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Sunday, December 25, 2011

The Danger of Stories

From Tyler Cowen, speaking at the TedX Talks.
…we should be suspicious of stories. We’re biologically programmed to respond to them. They contain a lot of information. They have social power. They connect us to other people. So they’re like a kind of candy that we’re fed when we consume political information, when we read novels. When we read nonfiction books, we’re really being fed stories. 
 …So what are the problems of relying too heavily on stories? You view your life like “this” instead of the mess that it is or it ought to be. 
 …narratives tend to be too simple. The point of a narrative is to strip it way, not just into 18 minutes, but most narratives you could present in a sentence or two. So when you strip away detail, you tend to tell stories in terms of good vs. evil, whether it’s a story about your own life or a story about politics. 
 …As a simple rule of thumb, just imagine every time you’re telling a good vs. evil story, you’re basically lowering your IQ by ten points or more. If you just adopt that as a kind of inner mental habit, it’s, in my view, one way to get a lot smarter pretty quickly.
I find this great advice for life, but maybe more specifically to us researchers doing analytical work. Things are never as simple as they seem; there are invisible effects and unintended consequences which anecdotes often obscure.

The full transcript is available here. The excerpts are taken from Chris Blattman's blog.

Tuesday, September 13, 2011

What do you want it to be?

I am reading some high quality debates (and jokes) lately for my class in labor economics. This one is on economists, and the assumptions we make.
An official at Treasury asks three experts, “What’s 200 billion plus 200 billion?” The first expert, a mathematician, immediately responds, “Four hundred billion, of course.” The second, an economist, kind of grimaces and says, “Well, that depends . . .” But the third expert, an econometrician, doesn’t immediately answer. Instead, he gets up and quietly closes the office door. Once he’s sure no one is listening, he leans over and whispers in the official’s ear, “What do you want it to be?” 
I never thought this joke was very deep, but thinking about Leamer’s (1983) paper made me appreciate it more. Insightful jokes typically exaggerate to make a point, so let’s assume what is really being asked is a hard question like “How will consumer spending be affected by $200 vs. $400 billion in fifiscal stimulus?” The econometrician is well aware that by playing with assumptions—what control variables and instruments to use, what functional forms to pick—it’s possible to obtain pretty much any desired coefficient on government spending in the consumption function. 
What struck me for the first time upon rereading Leamer (1983) is that the economist is really the hero of this joke. He knows what the econometrician knows, but he’s willing to admit it. In Leamer’s words, “All knowledge is human belief; more accurately human opinion.” In contrast, it is the mathematician who is really misguided, by expressing a false degree of certainty. My view, like Leamer’s, or the economist in the joke, is that there is no way to escape the role of assumptions in statistical work, so our conclusions will always be contingent. Hence, we should be circumspect about our degree of knowledge. In the words of Maimonides: “Teach thy tongue to say ‘I do not know,’ and thou shalt progress.”
-- Keane 2010 on the Journal of Economic Perspectives

Saturday, September 10, 2011

The Classics of Development Economics

"This class will proceed like a Great Books class, where we will read, critique, and learn from the classic papers in development economics." But as I glance at the syllabus, I notice that 98% of the 100+ papers assigned were written after 2002.

History and Development. Misallocation of Capital. Corruption. Infrastructure. Leaders. Property Rights. Media. Ethnic and Social Divisions. Conflict, Violence, and War. Inequality. Poverty Traps.

I wonder if Raj will allow me to post his syllabus online.

Yes, this is the state of development economics and there is no better time to be in field. Much of the exciting, creative work is being done now and there is a huge opportunity to contribute.

Saturday, August 6, 2011

Why Can't We Be More Like Kenya?

Yes, I am asking that question. Kenya is the first "low income country to have an open government data portal".

From the World Bank's Let's Talk Development:
On July 8th 2011, President Mwai Kibaki launched the Kenyan Open Data Initiative, making key government data freely available to the public through a single online portal. The 2009 census, national and regional expenditure, and information on key public services are some of the first datasets to be released. Tools and applications have already been built to take this data and make it more useful than it originally was.
...with over a hundred requests from the public for new datasets on the site, it's clear that there's a desire for more information. People want data similar to what they might want in the USA: land registry, company registrations and employment statistics to name a few. Kenyans also want data that citizens of more developed countries may be less likely to ask for: fire protection information (how many fire engines are there per county?), school payment disbursement data (do government funds actually reach schools?) and livestock populations.
Open data in Kenya is special: it comes at a time of national change; it’s got a head start on tools and expertise from the global open data community and it’s happening in a country where the information ecosystem is still maturing. 

Tuesday, August 2, 2011

Setting an Example for Transparency

The Center for Global Development, where I used to work, has a new transparency policy: "we will post the data and the code that underpins our analysis."
CGD analyses should be acts of social science. By some definitions, a sine qua non of science is replicability. The responsibility for replicability is especially great for research that aims to influence policy and ultimately affect the lives of the poor. Bruce McCullough and Ross McKitrick put it well in their report, Check the Numbers: The Case for Due Diligence in Policy Formation:

When a piece of academic research takes on a public role, such as becoming the basis for public policy decisions, practices that obstruct independent replication, such as refusal to disclose data, or the concealment of details about computational methods, prevent the proper functioning of the scientific process and can lead to poor public decision making.
It is a good example to set, especially when one calls on aid organizations and governments to be transparent. It's pretty timely as well; I'm thinking about the groups currently calling for the Freedom of Information Act in the Philippines to pass. Are they being transparent?

Guess this means more work for my old research assistant friends back at CGD. Maybe it's time to ask for a salary raise? Ha!

CSR driven more by PR than helping?

