Results for “age of em” 17233 found
College Admission Secrets
Most colleges are non-profits with unclear ownership status so their incentives do not lead to simple profit-maximization. Don’t be fooled, however, neither do colleges maximize student welfare or the public good. Instead colleges pursue some index of free cash flow, prestige, and administrative and faculty independence. The result is some peculiar outcomes. Most businesses, for example, don’t want to reject customers but colleges often encourage students to apply so that they can reject them. The Washington Monthly’s college issue has an excellent primer, Ten Ways Colleges Work You Over, that explains:
The aim of the game for colleges is to boost the number of students who apply and can be rejected. By doing this, the schools see their acceptance rates fall, making them appear to be more selective—which helps them rise up the U.S. News & World Report rankings.
Take Northeastern University in Boston… [which] sends nearly 200,000 personalized letters to high school students each year. The institution then follows up these letters with emails, making it seem that the school is wooing these individuals.
… Nearly 50,000 students applied to Northeastern this year for 2,800 spots in the fall 2014 class…
Lowering its acceptance rates is at least one factor in why Northeastern has catapulted up the U.S. News rankings, rising more than 100 spots since 2002.
Profit-maximization (or maximization of free cash flow) is also not absent from the process. Many schools, for example, say they are need blind but that just means that admission officers don’t know the student’s income. Admissions officers, however, do know lots of information that is highly correlated with income including where applicants live, what high school they attended and the occupations of the applicants parents–not exactly what I would call blind.
Schools even use seemingly arbitrary bits of information to increase their revenues. The Free Application for Federal Student Aid (FAFSA) form, for example, has students list the colleges that they are interested in applying to. Although the order is irrelevant, students often list in preferential order and the colleges see this information. As a result, colleges have an incentive to offer students who list their college first less financial aid simply because that is an indication that the student has a high demand for that college.
Why I endorsed Evo Morales
Well, “endorsed” isn’t exactly the right word, but I did say “simpatizante.” Here are my views:
1. I disagree with most of his economic policy, for reasons you can find stated in Adam Smith and the other classical economists.
2. Governments work very hard to stay in power.
3. In a weighted average of public opinion sense, I think of Bolivia as about 60-70% “indigenous,” one way or another.
4. If a Bolivian government is not strongly connected to the country’s indigenous population, that government cannot have a strong base. Yet it will still work hard to stay in power (#2), which will mean it will resort to oppressions and distortions, with high long-run costs. Bolivian history has seen an especially large number of coups and attempted coups, illustrating this weakness of the power base, which you can think of as the major problem in historical Bolivian public choice. Think of Mancur Olson on permanent vs. temporary bandits, where most of the past bandits have been temporary, and thus Bolivian governance has been of extremely low quality, even relative to its region.
5. The government of Evo Morales is quite popular and pretty stable. It has a strong and enduring power base, partly because of its specific policies and partly for symbolic reasons, such as its strong and explicit attachment to indigenous culture and “cosmovisions,” a notion newly embedded in the nation’s constitution.
6. The stability gains from #5 — the permanency of the bandit so to speak — exceed the costs from #1.
7. A democratic Bolivia will have “an indigenous government” sooner or later, better sooner. Let’s hope they learn some better economic policy. Something like the Morales government was in any case a necessary step, again without denying #1.
8. Bolivia is too decentralized for the Morales government to collapse into true dictatorship and Chavismo of Venezuela. That said, I would feel better if it were assured that the Morales government were to be limited in term.
9. See also my reasons why I am optimistic about Bolivia, including their fiscal prudence, supported by Morales I might add.
I made this argument to an audience of elite Bolivians and elite Bolivian students. Some of them hated it, some of them really liked it. A speaker should usually try to shake up his or her listeners in some manner.
Assorted links
1. What people cured of blindness see.
2. Shoes that show you the way.
3. Which states are in the Midwest? I say no to all the marginal cases, including Kentucky. And how can it be that not everyone thinks Iowa is in the Midwest?
