Results for “Tests” 811 found
Ilya Somin on Israeli signaling (markets in everything)
Ilya writes:
Various commenters on this and my previous post on the same subject claim that the Israeli government had to do this in order to send its citizens a “message” about how much it valued their lives and was willing to pay a high price to save them. But if these deals lead to the deaths of far more innocent Israelis than they save, the real message sent will be exactly the opposite: that the government is willing to make a large net sacrifice of innocent life in order to gain short term public relations benefits or a short-term boost in national morale. It’s possible, of course, that Israeli public opinion is myopic enough that they will think that the government is saving life despite the fact that it is actually sacrificing a much larger enough of innocent lives. If so, there could be a more permanent and substantial boost in national morale. Even then, it will probably fade as public attention shifts to other issues. In any event, it’s not worth the sacrifice of numerous innocents and the creation of perverse incentives for terrorist groups.
Link here. I don’t know whether this exchange is a good idea, but Ilya is possibly underrating the power of signaling models. It is precisely the fact that that Israeli government will trade for this single life, even apart from whether it is instrumentally rational, that sends the relevant signal. The less “rational” the act, the more potent the signal of concern, and in this case the possible irrationality is stochastic, not certain. Perhaps one must take a stand for the single, identifiable life in question; Hollywood rescue movies accept this meme and they face market tests all the time. Doesn’t the starship captain go back down to save the one life, even though it may place the entire ship in jeopardy? “That’s what makes us human, Bones,” while Spock raises the eyebrow, etc.
One can also read the Israeli government as signaling (correctly or not) that it has the power to prevent or at least limit future kidnappings. It is an expression of strength, or at least a belief in strength, and citizens seem to like that signal from their leaders. It also may allow governments to perform other (efficient) acts which involve offsetting signals of weakness.
That said, Ilya’s comments indirectly raise an issue in signaling theory: where does salience come from? Why is “one person” the relevant unit of concern for the Israeli citizenry here? There are plenty of simple answers, but most of them beg the question and of course one person is often considered quite disposable in other contexts, especially military. It also would not suffice to get just a month of freedom for him. Yet neither is the deal insisting that more than this one soldier be delivered.
If you haven’t already, I recommend that you all read David Grossman’s splendid To The End of the Land.
Capital and its structure, Haitian style
There are so many lessons in this story:
In one series of tests, the traditional stove took an average of 978 grams of fuel to bring a liter of water to boil, while fuel consumption among the newer models ranged from 479 to 591 grams.
Yet in a simple test of “time to boil” the traditional stove appeared to have a clear advantage over its fancier brethren. A pot of water was brought to a boil in 36 minutes on the traditional stove, while the four “improved” stoves were clustered between 51 minutes and one hour. This is a serious problem for the more efficient stoves. The researchers in the field found anecdotal evidence that Haitian cooks reject stoves if they are slow to boil.
“The traditional stoves are inefficient but cook quickly, because they put out more thermal power,’’ notes Kayje Booker, a UC Berkeley PhD student in Ecosystems Research, who was a member of the field research team. “Even some of the respondents who had tried the more efficient Mirak stoves to save charcoal had gone back to the traditional stove because it cooks quickly.”
More efficient stoves were often also plagued with design problems, such as holes that would become clogged during cooking, diminishing airflow and efficiency. “The traditional stove has the benefit of simplicity,’’ says Booker.
Here is the full article, very interesting, and here is the underlying study. In some alternate universe, I would live in Haiti, be independently wealthy, and blog it full-time.
For the pointer I thank Ken Feinstein.
Childrens Books With Economics Lessons
NYTimes: Justin Wolfers, a professor at the Wharton School of the University of Pennsylvania, cited “Click, Clack, Moo: Cows That Type” by Doreen Cronin and Betsy Lewin, a book about cows that withhold milk from a farmer until he provides electric blankets. Mr. Wolfers read the book to his 1-year-old daughter, Matilda, during the Wisconsin protests against Gov. Scott Walker’s attack on union rights.