This paper provides an empirical investigation of the hypothesis that companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI). We find general support for the causal relationship: when companies do more “harm,” they also do more “good.” The empirical analysis is based on an extensive 15-year panel dataset that covers nearly 3,000 publicly traded companies. In addition to the overall finding that more CSI results in more CSR, we find evidence of heterogeneity among industries, where the effect is stronger in industries where CSI tends to be the subject of greater public scrutiny. We also investigate the degree of substitutability between different categories of CSR and CSI. Within the categories of community relations, environment, and human rights—arguably among those dimensions of social responsibility that are most salient—there is a strong within-category relationship...
The working paper is here, via @Bill_Easterly. I am filing this under papers-to-read-after-my-prelims. I am stressed for time.

Sunday, July 31, 2011

Mechanism Design and Why Government Auctions Matter

All roads lead to mechanism design. It is the last topic covered by any advanced microeconomics course here in the US.

The setup is thus: we want to achieve a social goal. Maybe it is the efficient allocation of resources or the equitable distribution of wealth. Whatever it is, we imagine how a most benevolent dictator would do things, and that is the aim we envision.

The problem is almost philosophical. People have different motivations, different goals that compete. These goals are not stated explicitly and people cannot be counted on to care for society's aim as a whole, although some might.

How can we then fashion the rules of the game in such a way that people, diverse as they are, left on their own devices, can move towards the goal we envision. Does such a "rule" exist? If so, what are the possible rules or mechanisms we can implement to drive people towards this goal?

These are the questions I have pondering on for the past few days. We are given problems where we are tasked to find appropriate mechanisms. Quite interestingly, the answer is almost never "let the markets run freely," although it seems outsiders always think that as economists, this should always be our answer. Free markets only work under the assumption that information is perfect, everyone's goals are well known, and there are no externalities. This is not the case. And surely, the world works in a different way.

I think mechanism design can be most clearly explained through the classic problem of who the government should task to build the next tollroad. The government wants to make sure the selected contractor is the best one for the job, that it could build the highway in the least cost with the best materials. But the problem is the government doesn't know what the motivations of each firm is, how efficient their production would be, and how each of them value the project. The government could spend loads just figuring this out. The contract might be given to the wrong firm.

In such a case, we find that an appropriate mechanism is to auction off the contract, like in a first price auction. Auctions work because it can be proven that each firms best strategy would be to submit bids equal to their true valuation. This allows the government to identify the most efficient firm, the one most worthy of the project. It provides the government with most revenue. BUT this only works as long as -- and the proof heavily relies on this --  firms are prevented from colluding and rigging the ballot. This is why the way government procurement is done matters a lot.

My head hurts from studying too much. But at the moment, I'm relishing the realization that there's a load of theory that goes behind such simple things as auctions.

Saturday, July 30, 2011

Send our Boys Abroad

Etheridge, Gier, Younghusband, Schrock, Jonsson. Here are some of the names of the side we fielded to meet Kuwait in the 2nd leg of the Fifa World Cup qualifiers. None sound Filipino. None play their football in our country. Yet I hear no one complaining that they should represent the Philippine team, who have done our nation proud. Why should anyone complain? These five and a couple of others - Greatwich, De Jong, Hinrich, Ott, Burkey - are part of the reason why the Philippine Azkals have been named the 2nd most improved side in the world.

Not that anything about this should strike you as strange. Around the world, you see the same trend. Here's the French football team. Count the number of players that appear French. How many of these players still play in France? I don't think any of them, except the goalkeeper, does.

In 2003, top English football club Arsenal went on a record-breaking unbeaten run of 38 games -- an unbeaten season in the English Premier League, where competition is fiercest. The side was dubbed the "Invincibles." The team was composed of all foreigners, except two.

It's a world of globalized labor we live in and the benefits can be most clearly seen in football. The migration of talent allows tantalizing sides like Barcelona, Manchester United, Real Madrid, and AC Milan to develop. It is this same process that allows Younghusband, Schrock, Etheridge and others to grow into the stars they are for the Philippine side.

There are questions now on how we can make the Philippine side stronger for upcoming competitions. I am surprised no one has suggested this before: I say send the best of our boys to play in clubs abroad. It will do them and our country good.

(Thanks for Corrine Elum, who sent me the list of players)

Monday, July 25, 2011

The SONA in a Word Cloud

As expected, but I'm disappointed there was nothing on the legislative agenda. The problem with reform without legislation backing you up? Everything can be reversed by the next administration.

Saturday, July 23, 2011

Was the Larry Summers Scene on the Social Network True?

In case you've missed it, this interview has made the rounds in the blogosphere lately.
MR. ISAACSON: So was that scene in the social network true?

DR. SUMMERS: I've heard it said that I can be arrogant.

DR. SUMMERS: If that's true, I surely was on that occasion. One of the things you learn as a college president is that if an undergraduate is wearing a tie and jacket on Thursday afternoon at three o'clock, there are two possibilities. One is that they're looking for a job and have an interview; the other is that they are an asshole.

DR. SUMMERS: This was the latter case. Rarely, have I encountered such swagger, and I tried to respond in kind.
The full video is here. Felix Simon provides a short profile and a good summary of the interview here. Summers' view on US macroeconomic policy is worth reading, whether you care about the US or not.

Optimistic Much? Conditional Cash Transfers are Not Enough.

