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Tuesday, September 28, 2010

Colbert on Immigration Reform

Colbert testifies on Congress about immigration and migrant worker rights. Best testimony I have ever heard. He gets his economics right.

Its pretty clear to me, at this point, that the big debates of the next decade will revolve around immigration and migration. And what of the last big thing, globalization? We tried it and failed. The incomes of countries still show a path of divergence. But it was a globalization of everything but labor.

The population of Europe is getting smaller, the gap between rich and poor countries is growing, and ever more the pressure to migrate will be stronger.

Friday, September 24, 2010

What's the Value of Political Connections?

This one just out, from a paper, which tackles something I'd like to pin down in future work about political connectedness in developing country settings. We all know that political connections are important, but how much are they significant?
[L]obbyists connected to US Senators suffer an average 24% drop in generated revenue when their previous employer leaves the Senate. The decrease in revenue is out of line with pre-existing trends, it is discontinuous around the period in which the connected Senator exits Congress and it persists in the long-term. The sharp decrease in revenue is also present when we study separately a small subsample of unexpected and idiosyncratic Senator exits. Measured in terms of median revenues per ex-staffer turned lobbyist, this estimate indicates that the exit of a Senator leads to approximately a $177,000 per year fall in revenues for each affiliated lobbyist....We also find evidence that ex-staffers are more likely to leave the lobbying industry after their connected Senator or Representative exits Congress.

HT to Marginal Revolution

Monday, September 20, 2010

Just Give Money to the Poor

From the book title alone, "Just Give Money to the Poor" already sounds like an interesting read. I would assume there is heavy discussion of conditional (probably even unconditional) cash transfers here.

"Just Give Money to the Poor makes a convincing case for a simple but powerful idea: that guaranteeing families an assured base income will create a platform upon which they can build their futures." - Joseph Murdoch

Tangentially related to this, it bothers me sometimes that with such high administrative costs, NGOs or aid programs can act like expensive middle men. Think about the costs of, say, hiring expensive "experts" just to figure out what to do, that in the end, don't even work. Are the benefits that arise from these costs enough to generate development outcomes much higher than simply helicopter dropping money to the poor?

I've seen some pretty inefficient NGOs. There is a possibility that simply handing out money to the poor would give a greater return on investment than coming up, and implementing, some development idea.

But I imagine those in the development business would resist this insinuation. Because then, if this were correct, they would be driven out of work.

Saturday, September 18, 2010

DepEd Orders No More Homework on Weekends

An example of bad public policy making is on the news today. Bro. Armin of the DepEd issues the order to effectively ban giving out homework on Fridays.

"Mas maganda ang kinalalabasan kapag mayroon tayong balance between work and play," he says. But who would better know what the proper balance of work and play is than the teachers, and/or parents themselves?

The situation is different per class, per school, per place. Some students respond better when they are given work to be done for the weekend; some don't. It's the teachers who get the feel for this the most when they are in the classroom. Let them decide what policy is best for their situation. Have we reason not to trust them?

The government should not interfere in such small details that are better left to those who are most knowledgable about the situation on the ground. It's good to give a general direction, but I'm not sure about giving explicit directions on very particular matters.

I'm getting the feeling sometimes that we do policy for the sake of just showing we are doing something. Please, let's not.

Friday, September 10, 2010

Blame the Economist, not Economics

From Dani Rodrik's weblog:
The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.

They forgot that there were many other models that led in radically different directions. Hubris creates blind spots. If anything needs fixing, it is the sociology of the profession. The textbooks -- at least those used in advanced courses -- are fine.

Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency. If the only economics course you take is the typical introductory survey, or if you are a journalist asking an economist for a quick opinion on a policy issue, that is indeed what you will encounter. But take a few more economics courses, or spend some time in advanced seminar rooms, and you will get a different picture.
Case in point, as I started my Micro class last Tuesday, the professor prefaced the lecture by saying that while we will be talking about the simple models that hinge on man being fully rational, and having complete and consistent preferences, etc., we should take these with a grain of salt. These assumptions kill a significant amount of things that are interesting about human behavior.

I am looking forward to the sessions where we will be able to relax these assumptions.

Saturday, September 4, 2010

The Wang and Only

The internet was made for stuff like this.

