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Wednesday, April 28, 2010

The World Bank Makes Data Free

and user-friendly, Hans Rosling style. The page makes available over 2000 indicators, documenting the state of the world's economies. Previously, only researchers who paid high subscription fees could access this information but now it's available to everyone. The Philippines' page is below.


Data is even accessible through google public data explorer.

I'm certainly not one to readily cheer the World Bank, but well done. Just about time they did this.

Sunday, April 25, 2010

Development, No Longer Marginalized

After a period of relative marginalization, development economics has now reemerged into the mainstream of most economics departments, attracting some of the brightest talents in the field. It is no longer the preserve of development “experts” who pronounce on the strange ways of the world outside high-income countries, but instead serves as a testing ground for fundamental economic theories and the source of exciting new ideas. There is, of course, nothing entirely new about this. Innovative theoretical ideas from people such as George Akerlof and Joseph Stiglitz were inspired by thinking about the developing world. Pranab Bardhan and T. N. Srinivasan, and, slightly later, Angus Deaton and Mark Rosenzweig also resisted the compartmentalization of the field into development and the rest. Nevertheless the extent to which, today, economists in many other fields routinely think about the application of their ideas and techniques in development contexts, seems unprecedented. This new centrality is excellent news for the field and, we venture to hope, for the world it studies.

We believe that one of the reasons for the field’s vitality is the opportunity it offers to successfully integrate theoretical thinking and empirical testing, and the rich dialogue that can potentially take place between the two. The culture of development economics is particularly well-suited to this tight integration because of the emphasis on collecting one’s own primary data based on the theories that are to be tested...
That's the introduction to Esther Duflo and Abhijit Banerjee's latest paper. Incidentally, Duflo just won the John Bates Clark medal for economists under the age of 40 a few days ago, confirming this notion that development is indeed at the forefront of economics. These are exciting times for the subfield.

Let me clarify though, development here refers to a specific "flavor" of development research now increasingly being referred to as micro-development. The focus in general is with the proper evaluation of social programs, with questions that deal with the particular: how to raise education rates, lessen teacher absenteeism, and improve the provision of credit to the poor, etc. A humbler approach, if you ask me, than old school growth theory, which sought to explain how countries rapidly industrialized, an approach that has been out of vogue for quite some time. The mindset has shifted into coming up with better research designs that rely less on sophisticated econometric techniques. At the center of this is the increasing popularity of field experiments (RCTs) that carefully identify cause and have been easily implemented in developing country settings.

While macro ruminates on how its theories have failed miserably to predict and avert the recent financial crash, development economics is pushing the boundaries of the field. If anything, this should cause more funding to empirical research.

Sunday, April 18, 2010

The Lesser Evil

This, from Patricia Evangelista:
I’m not looking for a messiah, I need a man who will not shove this sorry country down a sorrier hole: who will not lie too often or demand too much, who will not cheat or steal, who will not be the mouthpiece of elite factions or the Catholic Church, who will have the balls to make the decisions that have to be made and will take responsibility when he fails, who will say what he stands for without weaseling out of it the next day, who will not invoke dead brothers and mothers, who will not put his mistresses in mansions while thousands starve, who will not put God over the law and bigotry over democracy, and who will, in the end, remember that his mandate is to the people. And because I know that is asking for too much, I am willing to vote for the lesser evil, once I figure out what the lesser evil is. I have discovered that the system demands men to make compromises and make promises, and that man is not only Joey Salceda. Every man waving from the stage is subject to the vested interests of families and factions and friendships and the smell of government money, and any man who claims otherwise is either a liar or a fool.
Although I agree with much of this, I find that over the course of these campaigns, I find myself less interested in this fight versus good and evil than in the fight over good policy and bad. The morality of candidates is a first order condition for sure and I understand why this is of primary concern. But I have little pre-existing information on who corrupts more, who is more of a liar, and who buys more people out. The information out there, I cannot completely verify whether they are true or not.

But what I can know are the policies that candidates are putting forth (whether these exist or not). And I can evaluate them based on whether these make sense, are reasonably implementable, and are based on a good understanding of the economy. Corruption will exist, but will the policies be less corruptible than the rest?

It is very hard to keep politicians accountable for their morality, unless of course, big scandals break out. But we can hold them accountable for their policies.

Saturday, April 17, 2010

Grad Students Take a Hit from the Simpsons

Ouch.



Did I just sign myself up for 5 years of scrounging for food? This can't be true. Why don't these guys smooth consumption and borrow from the future? They'll be earning tons then.

