Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Saturday, April 13, 2013

The Economist: a menace?

The Economist this week posted a study from Evolv, showing certain correlations between unusual worker choices and their talent. Among other factoids, it was argued that workers who had switched from their default browser (Internet Explorer or Safari) to another (Firefox or Chrome) were more likely to stay with the company and perform well - 15% more in fact. The browser is assumed to be a pure signal of initiative, rather than actually raising employee performance.

So far so good. However, the article concludes by encouraging all wannabe workers to change their browsers. This may be a good thing for some, but the advice will also definitely make some people worse off and will probably make society as a whole worse off. Let's take a look at who and how.

Wednesday, March 27, 2013

Amnesty and the Median Voter

As I prepare to introduce my ECO 303 students to the Median Voter Theorem today, I've been thinking about Republicans' worries that allowing more migration from Mexico or amnesty or Puerto Rico into the US will increase the number of Democrats. More of them, fewer of us, we lose elections. The Median Voter Theorem tells me that that isn't the real point to worry about.

Thursday, February 16, 2012

Proving I'm Alive: Big Bag of Blogs


Bellemare on Swinnen's paper on who wins and loses from high food prices and on the benefits to rural smallholders of joining marketing chains.

Tabarrok showing me why I should be very, very afraid: Kucinich and co. try a real life enactment of Atlas Shrugged.

Sumner discovers a second career as Bernanke's shrink, showing how his psychology  helps determine the fate of this recession. (If you wanted to be more sensational about it, you could talk about the discovery of the sinister figure in the shadows: Vincent Reinhart. That would be overdoing it a touch.)

The early impacts of AGRA's investment in Ghana, combining fertilizer subsidies, market access, and variable loan structure depending on outcome (essentially removing downside risk).

I was getting ready to run some proper experiments out here, only to learn that my very presence might bias the games. Of course, now this proposes that I need to replicate this (preliminary) finding itself. How general is the result? (HT: Aid Thoughts and Roving Bandit)

Urbanization in Africa is mostly about population growth rather than migration.

Tuesday, January 24, 2012

Create value. Make stuff if necessary

I'm often confused why we celebrate manufacturing as much as we do. The goal is to "create value" for other people as I blogged about yesterday - to serve in meaningful ways. Some services are more urgent than others, some more luxurious, some more faddish, and some of them involve turning one thing into another thing someone wants more than what it used to be. I turn ingredients into restaurant meals, I'm classified as a service worker. I turn metal into injectors, I'm classified as a manufacturing worker. The point is still the same - create value for fellow human beings. Why do we love manufacturing?

An Atlantic article on manufacturing in America has some very intelligent discussion, some of which tries to help me answer this. From the 1940s to 1970s, manufacturing was a pathway forwards and that got embedded into the psyche:
All came to work unskilled, at first, and then slowly learned things, on the job, that made them more valuable. Especially in the mid-20th century, as manufacturing employment was rocketing toward its zenith, mistakes and disadvantages in childhood and adolescence did not foreclose adult opportunity.
But now a hefty part of the growing inequality in the US is from opposing forces:

Friday, January 20, 2012

Fuel Subsidy: Success or Failure? UPDATED

The way Baobab tells the story, Pres. Jonathan caved. He "bowed to pressure" and "buckled." I'm not so sure.

Consider that previous governments have also tried to remove the fuel subsidy and had no successes to show for it. Jonathan accomplished what his predecessors couldn't, a cut in the subsidy by 40-50% and an agreement that further cuts would be sought in the future. UPDATE: yet it has persisted despite the decreases from previous governments. Jonathan's subsidy reduction is the largest in nominal terms, but is only the fourth largest in percentage terms. The very short-lived Shonekan presidency increased the price of fuel 614% compared to Jonathan's request for 110%. More information here.

In my first reaction and in many people's, the government ought to have done things little by little, gradually reducing the subsidy so people had time to react and respond, and could see that (if) he was genuine in channeling the money to health, education, roads, electricity, and other public goods.

But there is a real political economy argument to be made for asking for the full subsidy in the hopes of getting half. People are no doubt happier and more docile today about a price of N97 per liter than they would have been had the government simply announced N97 on January 1.

Baobab could have just as easily said that the opposition buckled because they had demanded removal of all the subsidy and gave up the strike with a 50% increase in the price of fuel. If Pres. Jonathan succeeds in obtaining further reductions, he will have done exactly what I and others asked, gradually phasing them out.

UPDATE: Having found the above source, I am much less impressed about a 50% increase since it is the smallest decrease on record. What I would like to know is what the non-subsidized prices were during those other regimes, though, which Sobowale does not report.