Mahar Mangahas criticizes the latest Philippine Development Plan's "inclusive growth" strategy:
“Inclusive growth” is the current buzzword or fashion statement among those economists and development biz types who insist that macro growth is the key to success, yet grudgingly concede that it hasn’t delivered on promises to uplift the masses... 
The Plan’s other chapters are on “macroeconomic policy,” “competitive industry and services sectors,” “competitive and sustainable agriculture and fisheries sector,” “accelerating infrastructure development,” “towards a resilient and inclusive financial sector,” “good governance and the rule of law,” “social development,” “peace and security,” “conservation, protection and rehabilitation of the environment and natural resources.” With conditional cash transfers, health, and education mentioned only in passing, and undeserving of even a sub-chapter, this Plan isn’t too focused on “inclusive growth. 
I, for one, am willing for the government to focus almost solely on anti-poverty programs, and let growth take care of itself.
I agree that growth is not the only thing. But Mahar Mangahas is too optimistic about these anti-poverty programs. I like the CCT, I really do. In fact before people started raving about it in the Philippines,  I mentioned in my blog that it should be the next "thing." (Sorry for the brag.) But it seems now we are being over optimistic about what these types of programs can achieve. Conditional Cash Transfers is the buzz phrase.

What is the BEST evidence on CCTs so far? The evidence is strong that it increases schooling. Child health and nutrition are also improved. CCTs reduce child labor. It increases consumption. This paper is a good summary of the literature. But how much does it actually reduce income poverty... not many make that very strong claim.

Is it still a program worth doing? Sure. But it's NOT a substitute to growth.

I've said this again and again recently, so pardon the insistence that this is important, but in the Philippines, the unemployment rate for the educated is higher than the uneducated. Getting people to go to school through CCTs is part of the equation, but will it be enough to lift households out of poverty when the transfers end? I doubt it. Without structural change, I just don't see it.

Programs will be programs. They end. The money coming from the World Bank will run dry. Let's move on from gushing about the conditional cash transfer program we are currently implementing. It's insufficient.

Mr. Mangahas ends by saying that the promise laid out by the report of reducing poverty by 10 percentage points in 6 years has never been done. Like the true social scientist that I am, I am skeptical. Never? I may be wrong (and a little bit pilosopo), but what was the rate of reduction during the greatest period of growth in the history of man, the industrial revolution?

***DISCLOSURE: I have not read the full Philippine Development Plan Report***

Wednesday, July 20, 2011

Level-Up By Reading the News

Or should I say, badge-up? Google badges may have been overshadowed by the release of google+ but it's another one of those simple but ingenious ideas coming from my favorite company. Earn badges by reading the news.

The idea is similar to the system used in games like World of Warcraft, a most addicting game, where you level-up your character by accumulating experience points, achieving missions, and doing quests.

Google applies the same incentive structure to reading and hopes that it would increase readership. It's unique; you level-up yourself by reading more. Now imagine if this catches on, and people would read more, get more fun out of this task, with the same intensity that gamers play their RPG games. Public awareness would increase. And perhaps those history teachers would not have such a hard time convincing their students to master their current affairs.

Now if only there was a way to apply the same addicting incentives to work. Imagine what could happen to productivity if workers attacked their tasks with the same gusto as World of Warcraft players to combat their online enemies. That would be the day.

What's the Legislative Agenda, Mr. President?

Forgive me if I join the chorus of those who would predict what would be said in the SONA on Monday. I would like to bet on these. The president will highlight the recent success in government revenue collection and the subsequent upgrading of our country's credit rating to BB+. There will be short mention of the conditional cash transfer program and its progress (although as my friend points out, that was "so last year."). An announcement will be made about the expansion of a community development program, KALAHI-CIDSS, which will allow government units in 21 provinces to fund and create their own local development initiatives. It's unique; it's massive. The US, through its Millenium Challenge Corporation is funding $120M of it.

If any of these turn out to be correct predictions, it's only because the president has shown himself readable in his first year. He is a project-oriented person. In this, he has found success.

The most exciting part to me about this SONA then is not what the president will say about projects but what the president will say on the legislative front. No one will disagree with me when I say this administration has so far taken policy for granted. The legislative agenda in the past year has been incoherent at best. The president ran under banner of anti-corruption and anti-poverty -- "kung walang corrupt, walang mahirap" -- but how the RH and divorce bills fit into this framework, I am left wondering. Should those be the priority? Population control to me remains a dubious anti-poverty strategy, and the empirical research on the topic confirms this, although I agree that the bills would do wonders for women's health and rights.

Whatever happened to the Freedom of Information Act? I cannot think of another policy that embodies "kung walang corrupt, walang mahirap" more. Recent research in India suggests that such a policy substitutes for bribery. No other law is politically easier to pass. For how can anyone reasonably argue against transparency? The costs would be marginal for releasing government data to the public.

There is also the pressing need to discuss the labor code. Recent data on the Philippine labor market, as I have blogged before, is horrifying. The unemployment rate is significantly higher for college educated filipinos than for uneducated ones in the domestic market-- 10% compared to 3% respectively. The returns are negative. It is of no wonder than that workers flee for foreign employment. But the situation in Saudi Arabia will make matters worse. No conditional cash transfer program or project can mend this problem. The country needs some change of policy.

What will be on the legislative agenda next year? Any thoughts and comments on what else could be done? I am all ears this Monday. 

Saturday, July 9, 2011

Development Bingo for the SONA

One of my fond memories from working at the Center for Global Development in DC is the annual State of the Union Bingos we held. The event would work like a usual bingo game would, except that instead of numbers we would have development words in the boxes of the bingo cards. So every time President Obama would mention something related to development in his speech, like "climate change," "aid," or "health" one of the boxes in the cards would get ticked. There would be prizes and of course a healthy supply of booze. We would hold it in one of the bars downtown. Friends of the center, folks who are interested in development, and staff, especially the young ones, would go.