HT to Mike Abito.

Friday, April 16, 2010

Indian Call Centers Promote Education

So say Emily Oster and Bryce Millett (HT Marginal Revolution):
Over the last two decades in India there have been large increases in outsourced jobs and large increases in schooling rates, particularly in English. Existing evidence suggests the trends are broadly related. In this paper we explore how localized these impacts are; this has implications for understanding how quickly information about these jobs diffuses. We use panel data on school enrollment from a comprehensive school-level administrative dataset. This is merged with detailed data on Information Technology Enabled Services (ITES) center location and founding dates. Using school fixed effects, we estimate the impact of introducing a new ITES center in the vicinity of the school on enrollment. We find that introducing a new ITES center results in a 5.7% increase in number of children enrolled; these effects are extremely localized. We argue this resultis not driven by pre-trends in enrollment or endogenous center placement, and is not a result of ITES-center induced changes in population or increases in income. The effect is driven entirely by English-language schools, consistent with the claim that the impacts are driven by changes in returns to schooling.
This should take away some negative stigma about call centers. In my view, a call center job, though certainly not prestigious, is still a better job than many people could have otherwise obtained.

Thursday, April 15, 2010

Students Underestimate the Returns to Education

I previously blogged about my critique of Noynoy's education agenda. My main point was that I see the problem of education in the Philippines as one of demand. That is, households do not send their children to school because the returns to education is low: getting a job after college is highly variable, and the pay regardless is small. Thus, education does not look an appealing investment as compared to what households can earn by sending kids to the streets to sell sampaguita or help around the house. Noynoy's education agenda does nothing to address this fundamental problem as he focuses on the supply - buildings, curriculum, schools, classrooms - which previous administrations have also promised and failed to deliver. I suggested conditional cash transfers.

Now evidence from a new paper by Rob Jensen suggests that not only can the returns to education be low (or high) but students themselves underestimate the returns to education:
Economists have long emphasized the link between the market returns to education and investments in schooling. While many studies estimate these returns with earnings data, it is the returns perceived by individuals that affect schooling decisions, and these perceptions may be inaccurate, due to limited or imperfect information. Using data from the Dominican Republic, we find that while the measured returns to schooling are high, the returns perceived by students are extremely low. Students provided with information on the higher measured returns reported increased perceived returns several months later. The least-poor of these students were also significantly less likely to drop out of school in subsequent years. However, there was little or no effect on schooling for the poorest students. Finally, we find some support for the hypothesis that students underestimate the returns to education in part because they rely heavily on information on the returns within their own community, which are downwards biased due to residential segregation by income.
What fascinates me so much about this study is that they discovered that just by informing 8th graders of the true returns to education (the average wages they could get for finishing high school), they were able to increase enrollment to the next term by 7 percent as compared to students not given this information. And the result is statistically significant. Wow.

Maybe part of our next education policy should simply include informing students what they could get paid after high school. This is low cost policy with potentially significant benefits.
There are few examples of policies or interventions that result in a 5 to 10 percent increase in the likelihood of school enrolment or a .20 year increase in schooling, much less interventions that are as inexpensive as this one
This is an example of a fantastic paper - easy to read, relevant, with a careful causal identification strategy.

Wednesday, April 14, 2010

How can you reject a resignation?

From ABS-CBN News, more plagiarized speeches by Manny Pangilinan:
Pangilinan's keynote remarks at the 8th Asian forum on Corporate Social Responsibility (after typhoons "Ondoy" and "Pepeng"), November 2009:
From the streets of Marikina to the flooded plains of Pangasinan, Filipinos should write the next chapter in their stories. Together, we should ensure that the legacy of a terrible storm is a country that is safer and better prepared for the tragedies that may come.
Obama's remarks at the 4th anniversary of hurricane "Katrina," August 2009:
From the streets of New Orleans to the Mississippi coast, folks are beginning the next chapter in their American stories. And together, we can ensure that the legacy of a terrible storm is a country that is safer and more prepared for the challenges that may come...
Okay, there is one thing I don't understand about this debacle. How can you reject a resignation? Seriously, when I tender my resignation from my job in the next few weeks, my boss cannot do anything about it. It's a done deal. I say goodbye.

Now sure, Pangilinan merely offered to resign. But that's a cheeky move on his part that's neither here nor there. He passes the buck to the Board to decide the consequences of his mistakes, of which he says he takes "full responsibility."  But by doing so, he absolves himself. How is that act commendable, as some have suggested? And then how does the Board even find it okay to separate full responsibility from its full consequences?

