Category: Education

Zimbabwe Inflation: The End of the Story

As we went to press with Modern Principles: Macro we kept having to add zeroes to Zimbabwe's peak hyperinflation rate and move it up the table of world leaders.  In our final revision, Zimbabwe's inflation rate had hit 79,600,000,000% per month putting Zimbabwe in second place.  We wondered whether in our  second edition Zimbabwe would overtake the all time hyperinflater, Hungary (1945-1946) at 41,900,000,000,000,000% per month, but it was not to be.  As it turned out, we went to press just as the hyperinflation peaked and Zimbabwe's currency ceased to exist as a medium of exchange.  Steve Hanke at Cato has the end of the story

Ashes are all that is left of the Zimbabwe dollar – a remnant of
paper money. During Zimbabwe’s hyperinflation, foreign currencies
replaced the Zimbabwe dollar in a rapid and spontaneous manner. This
“dollarization” process was legalized in late January 2009. Even though
the Zimbabwe paper money remnant circulates alongside foreign
currencies, its real value is tiny, its use is limited, and its value
against the U.S. dollar is cut in half every two days.

Zimbabwe failed to break Hungary’s 1946 world record for
hyperinflation. That said, Zimbabwe did race past Yugoslavia in October
2008. In consequence, Zimbabwe can now lay claim to second place in the
world hyperinflation record books.

Final Postscript: In 2009, Zimbabwe's central banker, Gideon Gono, was awarded the Ig Nobel prize, not, as expected, in economics but in mathematics for, in the prize committee's words, "giving people a simple, everyday way to cope with a wide range of numbers – from very small to very big – by having his bank print bank notes with denominations ranging from one cent ($.01) to one hundred trillion dollars ($100,000,000,000,000)."

Dining tips for Manhattan

JonSanders, a loyal MR reader, asks:

I read "Discover Your Inner Economist" (as well as "Create Your Own
Economy") and I want a little more help with the Manhattan dining tips
you covered. Care to help someone on a serious budget, like say, an
undergrad at NYU? Staying off the main avenues is useful, but it is
still hard to find dirt cheap authentic food from most cultures. More
advice?

I'm was in New York yesterday and I despaired.  Short of dropping $50-$70 or more for lunch, it's hard to get a good meal in most of Manhattan.  Greenwich Village went mainstream long ago and the overall problems in Manhattan are high rents, rising tourism, and the importation of growing numbers of people from U.S. regions with lesser food taste (can you guess where?).  That's a triple whammy.  I recommend the following:

1. Eat on the far west or far east side, like 9th Ave. or The Bowery.  The East Village hasn't been ruined.  The West Village still has some quirky places near The Village Vanguard, usually further west off the main paths.  There are good places near Hudson St., the neighborhood Jane Jacobs wrote about.

2. Eat on the way to or from LaGuardia in Flushing, Queens, in superb Chinatown.  If you try the Chinatown in Manhattan, go for breakfast — not dinner — for the best chance at quality.

3. Look for obscure ethnic places in the mid 30s, on the streets, not the avenues.

4. The best food reviews are in New York magazine, by far. 

5. Two of my reliable stand-bys are Ess-a-Bagel and Shun Lee Palace, both in East/Midtown.  They're both pretty tired in terms of concept but the quality still is excellent.  I enjoy them every time I go.  Shun Lee Palace would not count as dirt cheap, however.

6. Get to Brooklyn or Queens.  Or (gasp) New Jersey.

What advice can you give this poor fellow?

Sentences to ponder

Experts are more
persuasive when they seem tentative about their conclusions, a study
soon to be published in the Journal of Consumer Research suggests. But
the opposite is true of novices, who grow more persuasive with
increasing certainty.  In one experiment, college students were
randomly assigned one of four variations of a restaurant review,
praising a local Italian spot. In some versions, the reviewer was
described as a famous food critic; in others, he was a technology
worker at a local college with a penchant for fast food. Each of the
critics expressed positive certainty about the restaurant's virtues in
one variation, and tentative praise in another. Asked to evaluate the
restaurant, the students who read the expert's review liked it much
better when he seemed tentative; the opposite was true of the novice…

The story is here.  Of course I'm not sure you should ponder these sentences.  Maybe you should, maybe you shouldn't.  If that.

I thank John De Palma for the pointer.

Gone, gone, gone

At BofA and AIG close to a majority of the top executives whose salaries were to be cut have already left.  Nuff said.