There is no other country that embraces technology with as much vigor and passion as the Philippines.   My boss once remarked that he was fascinated one day to hear about an interview that was entirely conducted through text message.

Hat tip to The Daily Wh.At. The Facebook page of the brothers is here.

Friday, September 3, 2010

Conditional Cash Transfers Work

As someone who fervently believed, even before the elections, that government policy should address the demand side problem of education, I am satisfied to hear that the Aquino administration is finally expanding the Pantawid ng Pamily Program, the conditional cash transfer program (CCT)

While the opposition is quick to call the program a dole-out, CCTs are actually a good example of social anti-poverty policy that has a solid backing of evidence of its effectiveness. There are a number of academic papers in peer reviewed journals about this - just search for "conditional cash transfers" in google scholar. The seminal article is Paul Gertler's randomized evaluation of Mexico's PROGRESA. The study shows that applying conditional cash transfers in health, the program was able to reduce the illness rates of treatment children by 39.5 percent after 24 months in the program. The results have been similar for programs mainly targeted at education, and administered in different contexts - in Columbia, Nicaragua, Honduras, Jamaica, Turkey and so on and so forth. The evidence coming out from Brazil's Bolsa Escola suggests that about 60 percent of poor 10- to 15-year-olds not in school enroll in response to the program.

Consider this: I've never read an academic paper which scientifically shows that the model of giving houses to the poor works on net (e.g., Gawad Kalinga), or that livelihood workshops work -- and mind you these are things we believe religiously to a fault -- but I am pretty confident that CCTs do work. The theory is, families are able to know what they need better than the government and so based on certain conditions, just give them the money. I think I like this approach better than the government forcing upon the poor that they need textbooks, rice, or other aid.

So to the detractors, I challenge you to show solid evidence that say "livelihood and entrepreneurship programs [have] a multiplier effect and are more sustainable than outright dole outs.” Unless you show me something better and credible, then better not say anything.

That said, I wish DSWD, with the help of the ADB, are smart enough to anticipate an evaluation of the program after 1 or two years.

Thursday, September 2, 2010

The Billionaires of the World

The Philippines appears to have three. Click for a larger picture.

I wish I knew which companies are making billions in the Philippines. And I wish there was one more categorization - which billionaires gained their wealth through entrepreneurship and which through rent seeking behavior.

My theory is that Philippine companies are rewarded more by their political savvy rather than their productive activity. Each administration breeds its own group of millionaires.


Wednesday, September 1, 2010

Good Academic, Bad Human Being - by Mankiw

This is quite dated but relavent to all those who seek to go into the academe, like me. Some sage advice from Greg Mankiw. It's tough to be an academic, especially here in the US. There's this pressure to publish, to come up with good ideas, to seek out the research frontier. There's also a ton of good competition. The question is, what does it really mean to become a good academic.

It all comes down to the definition of "good academic economist." If your goal is to maximize the probability of winning a Nobel prize, or at least to climb up as high as you can on citation rankings, then this advice is correct [focusing on isolated and unique problems instead of real world experiences]. Real world experiences and outside interests are a distraction. Don't take time off from academic pursuits for a job in public policy. Don't ever work on Wall Street or do any consulting. Don't engage in the broader societal debate by writing op-eds or working on political campaigns. All of that takes time away from getting papers published in academic journals.
But don't stop there. If you have this objective, then it is best not to have hobbies, or read novels, or go to the movies. Don't spend time teaching well or mentoring students, except the very best students who can help you with your research. Don't get married or have friends, unless your spouse and friends are PhD economists and can coauthor papers with you. Whatever you do, don't have children--boy, are they a time sink! And if you make the mistake of having children, make sure you spend as little time with them as you can.
In other words, if you want to be the best academic you can be, get ready to be a miserable human being. 
Alternatively, you might decide that, at the end of your life, Saint Peter will not judge you solely by checking the Social Science Citation Index. If so, maybe you should make life choices using a broader objective function--one that encourages you to sacrifice some degree of academic success narrowly construed for a more diverse, more satisfying, and more noble life.

Steve Jobs' Think Different

Steve Jobs explains Apple's marketing strategy in 1997, the one which signalled, or perhaps was responsible for, the company's return to profitability. This is an oldie but goodie.

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
Hat tip to Ben Casnocha