I'll try to be bold here and voice out what some Ateneans are probably uncomfortable, afraid to even ask but are thinking: could money have played a part somehow in this decision? Is there an economic aspect to this? MVP after all has given the school so much. An empirical study might actually be something cool to do in this situation. I wonder if MVP donations to the Ateneo shoots up after this decision. I wonder if donations by alumni actually go down. What is the overall effect of this decision? How much was he giving to start with? Some document could be available somewhere (can google come to our aid again?). This might just make a good project.

I am just deeply ashamed, I guess. My next blog was supposed to be about how Ateneo ranked well in the latest QS World Universities Ranking. My alma mater is again the top university in the Philippines and number 234 in the world! But I guess it would be depressing to celebrate this now.

UPDATE: It looks like Pangilinan has since irrevocably resigned from his duties from the Board of Trustees. Well done, Sir. Now that is a commendable act.

Monday, April 12, 2010

I am convinced the HDI should be revamped

Thanks to Lant Pritchett's new note on the 20th anniversary of the Human Development Report:
The Human Development Index (HDI) has been a politically and rhetorically powerful counter-point to measures of “development” that focus exclusively on economic indicators, such as Gross Domestic Product per capita or household consumption expenditures. However, the relevance of the HDI is increasingly challenged by success. For instance, by pitching the education component of the HDI at a very low level (literacy and gross enrollment) which has an upper bound, as more and more countries attain near 100 percent literacy and 100 percent gross enrollment of the young the education component ceases to contribute to progress in the HDI. For countries above the low educational thresholds this implies that more progress in education (e.g. expanding tertiary enrollment, improving quality of learning outcomes in primary school) does not raise the HDI while increases in GDP per capita do raise the HDI. Paradoxically, a measure that was intended to promote the importance of non-economic dimensions of human well-being actually has its cross-national variability driven increasingly just by GDP per capita.
Brilliant analysis applying a Rawlsian framework to Amartya Sen's notion of development (which reminds me as an economist, I should get a copy of Rawles's A Theory of Justice soon). Pritchett weighs the pros and cons of using different measures of development. It's a tough read but I urge students of development to read this piece because you will be rewarded.

I previously blogged on "What's the Value of the Human Development Index?" here.

Saturday, April 10, 2010

On Unslumming and Slumming

Like Fight Blight and Conservation campaigns in neighborhoods declining into slums, slum shifting fails because it tries to overcome causes of trouble by diddling with symptoms...
Conventional planning approaches to slums and slum dwellers are thoroughly paternalistic. The trouble with paternalists is that they want to make impossibly profound changes, and they choose impossibly superficial means of doing so. To overcome slums, we must regard slum dwellers as people capable of understanding and acting upon their own self-interests, which they certainly are. We need to discern, respect and build upon the forces for regeneration that exist in slums themselves, and that demonstrably work in real cities. This is far from trying to patronize people into a better life, and it is far from what is done today.
The key link in a perpetual slum is that too many people move out of it too fast -- and in the meantime dream of getting out.
Unslumming hinges, paradoxically, on the retention of a very considerable part of a slum population within a slum. It hinges on whether a considerable number of residents and businessmen of a slum find it both desirable and practical to make and carry their own plans right there...
I am reading now the 1960s classic, The Death and Life of Great American Cities, by Jane Jacobs. The quote above is from one of my favorite chapters so far on slumming and unslumming. The entire book itself deserves a full blown post (soon to come) but I was so moved by this chapter of the book, I felt I should share it now, separately.

Yes, very often, our approach to taking care of slums is superficial - we must relocate them, or at least hide them. I cannot think of anyone else who epitomizes this view than Bayani Fernando. I remember the time he drove out the squatters in the UP portion of Katipunan Road or the ugly facade he built in front of those squatters in Marikina. This is also the view of Gloria Macapagal Arroyo when after the onslaught of Ondoy, she vowed to make Metro Manila cleaner and thus move its slums elsewhere. Her implicit theory was that the pollution generated by these slum areas clogged our drains. I remember seeing a status message in facebook with the same sentiment -- Let's get them out of here -- it said. (I was enraged because I do not think the poor in Manila are worse pollutants than the better off. In fact, I am willing to bet the opposite. Who drives the cars, huh? Who consumes much, much more? It is the rich who should leave the city!)