Me? I read my kids The Little Red Hen–sort of like Atlas Shrugged for children.
The gdp revisions and labor market weirdness
The weirdness is still there. Menzie Chinn does the hard work and reports back:
Formal statistical tests indicate that the relationship between GDP growth and private employment growth has experienced breaks at each of the past two recessions, and strongly rejected stability (using 1-step-ahead recursive residual tests) in the last recession. This remains true regardless of whether one uses the pre-revision or post-revision data, although the rejection of stability is slightly less marked using the revised data.
Nigerian markets in everything facts of the day
Lagos bigwigs have long paid on-duty local cops to speed them through jams by riding shotgun with machine guns and menacing other drivers with bullwhips.
And:
In 2009, the latest year for such data, more than 2,600 Lagosians were forced to take a psychiatric exam at the Federal Neuro-Psychiatric Hospital because of wrong-way driving, according to the state transportation commissioner.
Officials at the hospital say that the number was slightly lower and that they couldn’t recall the last person to fail the test. Failure would trigger more outpatient tests—and mean continued impoundment for the offending car, officials say.
The article is interesting throughout.
The draft Eurozone plan
It is here (and further detail here), via Paul Krugman, who rightly slams it. Matt offers comment, so does Wolfgang, many more details and updates here. If you had told me it was an Onion-like satire of all the previous plans, and not an actual serious plan at all, I would have believed you. Here is one of the stranger, funnier, sadder, and more Straussian paragraphs:
6. All other Euro countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The Euro area Heads of States or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the Euro area as a whole.
In other words: “We know you are worried about Italy and Spain so we promise you that they are fine.” There is a good deal of ah, optimism about the real side of these economies:
9. All euro area Member States will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Deficits in all countries except those under a programme will be brought below 3% by 2013 at the latest…
Here’s an important sentence, and I view the exclusive reference to “Member States” as throwing in the towel:
As a follow up to the results of bank stress tests, Member States will provide backstops to banks as appropriate.
It is also promised that the bailout model for Greece won’t be used again.
Time to blast the Brahms! In all fairness to the plan, maybe that’s the only disc in anyone’s collection these days.
Addendum: “The proposed expansion of the EFSF’s role would have to be ratified by national parliaments, and could fall foul of critics in Germany, the Netherlands and Finland.”
Does the returns to education literature really test the signaling model?
Here is a comment by Matt, and also by Arnold. Bryan’s response argues that the returns to education tests consider “ability bias” but not “signaling.” For a lot of the tests that is a distinction without a difference, and indeed you can see this on the first two pages of Angrist and Krueger, which discuss “omitted variables that are correlated with educational attainment and with earnings capacity.” The tests still discriminate against the signaling model, even if signaling and ability bias differ in other regards. In a nutshell, artificially or randomly elevated workers fare better in the longer run than the signaling model predicts.
Here’s a parable to illustrate. Imagine a market situation with wages and different education levels observed for two classes of workers — call the locale Honduras. Now compare that to another setting — Nicaragua — where education is handed out on some subsidized, randomized basis. In the latter case some of the low ability group will be induced to get more schooling, and the pool of the educated will contain more low ability individuals in Nicaragua, compared to Honduras.
Now measure the long term earnings and compare.
If the signaling model is correct, the average long-term wage rates of return for the subsidized/elevated group in Nicaragua will be noticeably below the average wage rates of return of the educated group from the separating equilibrium in Honduras. After all, the subsidy-elevated group adds many more “low ability individuals” to the Nicaraguan mix of the educated than one would find in Honduras. According to the signaling model, in Nicaragua eventually the lower skill level of the elevated group will be discovered and their wage rates of return won’t stay so high forever.
But the wage rates of return for the elevated groups do not plummet back to earth and generally they are robust over time. That measures the real learning which went on in school, or so it would seem. Education is good for more than getting a good first job offer right off the bat.