I share only because some might want to plan a similar event for President Aquino's State of the Nation next week. It's a good way to get people to listen, to show that politics and public policy is fun -- as it really is. I hope someone could catch on to this.

Wednesday, July 6, 2011

When History was Made

The chart below shows a population-weighted history of the past two millennia. By this reckoning, over 28% of all the history made since the birth of Christ was made in the 20th century. Measured in years lived, the present century, which is only ten years old, is already "longer" than the whole of the 17th century. This century has made an even bigger contribution to economic history. Over 23% of all the goods and services made since 1AD were produced from 2001 to 2010, according to an updated version of Angus Maddison's figures.

I got this one from the Economist.

Sunday, July 3, 2011

A Word of Caution About the RH Bill

Some tables I pulled from the full report of the National Health and Demographics Survey of 2008. There are two small things I want to point out. First, a whopping 97.8% of women are familiar with modern contraceptive methods.

How does the current RH bill take this into account? This tells me that any proposed sexual education program must be mindful that people already know. What will be the value added? I hope current advocates are thinking hard about this. Knowledge of contraceptive methods is not the binding constraint. (Although perhaps knowledge of side effects is? I'm talking about the last table here.)

Second, considering that religious groups make the most noise against the RH Bill, I find it interesting that, in the end, religion plays such a tiny, tiny part of the decision of women not to use contraceptives.

I have in my computer the micro data for the Survey. If only I had more time, it would be fun to play around with it and see what more it can contribute to the debates because it is so rich with information. But I'll leave it to others at this point; I have exams to look after. To those interested, the data is freely downloadable at upon request.

Calling health economists?

Thursday, June 30, 2011

The Strange and Distorted Philippine Labor Market

Yet some clues to the problems facing Philippine industry may be gleaned from work by Philippine labor specialists. For example, despite the higher productivity in the urban industrial sector and the need for highly skilled workers, the unemployment rate is higher for college-educated students than less educated workers. In 2008, the college-educated had a 10.6 percent unemployment rate compared to 8.6 percent for those with only high school degrees, 3.3 percent for those with elementary education, and 2.1 percent for those with no elementary schooling at all. This is so much the opposite of what is typical in the developed economies that it suggests the importance of high barriers to entry in the formal job market that are not binding in the low-wage, heavily informal service and agricultural sectors that are more likely to employ the least educated. 
Esguerra (2010) points to two features of Philippine industry that would dramatically inhibit job creation: (i) a high industrial minimum wage and (ii) strict employment protection
As is well known, competition and investment are hampered by constitutional rules that limit foreign participation in local business to minority status and that prohibit foreigners from owning property with a few limited exceptions such as inheritance. This severely restricts the entry of firms with the greatest knowhow and managerial experience that would benefit the Philippine economy.
It is not a surprise that skilled workers are among the Philippines’s largest exports. Overseas workers on a variety of temporary assignments cannot find employment in their home country because enterprises are heavily constrained in their ability to enter. It is simpler to hire Filipinos abroad than at home with predictable costs for growth and developmental progress...
Despite the clear and glaring problems that these and other distortions represent, what are two of the most highly promoted reforms often suggested for the Philippines? Tax collection (or fiscal reform) and infrastructure development.
The last, is a very good question.

This, from a thoughtful new ADB paper by John Nye about labor market rigidities in the Philippines. My former boss, Michael Clemens, describes Nye as a "hyper-brilliant guy, an extremely impressive intellect."

This is a paper I wish my friends in government will read, despite its length. You may disagree with the specific policy implications, but I believe it gives an accurate assessment of the problems facing the Philippine economy that no one is saying.

Sunday, June 26, 2011

Should we take the Freedom of Information Act More Seriously?

Recent empirical evidence from India suggests that we should:
In this randomized field experiment we observe urban slum dwellers of New Delhi, the capital of India, apply for ration cards at the local offices of the Food and Civil Supplies Department. The ration card entitles the holder to subsidized foodstuffs and is the cornerstone of India’s minimal welfare state. To measure the benefit derived from paying a bribe and the effectiveness of an anti-corruption intervention we compare the length of time lapsed before a ration card is issued for confederates randomized into a control group and three treatments—bribepayment, FOI [freedom of information] application, and NGO support.
The findings from the field experiment are striking in their clarity. Only confederates randomly assigned to the bribe and local freedom of information law interventions received ration cards within the experimental time frame of seven and a half months. The maximum legally mandated period during which ration cards must be issued is forty-five days. The fastest way to secure a ration card is through bribery. The FOI treatment is only a little less effective than the graft intervention. NGO support seems to be completely ineffectual in helping the urban poor to secure ration cards
The highlights are mine. The paper is forthcoming in the Journal of Law and Economics. An outdated draft version is here.

HT to Chris Blattman

Thursday, June 23, 2011

Just as Beautiful. Just not as Expensive.

Brilliant new ad from the Department of Tourism. It oozes cocky-smart. This one's a hundred times better than that failed "Pilipinas Kay Ganda" slogan from months ago. I can almost imagine a whole series of these coming out. They're a bit controversial, but it's time we, as a country, showed some balls for a change.

HT to Jayvee Fernandez

Wednesday, June 15, 2011

An Undersupply of Physicians?

Here's a follow up on my previous post on keeping medicine and health students in the country. Some might say my argument relies heavily on nurses while what U.P. is trying to do is stem the tide of migrating physicians.

But here's the data on physicians per 1000 people. I hardly think our 1.2 physicians per 1000 people constitutes an undersupply, given that we have a higher number than Thailand, India, and some comparable countries. But I'm no expert so  I'll let health practitioners comment on whether the number for the Philippines is sub-optimal or not.

The data is from the World Development Indicators. The latest year for the Philippines is 2004. Not all countries have a data point in this year so they have been dropped.