To Jacobs, the problem of slums lies in the fact that they are communities constantly in the embryonic stage, perpetually regressing to helpless infancy. Once a slum has formed, the pattern of immigration of poor people to it continues, while the successful people, those who achieve very modest gains, keep moving out so that the community is kept backward instead of moved forward. Slum shifting, or slum hiding (ala Bayani and GMA) does nothing to break this cycle. And slum shifting in this view is even more so destructive. The secret to unslumming lies in finding ways to retain the relatively better off in them. Not forcing them to stay, but finding ways to make them contribute to unslumming, by choice. The book is filled with rich examples on how this has been achieved successfully in North End and Greenwich Village (both in NY) and other places.

Well worth buying the book, if this has piqued your interest.

Friday, April 9, 2010

Links I Liked

1. Awesome World Cup commercials: Africa United.

2. Are women naughtier than we think they are?

3. Bad art meets bad politics. I really thought the Marcos statue would make to the top 10.

4. Incentives to be a homosexual.

5. The Christian rebel in me likes this. But then again, things aren't black and white.

Thursday, April 8, 2010

A Guide to Successfully Applying to an Economics PhD in the US (for Filipinos)

If it's been awfully quiet here, it's because I've been travelling. I went to visit the three schools I got accepted in for an Econ Phd: Michigan (UMich), San Diego (UCSD), and Los Angeles (UCLA). Now that I've finished application season -- all that's left for me is to choose -- I thought I'd write about my experience and some observations, in case there are other brave Filipino souls out there, who happen to read this blog, and want to do an Economics PhD in the US.

1. It is difficult to get in a good program - begin with this in mind. PhD programs in Economics are the most difficult to get into, right up there with Physics and Math. I should know, I applied to 15 of the top 20 schools and only got into 3 (and I know my application was relatively strong). NYU, I hear, got over 1000 applications this year while they only extended 20 offers. It's not even a tier 1 school! I've heard of highly qualified applicants not even getting into any of their 15 applications. That said, getting into a top 5 (MIT, Harvard, Chicago, Yale, Princeton) is quite a lottery. Maybe in the 80's it was easier to get into these schools when economics was less quantitative, but not so now.

2. Take math courses up to at least Real Analysis and do well. Because applications are so competitive, this almost seems like a prerequisite. Almost everyone I've seen get accepted during flyouts had taken this class. Or better yet, double major in math. I supplemented my profile my taking Linear Algebra and Real Analysis. I think it signalled that I was good. Otherwise, they would have doubted the quality of an unknown school like Ateneo even if my transcript looked great.

3. Accepted international applicants usually already have an MA under their belt. I don't think it's worth pursuing this, especially since this won't be recognized anyway; that is, you still need to go through 4 years in the program. Taking math courses will do.

4. A PhD is a research degree so you should display interest in research in the Personal Statement. Econ departments have the incentive to accept more students going to the academe because if they place students in the top schools, it makes their program look good. Placing a student in the private sector is not as prestigious than say placing someone in Yale. Actually, if you're interested in the private sector then maybe a PhD is not for you.

5. Connections are important so build them. It helped that I knew someone from Michigan and another from San Diego who both put in a good word for me. Get in touch with Filipinos in the area doing their PhDs (there are only a few, unfortunately). The e-group is econpinoy@yahoogroups.com. We have filipinos in Northwestern, Columbia, and Michigan. Also, get in touch with the Filipinos actively doing research. I think there are only two of note - Dean Yang from UMich and John Nye from George Mason.

6. Many believe that outside the top 20 schools, the PhD might not be worth it. There is some point in this, but I don't fully agree. If you want to go into the academe then only go to a top 20, for sure. Otherwise, top 30-50 would do. If you're going back to the Philippines, top 50 would do was well. But it looks like the academic rigor just won't be as excellent.

7. That being said, apply to 10-15 schools. Although it is not cheap, it is an investment with huge returns later on.

8. After getting accepted, funding is usually not a problem. The school usually covers tuition and presents you with teaching and research assistantships to cover living expenses. Grad students after all are highly skilled cheap labor. To my knowledge, half of the students get this during their first year then everyone does during years 2-5. That's the beauty of PhD programs, there's enough money to go around. Where do the funds come from? I suspect from masters students who have to pay loads of tuition fees.

9. Want to see who your competition is in admissions? Check out the TestMagic Forums in Economics.

10. And finally (just to make it to 10), write to me at paoabarcar@gmail.com. I'll be more than willing to help.