4. China insurance markets in everything.
5. Who is the gun salesman of the year?
6. Maids are no longer servants.
7. Interest rates.
Is China seeing a great stagnation?
China’s 1% average annual growth in total factor productivity between 1978 and 2012 – a period when average per capita annual incomes rose from $2,000 to $8,000 — compares with 4% annual gains for Japan during its comparable 1950-1970 high-growth period, 3% for Taiwan from 1966-1990 and 2% for South Korea from 1966-1990, he said, when purchasing power in the relative economies is taken into account.
“Our study shows that China’s spectacular growth in the reform period has been mainly investment-driven and quite inefficient,” Mr. Wu wrote.
A big problem, which often complicates efforts to assess the health of China’s economy, is the reliability of Chinese data. Using three measures of productivity, J.P. Morgan economist Haibin Zhu concludes in a research note that China’s total factor productivity grew 1.1% in 2013 from a 3.2% expansion in 2008. Mr. Wu draws on different methodology to argue that total factor productivity turned negative from 2007 to 2012.
“Correctly measuring China’s productivity has, not surprisingly, been obstructed by severe data problems that have resulted in widely contradictory productivity performance estimates,” Mr. Wu said.
I would classify this as highly speculative. TFP is hard enough to measure in the first place, but in a rapidly growing economy productivity boosts are especially likely to be embodied in (and measured as) rising capital expenditures. Still, it is an interesting perspective on what is the number one economic problem in the world today.
Why I am a relative optimist about Bolivia
1. Bolivia became a semi-stable democracy in the early 1980s and it has stayed that way.
2. For all the rhetoric to the contrary, the current regime is a mix of 1990s-era market-oriented reforms and Evo Morales. Probably you like one of these, though perhaps not both.
3. Many more Bolivian children go to school than before, and the incidence of malnutrition has been plummeting, with longer-run benefits for IQ. You will read many fabricated or non-causally-backed claims about the connection between inequality and growth, but for Bolivia I believe these arguments.
4. Bolivia has done so many things wrong in the past, there is a lot of low-hanging fruit through purely internal improvements. For instance the country is a fantastic tourist destination, but would not at this moment be experienced that way by mainstream American tourists, due to language, hotel, and infrastructure shortcomings. Eventually those problems can be and will be solved. Eventually.
5. Bolivia does not have much export exposure to China, and does not face much geopolitical risk.
6. Of all commodities, hydrocarbons may be relatively protected in price through the forthcoming global turmoil, because the Middle East implosion will make Bolivia’s current main resource more valuable.
7. Bolivia’s fiscal situation is surprisingly sound.
The three main reasons to be pessimistic about Bolivia are:
1. Most of their economic policy is quite bad, especially when it concerns the nationalization of foreign direct investment. The FDI future of Bolivia will be extremely unfavorable. The rhetoric and indeed the behavior of the government sometimes is like a villain from an Ayn Rand novel.
2. Their main trading partner is Brazil, a country which will have gone from eight percent growth to near-zero growth in but a few years time. Argentina is either the number two or number three trade partner, along with the U.S., depending on the year in question.
3. Bolivia hasn’t done that well in the past.
Of those three reasons, #1 probably matters a bit less than you might think, and #3 a bit more.
It is much debated in Bolivia whether corruption is going up or down. I believe it is going up, but partially for good reasons. For instance the construction sector is doing well, and construction tends to be corrupt in many countries, for reasons intrinsic to the activity itself (e.g., lots of big contracts, easy to claim invisible expenses, etc.). That means higher corruption but also a better corruption than the penny ante bribes of a shrinking economy.
Right now Bolivia is growing at a rate of above six percent.
Assortative mating in Bolivia
It is potent:
If people married each other more randomly, poverty levels would be considerably lower than they are now. If we abandoned all current family arrangements and randomly grouped all Bolivians into new families of 5 persons, poverty levels would fall by about 15 percentage points (from the current level of 55% of all households to about 40% of all households). The Gini coefficient measuring inequality would also fall from about 0.70 to 0.55.