Thursday, June 9, 2011

On What Makes a Top University

A survey of living MIT alumni found that they have formed 25,800 companies, employing more than three million people including about a quarter of the workforce of Silicon Valley. Those firms between them generate global revenues of about $1.9tn (£1.2tn) a year. If MIT was a country, it would have the 11th highest GDP of any nation in the world.
The full article, which talks about the university's 150th anniversary, is here.

In other news, my alma mater, the Ateneo de Manila University celebrates being the first in the Philippines to receive Institutional Accreditation and Level IV Reaccredited status by the Federation of Accrediting Agencies of the Philippines (FAAP). There is a ton to rejoice about of course. It confirms that we are a top school in the country.

But a voice in my head also asks: but how many entrepreneurs has the university produced? How many jobs has the school created through its students?

One looks at top schools like Harvard, MIT, etc. and the people here have a totally different mindset from the folk at usual universities. Watch the Social Network. While people do not talk that way as they do in the movie, the film captures the culture accurately: the goal is always to come up with the next new idea, to create the next new job.

Unfortunately, I still do not quite see this in the Ateneo. It reminds me that despite the awards, we are still far, very far, from being a truly top school. There's no room for complacency.

Sunday, June 5, 2011

Legalize Bribe Giving to Reduce Bribery?

A novel idea from Kaushik Basu, India's current chief economic adviser. The full paper is here; the WSJ article here.
There are different kinds of bribes and what this paper is concerned with are bribes that people often have to give to get what they are legally entitled to. I shall call these harassment bribes. Suppose an income tax refund is held back from a taxpayer till he pays some cash to the officer. Suppose government allots subsidized land to a person but when the person goes to get her paperwork done and receive documents for this land, she is asked to pay a hefty bribe... 
The central message of this paper is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words the giver of a harassment bribe [not the demander] should have full immunity from any punitive action by the state. 
It is argued that this will cause a sharp decline in the incidence of bribery. The reasoning is that once the law is altered in this manner, after the act of bribery is committed, the interests of the bribe giver and the bribe taker will be at divergence. The bribe giver will be willing to cooperate in getting the bribe taker caught. Knowing that this will happen, the bribe taker will be deterred from taking a bribe. 
Sounds to me like this is a policy we can experiment on and see if it works. At the very least, it's worth a try.

HT to Marginal Revolution.

Saturday, June 4, 2011

The Urban Poverty Paradox

This is the second time I'm quoting "The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier" because the book is simply composed of many little sharable insights. This one's a good note for city planners: providing expanded public services must not only take into account current under-capacity, but must anticipate the under-capacity generated by the public service as well.
The great urban poverty paradox is that if a city improves life for poor people currently living there by improving public schools or mass transit, that city will attract more poor people... 
Cities aren’t full of poor people because cities make people poor, but because cities attract poor people with the prospect of improving their lot in life... 
Indeed, we should worry more about places with too little poverty. Why do they fail to attract the least fortunate?
Of course, it's better to read the book to see the full argument.

Wednesday, June 1, 2011

Fees for Plastic Bags: Make it a Peso Per, Please

It's a long shot to claim that this bill on charging fees for plastic bags was influenced by my recent blog post, but I'd still like to take credit for it, however imaginary, as an ego boost.
The bill, also known as the "Plastic Bag Use Disincentive Act of 2011", will require big stores, food chains and similar establishments to charge their customers not less than P5 per plastic bag, regardless of size when buying items or products.
This is a fabulous idea and I've seen it work well in DC, where people are now more conscious to bring their own bags when they go to the grocery.

I believe charging upwards of P5 is too much though. Again, I suggested in my previous post that P1 per bag is enough, since I am afraid this policy might disproportionately hurt the poorer folk. The point of the bill should not be revenue generation, but mere behavior deterrence.  And with deterrence, it's enough to go from no fee to some small fee, as opposed to going to no fee to a substantial amount. Behavioral economists would agree with me.

In the meantime, I'm still horrified by the cashier at my local minimart who insists on putting the small shampoo saches I've purchased in a plastic bag. Redundant much? I'll carry them home with my empty hand, thanks.

Tuesday, May 31, 2011

Commutes that Kill

My two hour commute last night from Intramuros to Libis, reminded me of this piece on Slate:
This week, researchers at Umea University in Sweden released a startling finding: Couples in which one partner commutes for longer than 45 minutes are 40 percent likelier to divorce. ... 
In 2006, Nobel laureate Daniel Kahneman and Princeton economist Alan Krueger surveyed 900 Texan women, asking them how much they enjoyed a number of common activities. Having sex came in first. Socializing after work came second. Commuting came in dead last. ... 
Long commutes also make us feel lonely. Robert Putnam, the famed Harvard political scientist and author of Bowling Alone, names long commuting times as one of the most robust predictors of social isolation. He posits that every 10 minutes spent commuting results in 10 percent fewer "social connections." Those social connections tend to make us feel happy and fulfilled. ... 
Those stressful hours spent listening to drive-time radio do not merely make us less happy. They also make us less healthy. The Gallup survey, for instance, found that one in three workers with a 90-minute daily commute has recurrent neck or back problems. Our behaviors change as well, conspiring to make us less fit: When we spend more time commuting, we spend less time exercising and fixing ourselves meals at home. ... 
It is commuting, not the total length of the workday, that matters, [Thomas James Christian of Brown University] found. Take a worker with a negligible commute and a 12-hour workday and a worker with an hourlong commute and a 10-hour workday. The former will have healthier habits than the latter, even though total time spent on the relatively stressful, unpleasant tasks is equal. 
Two economists at the University of Zurich, Bruno Frey and Alois Stutzer, actually went about quantifying it, in a now famous 2004 paper entitled "Stress That Doesn't Pay: The Commuting Paradox." They found that for an extra hour of commuting time, you would need to be compensated with a massive 40 percent increase in salary to make it worthwhile.
Perhaps my time in the States has made me more irritable about Manila traffic, but it really is a waste of time. Plus with gas at ~50 pesos, how does our future look like?

