Readsplat
The Economist has a new travel blog, the new Fuchsia Dunlop book is only "good," the first issue of Reason magazine under new editor Matt Welch is out (so far I like it; it’s less cultural, less left-wing and more current affairsy than before), finally I am into Wilco, Vishnu’s Crowded Temple is an interesting account of the blend between Indian politics and religion, Arthur Brooks’s Gross National Happiness argues that the traditional conservative recipe makes people happy, Ramon Llull is a much underrated medieval thinker, here’s a blog on giving away your rebate, and here’s Ryan Holiday on how to master what you read; his technique is the opposite of mine which is simply to read and move on. And here is why congestion pricing died in New York.
The $10 billion Saudi university
A picture is here and yes they claim the finished version will have both male and female students and Western faculty. A question we’ve been asking over lunch lately is the following: how much would it really cost to set up a first-rate university — and not just a technical school — in Asia? Let’s say an Asian businessman were willing to put up $10 billion in endowment: how good would the school be? I see three major problems:
1. Many Asian governments cannot precommit to respecting academic free speech; nor for that matter can the Saudis.
2. An excellent university must be part of an intellectual network near other excellent universities. Arguably with the internet this effect is weakening over time. Still, if they tripled my salary I wouldn’t move to Saudi Arabia or for that matter Japan and that is for reasons related to network effects.
3. Such universities could not precommit to the governance systems (please don’t laugh) that have been so effective in bringing American schools to dominate the world rankings. In fact the more money that one person or government gave, the greater the commitment problem might be. By these governance systems I mean faculty control of appointments, with academic-based monitoring by the Dean and Provost, independent boards, and Presidents willing and able to raise enough money to maintain financial independence for the future. That’s a pretty tall order but you’ll find all those qualities in the successful American colleges and universities. Long-run financial independence also requires a more general culture of philanthropy which is found only in the United States.
Technical schools aside, I do not expect American colleges and universities to lose their leadership role in the immediate future. And if they do, the real competitors will prove to be Europe, the UK, and Canada, not Asia.
The world isn’t flat, installment #736
Wolf Totem, by Jiang Rong, is the most widely read book in China since Chairman Mao’s Little Red Book. In the United States it’s been out since March 27 and still it has only one Amazon review and a negative one at that. So far I find it compelling and I am enjoying its panpsychic vulgarities. It’s also a good guide to how the Chinese think about their foreign policy.
Questions that are rarely asked
Markets in everything
How much is a Twitter account with nearly 1,500 followers worth? Rocketboom founder Andrew Baron wants to find out, and launches a publicity stunt
that will spark a debate about trust and privacy: He’s selling his Twitter account
Here is the full story, and thanks to Chewxy for the pointer. And here is how to custom-order jeans on Second Life.
Financial Compensation for Organ Donors is Working
Only one country in the world has eliminated the shortage of transplant kidneys. Only one country in the world has legalized financial payments to kidney donors. That country is Iran.
In an important report, transplant surgeon nephrologist Benjamin Hippen argues that the Iranian system has saved thousands of lives and it should be used if not as model then to inform America’s efforts to eliminate its deadly shortage.
In the Iranian system organs are not bought and sold at the bazaar. Instead a non-profit, volunteer-run Dialysis and Transplant Patients Association (DATPA) mediates between recipients and donors. Recipients who cannot be assigned a kidney from a deceased donor and who cannot find a related living donor may apply to the DATPA. The DATPA identifies a possible donor from a pool of people who have applied to the DATPA to be donors. Donors are medically evaluated by transplant physicians, who have no connection to the DATPA, in just the same way as are non-financially compensated donors.
The government pays donors $1,200 plus limited health insurance coverage. In addition, charitable organizations also provide renumeration to impoverished donors. Thus demonstrating that Iran has something to teach the world about charity as well as about markets. Will wonders never cease? Recipients may also contribute to donor remuneration.
Hippen reports that the system works well, although better follow-up of donors would be an improvement. He concludes with a call to legalize financial compensation in the United States.