But Bolivians do not mix much in marriage. The correlation between partners’ education levels is extremely high at about 0.77, with no signs of falling. For comparison, the corresponding number for Germany is 0.52 and for Britain it is 0.41.
But not all Bolivians are equally restricted in their marriage choices. In the department of Santa Cruz the correlation is only 0.69 while in Potosi it is 0.82, with a corresponding difference in poverty rates.
That is from Lykke E. Andersen, Development from Within, an interesting and well-written collection of essays on Bolivian development, and sometimes on development policy more generally. The cited piece was written in 2008.
Here is a good sentence from that book:
Just one little road block can disrupt an entire vacation.
Here is the author on Twitter. Here is her blog.
Do wealth shocks affect the health of the elderly?
Hannes Schwandt of Princeton has a new paper (pdf) on this topic:
Do wealth shocks affect the health of the elderly in developed countries? The economic literature is sceptical about such effects which have so far only been found for poor retirees in poor countries. In this paper I show that wealth shocks also matter for the health of wealthy retirees in the US. I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stockholding retirees. Using data from the Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These constructed wealth shocks are highly predictive of changes in reported wealth. And they strongly affect health outcomes. A 10% wealth shock leads to an improvement of 2-3% of a standard deviation in physical health, mental health and survival rates. Effects are heterogeneous across physical health conditions, with most pronounced effects for the incidence of high blood pressure, smaller effects for heart problems and no effects for arthritis, diabetes, lung diseases and cancer. The comparison with the cross sectional relationship of wealth and health suggests that the estimated effects of wealth shocks are larger than the long-run wealth elasticity of health.
You can read more by Hannes Schwandt here.
Ambiguous business cycles
Here is a new paper by Cosmin L. Ilut and Martin Schneider on how ambiguity aversion can give rise to a kind of real business cycle, augmented by nominal rigidities:
This paper studies a New Keynesian business cycle model with agents who are averse to ambiguity (Knightian uncertainty). Shocks to confidence about future TFP are modeled as changes in ambiguity. To assess the size of those shocks, our estimation uses not only data on standard macro variables, but also incorporates the dispersion of survey forecasts about growth as a measure of confidence. Our main result is that TFP and confidence shocks together can explain roughly two thirds of business cycle frequency movements in the major macro aggregates. Confidence shocks account for about 70% of this variation.
The AER version is here, there are various versions here.
By Kristoffer P. Nimark, here is a paper on “Man bites Dog” business cycles.
Saturday assorted links
1. Obstacles to self-driving cars.
2. Paul Bloom is against empathy.
3. Why your flight was cancelled.
5. Is IT spending going down in real terms?
6. Publication bias in the social sciences.
7. Are these the most boring or the most interesting people in the UK? “But these things become detached from what it’s OK to have curiosity about.” I thought this was a truly excellent piece. And here is the SneezeCount website. Read this too, and this. After those, you don’t need to look at anything else on the internet today.
Love in the old East Germany
The East German woman had a job, was economically independent, self-confident, and divorce-happy; at a time when only 50 percent of West German women made their own money, 90 percent of women in East Germany were employed.
…the East German woman didn’t consider her male partner an enemy but rather a partner who, economically speaking, had little or nothig on her. Indeed, the average East German man, unless he had managed to gin a foothold in the regime’s upper echelons — but what woman would want a man like that? — wasn’t in a position to boast any typically macho privileges. He couldn’t show off with money, fast cars, or a house on Ibiza. he had to rely on his potential talent as a lover and his qualities as a father and partner. As a result, he tended to cultivate a rather “soft” masculine image.
…And, on top of all this: the suppression of free movement in public in East Germany had led both sexes to develop a relatively uninhibited attitude toward sex. What other unregulatable pastime did East Germany have to offer its citizens?