Let me say this: if our public transportation gets better, and I can walk and commute with relative ease inasmuch as I do in the States today, then I will migrate back for sure.

HT to James Choi for the block quotes

Thursday, May 26, 2011

Let the Diploma Mills Be

Harvey Keh in his latest Manila Times column advices the government to close down low-quality nursing schools. I disagree. Harvey tells of the story of Edward, a minimum wage earner, who enrolled in a well-advertised nursing college only to fail the Nursing licensure examinations twice, ending up unemployed and unable to help his family, who invested heavily in him.

I see the problem that Harvey is citing, but I do not think his solution is commensurate to the situation at hand. If the main problem is that people are misled to enroll in "diploma mills", then the appropriate solution is to provide more accurate information for these "Edwards" to make better choices. Or at least to make sure all the information nursing schools provide are correct.

Believe it or not, some people, even with full information, are willing to pay to go to low quality schools. It's the same with cars: some people are willing to pay for used and low quality cars. Because of this, the market for low quality things should be kept open. Otherwise, all that will be left are high quality institutions at high unaffordable prices, inasmuch as all that will be left are high quality cars whose prices will be pushed upwards, to continue the analogy. That's just how supply and demand work. But not everyone can afford to go to an Ateneo or La Salle. Not everyone would even want to. In this scenario, more would not get to go to school.

But because I think that low education is still better than no education, I am skeptical of Harvey's advice.

Let the diploma mills be.

*Note that it's not even clear whether students are failing out because the schools are poor or because the schools simply attract lower quality students, but that's a totally different argument.

Thursday, May 19, 2011

Filipino Food Into Escargot

Food is the main attraction in the Philippines. Whenever I come back, I always ask for what's new, and besides malls, people point me to restaurants that have opened up.

It takes different eyes sometimes to appreciate the huge variety of food here. My foreign friend jokes that in her stay here, she's now eaten food of every color. Red for rambutan, brown for adobo, white for lanzones, yellow for mango, and purple for ube and the Pili nut that Sorsogon is famous for. Okay, maybe except for blue.

One wonders why then, despite the richness of our food, international recognition of it has been lacking. My friend agrees that adobo would be an instant hit, so would halu-halo. But ask a random person in the US and most likely, he would hardly have a clue what Filipino food is. He would know Thai, Japanese, Vietnamese, Indian, Korean, and Chinese, but not Filipino. It is disappointing, considering Filipinos make up a large portion of immigrants in the country.

The french cook snails, call it escargot, and suddenly it's a $100. It's snails for crying out loud. Present a product well, make an experience out of it, and it will sell.

Is there any way we can market adobo better? Is there a way to market our sisig, mangoes, pinakbet, bicol express, and bangus that will capture the imagination of the western world?

We bring our food overseas but cater it to the OFW market, like that Jollibee in New York. (Not that Jollibee is any good anyway.) But observe filipino stores, in general. Little effort is done to entice foreigners to take part in our food. We do not adopt them to a different palate. This is the problem.

The Bicol Express I had the other day was wonderful.

Wednesday, May 11, 2011

Notes from the Field: Getting the Feel

I need a foot massage. In the past three days, I have been accompanying Jaye, our program associate, back and forth Bulan, Irosin, and Sorsogon City to meet with our project's satellite offices, train encoders and to accompany them in some of their interviews. The bus rides have been long. The view, thankfully, has been scenic. We are trying to get people jobs abroad. We are trying to see what happens if the barriers to migration are lowered.

Jaye is an amazing project manager, and compared to her, I feel utterly useless. There is something I admire about her, coming to live here in rural Philippines, even for just a year, to leave a comfortable life in the States. In contrast, I am an eager PhD student, who seems to have brought the wrong guns to battle. The theories I have painstakingly learned in my first year are of no use here at the moment. I am no project manager.

Nevertheless, I am starting to get the feel of this place. I am realizing how important this is: to get a non-cognitive assessment, to take in the environment, to sniff out what the critical issues and questions could be in the research. Sure, many just sit in front of a computer and do some analysis, regressions. But analysis without experience seems impoverishing. At least for me, I feel like I would be able to write a much richer paper now that I will be here for some time.

What is the main benefit of a randomized control trial? Many have praised it for advancing our capability for causal identification in development. But now that I am here in the field, working on one such experiment, could it be that its main benefit has simply been that it has brought more development economists into the field?

Sunday, May 8, 2011

Cities aren't structures; cities are people

I have arrived in Sorsogon City in rural Philippines. Because I have yet to see action in our research project, and there is not much to do yet especially here in the province, I have taken to reading. Currently, "The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier" is proving to be compelling. In particular, this sequence of passages struck me:
Too many officials in troubled cities wrongly imagine that they can lead their city back to its former glories with some massive construction project -- a new stadium or light rail system, a convention center, or a housing project. With very few exceptions, no public policy can stem the tidal forces of urban change. We mustn't ignore the needs of the poor people who live in the Rust Belt, but public policy should help poor people not poor places.

The hallmark of declining cities is that they have too much housing and infrastructure relative to the strength of their economies. With all that supply of structure and so little demand, it makes no sense to use public money to build more supply. The folly of building-centric urban renewal reminds us that cities aren't structures; cities are people.