The modern liberal interpretation (which may or may not be true) is that these poor people were waiting for a helping hand up the ladder, and then they took good advantage of it when it came. And if the elevated group in Nicaragua has higher long-term wage rates of return than the educated Hondurans (a result which does sometimes pop up in the data), that is because their lower initial margin of education made them an especially potent investment.
The actual tests are more complicated than this, and I use the country names to make the example easy to follow, not out of verisimilitude. But this example is one way to see some of the intuitions behind why the data do not treat the signaling model so kindly.
One empirical implication is that crude OLS measures of the return to education are much better than they may at first appear. These results are also one reason why most modern labor economists might object to the arguments of Charles Murray.
Here is a recent Brookings piece on the return to education, I have not had time to go through it.
Assorted links
1. New site for tracking economic indicators.
2. Claims about chocolate eating behavior, via Eric Barker.
5. The culture that is Japan there is no Great Stagnation (“Initial tests have people saying it even tastes like beef”….maybe they should consider sale at a discount.
What happens if you respond to spam?
While doing some spam research a couple of years ago, we did a series of test purchases from spam e-mails.
We bought pills, software, cigarettes, et cetera. We were a bit surprised that almost all of the orders went through and actually delivered goods. Sure, the Windows CD we got was a poor clone and the Rolex was obviously fake, but at least they sent us something.
We were carefully watching the credit card accounts we created for our tests but we never saw any fraudulent use of them.
The most surprising outcome from this test was that we didn’t see more spam to the e-mail addresses we used to order the goods.
Via Eapen Thampy, the link is here and they cite a new study on spam (pdf), which is interesting throughout. How does the financial side work?
One of the most interesting details in the study is this: almost all spam sales worldwide are handled by just three banks.
The banks? They were:
• DnB NOR (a Norwegian bank)
• St. Kitts-Nevis-Anguilla National Bank (in the Caribbean)
• Azerigazbank (from Azerbaijan)
Markets in everything
The 10-employee park has five pieces of machinery, including a pair of Caterpillar D5 track-type bulldozers and three Caterpillar 315CL hydraulic excavators. Dig This sells three-hour packages that consist of a 30-minute safety and operation orientation followed by two hours of maneuvering either a bulldozer or excavator.
Guests can either dig a trench up to 10 ft deep or build an earthen mound; there are also skill tests like picking and moving 2,000-lb tires or scooping basketballs from atop safety cones. Packages are priced at $400, which reflects equipment maintenance and insurance costs. Patrons 14 and older can play in the dirt.
“Half of our customers are females, including housewives and grandmothers,” says company spokeswoman Cathy Wiedemer. “Throttling up a powerful engine and moving mounds of earth is very empowering.”
The full story is here and for the pointer I thank Chug.
Does this technique reliably increase your fluid intelligence?
I am passing this along without endorsing it (travel prevents me from going through the research):
The n-back task involves presenting a series of visual and/or auditory cues to a subject and asking the subject to respond if that cue has occurred, to start with, one time back. If the subject scores well, the number of times back is increased each round. The task can be done with dual auditory and visual cues, or with just one or the other.
A few years ago, Jonides and his colleagues Martin Buschkuehl, Susanne Jaeggi, and Walter Perrig demonstrated that dual n-back training increased performance on tests of fluid intelligence. But the current work extends that finding in several ways.
“These new studies demonstrate that the more training people have on the dual n-back task, the greater the improvement in fluid intelligence,” Jonides said. “It’s actually a dose-response effect. And we also demonstrate that the much simpler single n-back training using spatial cues has the same positive effect.”
In the so-called real world, who actually gets this kind of training?:
According to Jonides, the n-back task taps into a crucial brain function known as working memory—the ability to maintain information in an active, easily retrieved state, especially under conditions of distraction or interference. Working memory goes beyond mere storage to include processing information.
For the pointer I thank MR commentator JamieNYC.
Simple Interventions that Work
Sometimes simple interventions are the best. From research by Glewwe, Park and Zhao.