"There's no question people have left because of uncertainty of our ability to pay," said an executive at one of the affected firms. "It's a highly competitive market out there."

At Bank of America, for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision. Under his plan, compensation for the most highly paid employees at the bank would be a maximum of $9.9 million. The bank had sought permission to pay as much as $21 million, according to Treasury Department documents.

At American International Group, only 13 people of the top 25 were still on hand for Feinberg's decision.

A big hat tip to Ryan Lee for the link.

Which areas are taught best?

Joanne asks a good question:

Everything else being equal, are there subjects that lend itself to
better teaching by professors? I've always chosen classes mostly on
professor teaching quality as measured by anonymous student surveys,
but was wondering if there are certain classes of subjects where one
could find better or worse teachers?

This may sound odd, coming from someone with a Ph.d, but I don't feel I have much experience being a student.  A lot of the time I didn't pay attention.

A foreign language is especially hard to teach well.  What can you do with verb conjugation?  Microeconomics can be taught well.  Literature.  Classes that can be taught well make for easy narrative and vivid anecdote.  The instructor can be enthusiastic without it seeming forced (not the case for introductory accounting).  The students can be presented with relatively high-level material even in lower-level courses; poetry and literature illustrate that principle.  Finally, the class must have actual substance, which rules out any number of offerings, best left unlisted.  It's harder to teach macro well because it's less likely the instructor actually believes the material.

The best teachers I ever had were Hilary Putnam for Philosophy of Language and Charles Pine for calculus, plus H. Bruce Franklin for literature.  Franklin was (still is?) a Stalinist and he edited The Essential Stalin.  Barbara Jean Glotzer taught a very good Algebra II.

The day everything changed?

Even since I wrote Create Your Own Economy, which was not so long ago, I've come around closer to Alex's position on on-line instruction.  Today I read:

After several years of experimenting
with “hybrid” Spanish courses that mix online and classroom
instruction, the University of North Carolina at Chapel Hill has
decided to begin conducting its introductory Spanish course exclusively
on the Web.

Spanish 101, which had featured online lessons
combined with one classroom session per week, will drop its
face-to-face component in an effort to save on teaching costs and
campus space in light of rising demand for Spanish instruction and a
shrinking departmental budget.

Adios a mis amigos!

Addendum: Elsewhere on the "everything changed" front, no one wants to buy The Boston Globe and Barnes and Noble's new e-Reader — Nook — will allow e-readers to "lend" copies to their friends, albeit in sequential fashion.

Pedigree bias in economics

Coastal Elite, a loyal MR requester, requests:

Why is there more "pedigree bias" for hiring of Economics faculty than
in other disciplines? For example, at any top 30 school, 95% of the
faculty will have their PhD from a top 10 school. In other fields, this
will not be the case. Some other disciplines have a much stronger
tendency to co-author than Economics, which should decrease the signal
to noise ratio on a CV. This should imply that pedigree bias should be
even stronger in disciplines with more co-authoring, but anecdotally
this does not seem to be true.

And very often it is the top six rather than the top ten.  I don't myself see the factor of co-authoring as the path to an answer here.  The default answer is to invoke a relatively high importance for IQ, in economics, combined with the relative absence of prodigies, compared to say math.  When prodigies and autodidacts are possible, top performers can come from anywhere.  But smarts and training and networking are all required.  The combination of those barriers give a big advantage, justified or not, to the very top schools.  It is usually believed that a candidate from a lesser school is lacking in at least one of these yet all are required for a big career success.  So maybe a "multiplicative model" of achievement in economics plays a big role in pedigree bias.

On top of that, economics is a relatively unified field with relatively homogeneous metrics of quality.  A school ranked #23 can "play it safe" by hiring a lesser MIT grad, rather than the best student coming out of Emory, and more or less know what they are getting and agree on that.  This tendency in the market is probably inefficient, relative to a first-best with a higher degree of intellectual innovation and less concentration of rewards across the top graduate programs.

Also, the top programs are good at doing admissions — surprisingly good in my view — and pre-selecting the kind of talent the rest of the profession is looking for.

Which other fields have a comparable "pedigree bias"?

Higgs on Leviathan

There are excellent writers and there are excellent economists and in that intersection there are none better than Bob Higgs:

Until more people come to a more realistic, fact-based understanding of the government and the economy, little hope exists of tearing them away from their quasi-religious attachment to a government they view with misplaced reverence and unrealistic hopes. Lacking a true religious faith yet craving one, many Americans have turned to the state as a substitute god, endowed with the divine omnipotence required to shower the public with something for nothing in every department – free health care, free retirement security, free protection from hazardous consumer products and workplace accidents, free protection from the Islamic maniacs the U.S. government stirs up with its misadventures in the Muslim world, and so forth. If you take the government to be Santa Claus, you naturally want every day to be Christmas; and the bigger the Santa, the bigger his sack of goodies.