After Hurricane Katrina, the building boosters wanted to spend hundreds of billions rebuilding New Orleans, but if $200 billion had been given to the people who lived there, each of them would have gotten $400,000 to pay for moving or education or better housing somewhere else. Even before the flood, New Orleans had done a mediocre job caring for its poor. Did it really make sense to spend billions on the city's infrastructure, when money was so badly needed to help educate the children of New Orleans? New Orleans' greatness always came from its people, not from its buildings. Wouldn't it have made more sense to ask how federal spending could have done the most for the lives of Katrina's victims, even if they moved somewhere else.

Ultimately, the job of urban government isn't to fund buildings or rail lines that can't possibly cover their costs, but to care for the city's citizens. A mayor who can better educate a city's children so that they can find opportunity on the other side of the globe is succeeding, even if his city is getting smaller.
Bravo. Development strictly speaking is not about place, but about people. This should have implications on how we should think about migration and development.

Additionally, I am thinking of Manila, Bayani Fernando, and in some ways Gawad Kalinga. I am thinking of how we should go about rebuilding in areas perpetually hard hit by typhoon.

Wednesday, May 4, 2011

The Hidden Sources of Love, Character, and Achievement

Children are coached on how to jump through a thousand scholastic hoops. Yet by far the most important decisions they will make are about whom to marry and whom to befriend, what to love and what to despise, and how to control impulses. On these matters, they are almost entirely on their own. We are good at talking about material incentives, but bad about talking about emotions and intuitions. We are good at teaching technical skills, but when it comes to the most important things, like character, we have almost nothing to say.

The passage is from a book I just finished, "The Social Animal: The Hidden Sources of Love, Character, and Achievement." The focus is on the latest research about the brain, particularly the unconscious, and its implications on how one ought to live life. It reads like a Philo 104 discussion couched in a story, lighter and more entertaining. Keen observers will note that the gist is strongly anti-"the Tiger Mom" way of bringing up kids, referring to Amy Chua's latest book.

Highly recommended. Chapter after chapter, I found myself highlighting tidbits of info I'd like to repeat to myself later on as a guide to life. Some passages I would like to reuse as conversational pieces. Did you know, for instance, that

...most adults have a vocabulary of about sixty thousand words. To build that vocabulary, children must learn ten to twenty words a day between the ages of eighteen months and eighteen years. And yet the most frequent one hundred words account for 60 percent of all conversations. The most common four thousand words account for 98 percent of conversations. Why do humans bother knowing those extra fifty-six thousand words?

The rationalist approach by mainstream economics got bashed, while recent work in behavioral economics got praised. I do not mind. (Note though, as I always like to contend, that no serious minded economist actually believes that humans are perfectly rational beings. No one. It's just easier to start with a model that assumes rationality inasmuch as it is useful in physics to start with a world without friction. And that's when you put in complexity. For how else would one start? What would be the baseline?)

The book however is most rewarding in its discussion of moral reasoning. Plato is given a run for his money here:  The notion that morality is all about reason conquering one's passions is taken down. Goodness then, it is argued, is composed of emotion, passion, and perception. It is an argument I have not heard before.

After reading, I felt compelled to do a better job at life. Buy it.

Saturday, March 12, 2011

Creepy Hand Model

An effect of specialization in the economy. Would Adam Smith be proud?

Thanks to Dyuti Bhattacharya for the pointer.

Saturday, March 5, 2011

Do You Need a Plastic Bag?

This occurred to me today, while buying cold medicine at a local pharmacy. What alternative things can we do to save the environment? Mandate managers to train their cashiers to ask, "do you need a plastic bag for that?"

A small detail, I know, but it makes sense since most of the time, we don't really need bags especially for our small purchases. That new book bought, for instance, can just as easily fit into the bag one brought with or without plastic. But we often forget, just like I did today, as I carried home my package in a plastic bag, when I could have simply put it in my pocket. If only the cashier asked me, perhaps I would have remembered.

Do you need a plastic bag? What if all cashiers of small stores asked this question whenever people bought anything? I wonder how much could be saved. It would be a good example of "nudge."

Another good nudge would be taxing plastic bags with a meagre amount, say 1 peso per. While this is such a small amount that in principle would not hurt anyone economically, the concept of loss aversion would say that people would respond significantly by cutting their bag consumption.

How about this as an alternative policy?

Tuesday, February 22, 2011

Why Getting Rid of Dictators is Not Enough

A perceptive piece by Arvind Subramanian on why the Arab revolution might not see an economic boom. A fundamental change in the political economy is also needed. While reading this, I was about to say: case in point, 1986 Philippines:
Even if the people of Libya and Bahrain join those of Egypt and Tunisia in overcoming their cursed political systems, the economic manifestations of their rent curses will remain. Even if they become more democratic, because these countries benefit from substantial rents they will have less need to tax their peoples. This precludes the need to reform state controlled industries to create private sector wealth. It also will stop the development of genuine democratic systems, the usual basis for the legitimate taxation of citizens. 
The history of economic development suggests that rent-ridden countries create governments with few incentives to build strong political institutions or listen to their people. In Egypt, for instance, these various rents account for about two-thirds of foreign exchange earnings. Directly or indirectly they generate at least a third of government revenues. This is not as large as other oil exporters in the region, like Libya, but substantial nonetheless. And Egypt’s state, in common with others across the Middle East, has used these rents to appease and suppress dissent, creating circumstances in which they have little need to develop competent political institutions.
Weak economic institutions will be the consequences of these nations’ ongoing reliance on rents. These will fail to deliver essential services, such as education and skill creation, in turn limiting the pool of entrepreneurial talent. Such institutions also create bloated bureaucracies, weak legal enforcement of property rights, and obstacles for starting businesses, especially for those outside the regime’s inner circle. Without reforms the private sector will still likely thrive only through connections to a rent-addled state, not because of the raw dynamism found in many Asian countries.