That is from the newly translated book by Peter Schneider, Berlin Now: The City After the Wall. Much of that passage makes sense, but one part confuses me: does “rely on his potential talent as a lover” support or contradict “cultivate a “soft” masculine image”?
Further evidence that the housing crisis was about screwy beliefs, not moral hazard
Ing-Haw Cheng, Sahil Raina and Wei Xiong have a new paper in the AER, here is the abstract:
We analyze whether mid-level managers in securitized finance were aware of a large-scale housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. We find that the average person in our sample neither timed the market nor were cautious in their home transactions, and did not exhibit awareness of problems in overall housing markets. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs.
There are other versions of the paper here.
Cochabamba notes
It is very charming here, but no one can tell me exactly what they export. Grain is a thing of the past. There are many universities in town. Trees, birds, and flowers are all first-rate.
I feel like I had never tasted a green pepper before. For silpancho, go to Palacio del Silpancho. The only item on the menu is…silpancho. I also recommend the street tamales with corn and cheese and the street food more generally, most of all at the comedores at the market 25 de Mayo. The “nice” restaurants are good and cheap, but not materially better than the Bolivian food you get in Falls Church, Virginia. Viva Vinto, about forty minutes out of town, served the best meal of my trip, the taxi will wait for very little money. Cochabamba provides one of the world’s best culinary micro-tours, although it requires a working knowledge of Spanish.
You can buy a quality Andean sweater for $12. The potatoes are the best I have eaten, ever, both purple and otherwise.
Quechua hats are not like Aymara hats.
People smile much more in Santa Cruz. The hotel electrical sockets use a different form here, and it would not be hard to convince somebody they were two different countries.
Along what axis is the Ukrainian electorate aligned right now?
It seems to be economic policy orientation toward Europe or Russia, and not either language or ethnicity. Here is a new paper by Timothy Frye:
Language, ethnicity, and policy orientation toward Europe are key cleavages in Ukrainian politics, but there is much debate about their relative importance. To isolate the impact of candidate ethnicity, candidate native language, and candidate policy orientation on a hypothetical vote choice, I conducted a survey experiment of 1000 residents of Ukraine in June 2014 that manipulated three features of a fictional candidate running for parliament: 1) ethnicity as revealed by either a Russian or Ukrainian name 2) native language of Russian or Ukrainian and 3) support for closer economic ties with Russia or with Europe. The results reveal little difference in the average response to these 8 fictitious candidates despite the candidate’s different ethnicities, native language, and economic policy orientations. This seeming homogeneity masks vast differences in the responses of self-reported native speakers of Russian and Ukrainian. Analyzing the responses among Ukrainian and among Russian speakers yields considerable differences in the responses to the different candidates. Perhaps most striking is that among both native speakers of Russian and native speakers of Ukrainian a candidate’s economic policy orientation toward Europe or Russia appears to be a more important determinant of vote choice than a candidate’s language or ethnicity. That policy retains its importance for voters despite the intense politicization of both ethnicity and language and ongoing violence in eastern Ukraine suggests that vote choice in Ukraine has not been reduced to an ethnic or linguistic census.
Hat tip goes to www.bookforum.com.
Assorted links
1. The benefits of early work experience are declining, especially for men.
2. Interview with Pete Best, who is happy and still alive.
3. 38 maps of the global economy.
4. How the Japanese messed up Pearl Harbor.
5. Very good (and complex) FT Alphaville post on long-term unemployment this time around; “…about 10 per cent of men who are laid off en masse are never employed again. Intriguingly, the overall health of the economy at the time of getting laid off does not seem to play much of a role, although age does.”
6. Carrying costs > liquidity premia, unsheared sheep edition. And can a panda fake pregnancy for better treatment?
Tuesday assorted links
1. The FAA vs. model airplanes.
2. What it’s like to be in a plane crash.
4. The eleven funniest papers in the history of economics? How about that one that got published twice (identically) in the QJE?
5. Beware tall men.
6. Political diversity will improve social psychological science (pdf), coverage of that paper here.