Refuting this post helps confirm it

Chess players who train with computers are much stronger for it.  They test their intuitions and receive rapid feedback as to what works, simply by running their program.  People who learn economics through the blogosphere also receive feedback, especially if they sample dialogue across a number of blogs of differing perspectives.  The feedback comes from which arguments other people found convincing.  Do the points you wanted to hold firm on, or cede, correspond to the evolution of the dialogue?  This feedback is not as accurate as Rybka but it's an ongoing test of your fluid intelligence and your ability to revise your opinion. 

Not many outsiders understand what a powerful learning mechanism the blogosphere has set in place.

Markets in everything

Max L. writes to me:

www.ultrinsic.com has gone live and has expanded its betting options for college grades in some interesting ways.  Students can bet not only on their grades in particular classes but also on their career GPA's.  They can also buy insurance for bad grades and make a bunch of different "multicourse" bets.  I thought the expansion adds an interesting finance technique and speeds up the rate at which students feel the burdens/benefits of their academic performance. Also, Ultrinsic either must already have or must develop an effective model for predicting student performance, which should create a lot of very useful data for a huge variety of purposes.

Max also sends along this piece on Hamas and Bernie Madoff.

Assorted Links

  • "Inside the Wayne County morgue in midtown Detroit, 67 bodies are piled up, unclaimed, in the freezing temperatures. Neither the families nor the county can afford to bury the corpses. So they stack up inside the freezer…You can smell the plight of Detroit."
  • A very good video profile of Tyler, who was honored yesterday at GMU for his many contributions to scholarship.

Teacher Performance Pay: Experimental Evidence from India

In an impressive new paper, Karthik Muralidharan and Venkatesh Sundararaman provide evidence on the power of teacher incentives to increase learning.  The paper is impressive for three reasons:

1) Evidence comes from a very large sample, 500 schools covering approximately 55,000 students, and treatment regimes and controls are randomly assigned to schools in a careful, stratified design. 

2) An individual-incentive plan and a group-incentive plan are compared to a control group and to two types of unconditional extra-spending treatments (a block grant and hiring an extra teacher).  Thus the authors can test not only whether an incentive plan works relative to no plan but also whether an incentive plan works relative to spending a similar amount of money on "improving schools."

3)  The authors understand incentive design and they test for whether their incentive plan reduces learning on non-performance pay margins.

The results are as follows:

We find that the teacher performance pay program was highly effective in improving student
learning. At the end of two years of the program, students in incentive schools performed
significantly better than those in comparison schools by 0.28 and 0.16 standard deviations (SD)
in math and language tests respectively….

We find no evidence of any adverse consequences as a result of the incentive programs.
Incentive schools do significantly better on both mechanical components of the test (designed to
reflect rote learning) and conceptual components of the test (designed to capture deeper
understanding of the material),suggesting that the gains in test scores represent an actual
increase in learning outcomes. Students in incentive schools do significantly better not only in
math and language (for which there were incentives), but also in science and social studies (for
which there were no incentives), suggesting positive spillover effects….

School-level group incentives and teacher-level individual incentives perform equally well in
the first year of the program, but the individual incentive schools significantly outperformed the
group incentive schools in the second year….

We find that performance-based bonus payments to teachers were a significantly more cost
effective way of increasing student test scores compared to spending a similar amount of money
unconditionally on additional schooling inputs.

Surprisingly, since absent teachers are a big problem in India, reduced teacher absenteeism per se does not appear to be the primary mechanism by which incentives improve learning.  Instead the primary mechanism appears to be more intensive teaching, including more homework and classwork and better attention to weaker students, this greatly increases the relevance of these results to teaching in the developed world.

Addendum: See also Karthik's comments on the comments at 26.

The Ultimate Productivity Blog

I give it an A+

I found this at the excellent Twitter site of Michael Nielsen, recommended by an MR reader.  He also refers us to this interesting article on neurology and athletic performance and this piece on the surprises of mathematics.

Here is his blog and here is his blog post on the future of scientific journals.  Here is Michael on the future of science.

Most of all, I like his six rules for rewriting.

Hail Michael Nielsen, who justifies Twitter all on his own.