About 10% of primary school students in developing countries have poor vision, yet in virtually all of these countries very few children wear glasses….This paper presents results from the first year of a randomized trial in Western China that began in the summer of 2004. The trial involves over 19,000 students in 165 schools in two counties of Gansu province. The schools were randomly divided (at the township level) into 103 schools that received eyeglasses (for students in grades 4-6) and 62 schools that served as controls. The results from the first year indicate that, after one year, making eyeglasses available increased average test scores by 0.09 to 0.14 standard deviations (of the distribution of the test scores). For those students who accepted the glasses, average test scores increased by 0.12 to 0.22 standard deviations….
These are rather large effects; similar tests given to children in grades 5 and 6 in Gansu province show that an addition year of schooling leads to an increase of 0.4 to 0.5 standard deviations of the distribution of test scores, which implies that these impacts are equivalent to one fourth to one half of a year of schooling. Thus providing eyeglasses is a relatively low cost and easily implementable intervention that could improve the academic performance of a substantial proportion of primary (and secondary) school students in developing countries.
It’s interesting that many students/parents refused the glasses.
Hat tip to Stephen Dubner who has a good segment on this at Freakonomics Radio.
Do demographic changes matter for financial market returns?
Be careful when predictable factors appear to shape financial market returns, but nonetheless this result, written up by Robert Arnott and Denis Chaves,is intriguing:
It seems natural that the shifting composition of a nation’s population ought to influence GDP growth and perhaps also capital markets returns. Entrepreneurialism, innovation, and invention tend to be associated with young adults. Accordingly, GDP growth should perhaps be best when there is a preponderance of young adults in a population. Investing for retirement is associated with middle-age, with a shift in preferences toward bonds with late-middle-age. So, stock and bond returns might be best in populations with growing rosters of these age groups, respectively. Our data – spanning over 60 years and 22 countries in our main tests and roughly 175 countries in out-of-sample robustness checks – support all of our priors.
We confirm what others have already demonstrated, but we extract markedly more statistical significance by adapting a polynomial curve-fitting technique pioneered by Fair and Dominguez (1991), to this new purpose. In our work, we find that a growing roster of young adults (age 15-49) is very good for GDP growth, a growing roster of older workers is a little bad for GDP growth, and a growing roster of young children or senior citizens is very bad for GDP growth.
This is in accord with some of Brink Lindsey’s recent observations. For the pointer I thank Sami, a loyal MR reader.
Illiteracy and Testing
Here is Matt Yglesias who is always sensible and worth reading on education policy:
Something that I think drives at least some of my disagreements with other liberals about education policy is that I think a lot of middle class liberals implicitly underestimate the extent of really bad learning outcomes. Take this report (PDF) from the Detroit Regional Workforce Fund which notes “that 47% of adults (more than 200,000 individuals) in the City of Detroit are functionally illiterate, referring to the inability of an individual to use reading, speaking, writing, and computational skills in everyday life situations” and also that “within the tricounty region, there are a number of municipalities with illiteracy rates rivaling Detroit: Southfield at 24%, Warren at 17%, Inkster at 34%, Pontiac at 34%.”
Under those circumstances, I find it difficult to be seized with worry that schools are going to be ruined by teachers “teaching to the test” too much. It is true that school districts that have started taking testing more seriously now need to step up and also take the possibility of outright cheating more seriously. But the fact that huge numbers of kids are passing through school systems and not learning basic literacy drives home the fact that districts also need to take checking to see if the kids are learning anything more seriously. That means tests, and since it’s good to be able to compare different schools to one another that means standardized tests. It’s a limited tool, it shouldn’t be the sole criterion on which the effectiveness of anything is measured, but it’s also an important one.
Ireland fact of the day
Irish Life and Permanent is expected to require more than €3 billion – about 30 times its market value – to meet worst-case mortgage losses estimated in the tests.
Here is more. Once the Irish government takes majority ownership in this company, virtually the entire Irish banking system will have been nationalized, with no prospect of re-privatization in sight. Some of the stress tests, by the way, are based on data taken from Nevada.