Analogy of the day: Immigration and cookies


Wronging Rights has a thought-provoking analogy on immigration. The basic question is whether immigration is a zero-or-negative sum game or a positive sum game. Taub's analogy is that some people think of immigration like love (the more you share, the more you have - a positive sum game) while others think of immigration like a cookie (the more you share, the less everyone else has - a zero sum game). To put in an equation, which side do you think would be bigger:

      Gains to immigrants     OR    losses to recipient country + losses to the families left behind (brain drain)

So the natural answer from an economist is to try to measure the gains and losses. Barro, Card, Clemens, and many others have a slew of literature showing that the gains to immigrants are really big, the losses to host countries are small, and there may even be a brain gain instead of a brain drain. Then we even have Taub and Yglesias arguing the recipient country gains too, so that EVERY term is a gain. Conclusion: immigration is really positive sum. If we're feeling particularly wonkish, we'll even write down a social welfare function to show that if every human deserves equal attention, the gains to poor immigrants are even bigger compared to any conceivable losses to the already-wealthy recipient countries.

Unfortunately, what most people don't tend to do is actually sit down to measure gains and losses and find out empirically whether immigration is like love or a cookie. They use a substitute question, such as how they feel about immigrants, or our burgeoning welfare state, or people getting out of poverty or something else, and from there develop a line of reasoning to justify their emotions*.

This is part of the reason it is so difficult for economists to convince people of the gains from immigration. If people have at heart an assumption that the world is zero-sum because of how they feel about the question, new numbers won't resolve the issue. Put another way, if people assume there is some accounting identity out there that says

      Gains to immigrants = losses to recipient countries + brain drain

then new research showing the gains to immigrants are even larger won't convince anyone. They'll just assume that the losses must be larger too. New research on brain gain won't convince them either because it just means losses to the recipient country are even larger than they thought. Combine that with 1) the fact that Americans think there are twice as many foreigners already and 6-7 times as many illegal immigrants in the coutnry as there are and 2) new research showing that correcting that misperception doesn't change attitudes much, and we have a problem. This makes it all the more amazing that Clemens succeeded in convincing the US government to remove restrictions on Haitians coming to the US.

If the real issue is about how people feel, then what needs to change are hearts rather than minds. The research will provide evidence for them to hang their hats on once they've switched over to the Love camp, but by itself won't bring about the change we need.

Tuesday, January 17, 2012

Best of 2011

Time for some intense naval-gazing. I wasn't going to do one of these, but then I enjoyed others' so much for the posts I missed that it seemed much more interesting.

Top Ten Posts of 2011
1. Google's statement on AUN's amazing internet usage, got a lot of doubting comments and a few  defending and very plausible explanations.
2. Nutrition Labeling, describing the new requirement that meat include information on calories from fat.
3. Unemployment: Leads and Lags - Breaking unemployment into separate decisions to hire or fire will give us a better indicator of where the economy is going (has been) than total unemployment.
4. AEA session on agricultural export bans during the 07/08 food price crisis.
5. Microinsurance in Kenya via cellphone
6. My first visit to AUN. Classes will resume Thursday the 24th
7. Low saturated fat diet vs. low simple carbohydrate diet
8. QE2 and food prices - debunking the idea that the Fed is causing global food price inflation
9. Food safety, food movements, and paternalism
10. Lit in Review: Food Demand -- Ethiopia and Speculators
Honorable Mention (because I thought it was fun): The socially acceptable price of fried chicken, also known as the political economy of fast food markets in South Korea.

Top Ten Posts of 2010 (in 2011)

1. My pictures of the Thorvaldsen's Christus and apostles statues, mentioned in a Church lesson this year.
2. Lit in Review: Grossman and Helpman, there has been steady interest in summaries and other papers that make use of the "Pay to Play" model of lobbyists.
3. Food in Africa: Too much and too little discussing the problem of getting food from food-surplus states to food-deficit states. There was never a large spike, but a steady stream of interest throughout the year.
4. High Hopes for Rwandan Agricultural Development
5. Food Security in Nepal which has been of increasing interest lately
6. Cutting Costs Through ... Fonts?? Some fonts go easier on the printer's ink
7. Population Health vs. Individual Health - commentary on macro vs. micro in economics and health
8. Ethiopian Monetary Policy - combines monetary policy, food prices, Ethiopia's development goals (food self-sufficiency), and growth prospects
8. Five from vacation: education, hyperinflation, and Chinese food safety.
10. Fed governor: if we could guarantee 5% NGDP growth, it would be great - I'm glad this made the list because I think it was my most significant post, interviewing Governor Dudley about what they are targeting and Sumner's policy.

Where did my visitors come from in 2011?

Thursday, January 12, 2012

Random Links: food governance, being LDS, behavioral economics

C. Juma on how to improve Africa's research infrastructure - basically, make research institutions more like teaching institutions and teaching institutions more research oriented.

A fascinating Kenyan website called I paid a bribe. The tagline is: uncover the market price of corruption.

The price of orange juice at a 34-year high.

Price transmission in NYC from subway to pizza.

Why are Americans eating less meat? Partly higher relative prices, partly recession, party "Flexitarianism."

WalMart pays Nicaraguan farmers less than other retail outlets, but offers much less price variance in compensation. Since food price variance has increased, this might be a better deal than it used to be.

"What is essential to being a good Mormon? According to the [Pew] survey [of pretty active American members of the Church of Jesus Christ of Latter-day Saints], 80 percent said "believing Joseph Smith saw God the Father and Jesus Christ" is essential to being a good Mormon, 73 percent said "working to help the poor,"" Other interesting sound bites:
  • The Latter-day Saints surveyed had a more favorable opinion of Pres. Obama than LDS Senate Majority Leader Reid (25 to 22)
  • 97% of us identify as being Christians, believe in Jesus' resurrection, and use the word "Christian" as the single word that best describes us, while 49% of non-Mormons do not think we're Christian
  • Most of us rank being a good parent as more important than career or religious activities
  • 60% of converts cited church beliefs as why they joined. 60% of converts joined between 18 and 35 years old.
  • 82% say they have a food storage, and almost half have 3 months stored up. When Pres. Ensign came to check on us and assess our needs, we were happy to report that we had 1-2 weeks of food stored up and enough cash to satisfy our needs. Water was another story, but we could boil the tap water to make more as needed and had already refilled a 5 gallon (20 liter) drum with boiled water.
  • Even though most identified as conservative, we are much more positive about immigrants and immigration than the average conservative.
Asking people to give a lot of examples actually convinces them that something is less likely than asking them only a few examples. It is the ease of coming up with the marginal example that matters rather than the total number.

Bellemare on how to do well in an economics class.

Tuesday, January 10, 2012

Food demand and price volatility

In Mankiw's Principles of Microeconomics textbook, he poses students the following paraphrased question: Your friend notes that food has a very high demand elasticity and comments that it would be a good source of tax revenue. In what sense is your friend right about it being a "good" tax and in what sense is the tax "not good"?

Most students successfully answered that it was "good" in the sense that it would generate a lot of tax revenue, (missed the part of it being "good" in the sense that there would be very little deadweight loss), and that it is "not good" in the sense that it will hurt the poor who may not have enough to eat more than the wealthy.

FAO in its new High Level Panel of Experts report on food price volatility takes that excellent point one step further in rigor. As societies and individuals become wealthier, their demand for food becomes less sensitive to price (less elastic). This means when any price change occurs, it is the poorer consumers who will change their consumption pattern most. When all food prices increase and it isn't because of an increase in demand*, the poor have less to eat while the non-poor are still able to have enough food.

Food price volatility increases the inequality of food consumption. They also show that biofuel policies increase the inequality of food consumption even further, shaping a food system designed to hurt the poor more when food prices rise.



Wednesday, January 4, 2012

Best tweets of the protests

This is another post I will be updating occasionally: some entertaining tweets about the fuel subsidies (in some cases, spelled out further for the Twitter-impaired)

On economics:
This is the point where I wish I concentrated during those classes on Economics
There are 3 groups of Nigerians at the moment: 1, those fighting for the fuelsubsidy; 2, those fighting against the fuel subsidy, 3. Those who don't even know what subsidy is. I'm no. 3.
The market for high heels have died with the market for cabs.

On cars:
If he puts on the AC in his car for you, marry him!
Abuja Bigboy spotted Oppressing as he left his engine on while waiting for girlfriend

Tried on a new shirt. Kinda tight. I'm not there yet but I'm on my way. My Fuel subsidy "strolls" should do the rest!
Lol! We be blaming everything on the fuel subsidy. Employer: "why are you 2 hours late to work" Employee's reply: fuel subsidy.

Price transmission in Nigeria

With the fuel subsidy's disappearance, the price of gasoline increased from N65 ($0.40) to N140-N150 (just under $1). What other prices go up and how quickly? I'll be updating this post from time to time with new prices as I learned them:


Small plastic bag with water: N5 up to N10; larger bag in Lagos from N60 to N150 Jan 4   (reported through Twitter from numerous sources)


Jan 5 from our shopping - taxi service price up from N1000/hour to N2000/hr; water jug refills unavailable; most food sold at the same price; lower selection of bread than usual; 


Jan 5 NigeriaNewsDesk Twitter report: Many filling stations outside Calabar, the Cross River State capital, are selling premium motor spirit, popularly known as petrol, for N250

Fourth-hand Twitter report: Packet of St Louis Sugar was N100. Post subsidy N250


A student reports: A bowl of raw foreign rice has gone from N250 to N270 in Kaduna while a similar bowl of black eyed peas has gone from N120 to N180.


Jan 9 - water jug refill up from N350 to N375. Tailoring services and fabric same price as before.

Monday, January 2, 2012