Monday, February 21, 2011

On the Laws of Economics Holding True in a Board Game

A wonderful piece by the NYTimes on Monopoly, the board game:
The precise details of our classic game are blurred by the alcohol consumed that night and the years that have passed since then, but this much is recalled. We decided that Monopoly was hostile to a free market because it restricted the number of houses or hotels one could buy. We voted that a player could buy as many hotels as a property could physically bear and rents would be raised proportionally. 
But the bank soon began to run out of money. So we did what any government would do. We began printing more of it, by scribbling $500 on scraps of paper. We printed a lot of money.
Prices shot up, which we all knew, even in that inebriated state, was the consequence of expanding the money supply. (After all, the great economist told us, “Inflation is always and everywhere a monetary phenomenon.”) 
The inflation became so extreme that we eventually voted to alter the rules again: we’d cut the money supply. Any money we printed that came back to the bank would be taken out of circulation. 
A severe depression kicked in, of course. Prices plummeted and it was a race to liquidate assets. One by one the players quickly went bankrupt, and sometime around 4 that morning the game was over.
This got me thinking: Perhaps macroeconomists should start to work with game developers. They could run experiments, say like jack up the monetary supply in World of Warcraft and see how gamers would react.

HT to James Choi for the pointer.

Wednesday, February 16, 2011

The Triumph of Cities

John Stewart interviews Ed Glaeser about his new book, The Triumph of Cities: How our Greatest Invention Makes us Richer, Smarter, Greener, Healthier, and Happier. I am convinced to get a copy, despite the high price Kindle still has for it. There are numerous positive reviews online; and judging from this video, Ed Glaeser seems to be a pretty cool and smart.

I am interested in how cities work (and not work), primarily because they have implications to migration, a topic I would like to work on in the future. But personally, I just find cities fascinating. I've been to some great American ones like New York and Chicago, and I've lived in one, D.C.

Close friends will note that I have made a pact that I will never settle down in a non-city. I'm done with driving, seriously; I would rather much just use public transportation and walk - the best way if you ask me to get a feel of the heartbeat of a place. And cities have this youthful energy in them that draws me infinitely.

If anyone is interested in this sort of thing, I would suggest the canonical 1960's The Death and Life of Great American Cities, by Jane Jacobs if you haven't read. I've written about the book before and to me, it captures very well how we should think about cities, and how to design them.

TY Jeff Smith for the pointer.

GMA Posts Racist Billboard alerts me to this billboard of GMA's newest soap, Nita Negrita. I knew there was something subtly wrong about the billboard, which disturbed me, but it took me a while to pin it down. It took a friend, CH Herrin, to point out that exactly what's wrong with the frame is that they portray someone who is supposed to be a Filipino African-American with a whitish kid painted black. As if saying that both are the same. They should have hired a real Filipino African-American instead.

I am willing to consider this an honest mistake on the part of producers at GMA Network. The write up about the show hints at good intentions. The poor execution, however, is completely outrageous. If you are still not outraged, imagine this: an American network produces a show that tells the story of an inspiring Filipina nurse living in the US. But they hire, say, Miley Cyrus to portray the role and then paint her brown. Wouldn't that get you up in arms?

Why haven't I seen the the internet community in the Philippines fuming over this? Remember three years ago when we demanded an apology from ABC's Desperate Housewives for their slur about Filipino medical professionals? Where has that cultural sensitivity gone to?

Billboards like this will not fly anywhere else. That this could be put up, even in the best of intentions, says something about our country's lack of racial sensitivity, borne out of the absence of constant exposure to true racial diversity.

Please GMA, take this show down.

ADDENDUM: Cess Celestino informs me that this is like Blackface. Incredible. This makes the Philippines 50 years behind in terms of the civil rights movement.

Monday, January 31, 2011

Adolf Hitler Understood Nudge

Even before those in behavioral econ warmed up to the idea, Adolf Hitler understood the power of "nudge." In this 1938 voting ballot, he makes it quite clear what you should vote for. The question read: "Do you agree with the reunification of Austria with the German Reich that was enacted on 13 March 1938 and do you vote for the party of our leader; Adolf Hitler?; Yes; No,”

T'was a double question too. Smart.

via Marginal Revolution

Sunday, January 30, 2011

Do No Harm and the GK approach

I got woken up by a tweets yesterday by Dean Tony La Vina. It was from some high level meeting of important people:
@tonylavs: In China, they never scale up programs nationally unless tested in provinces and regions first.
@tonylavs: Dean Arsi Balisacan of UP Economics argued that the choice of what strategy to scale up should be based on evidence.
Ah, this is indeed very encouraging. If public policy can be based more on evidence, I believe we would be able to bring more people out of poverty more quickly and use scarce resources better. Dani Rodrik of Harvard has spoken about this many times. Development should take a more diagnostic approach rather than a presumptive one.  The idea is, we really don't know what works. But we will try out many things, many programs, and evaluate each, and see which one to pursue and scale up.

Quite the opposite, I would say to what I would call the "Gawad Kalinga approach," where the idea is to scale up as quickly as possible. I'm sorry, I know many are fans of this program. 700000 houses in 7 years was their motto right? But to date, I have not seen or read any rigorous evaluation done of the program. Does building houses -- pretty ones -- in fact, increase development outcomes like health, employment, education, etc.? Did the housing cause unintended consequences to the families, to surrounding neighborhoods? Nobody knows the answers to these questions because nobody stopped and said, wait a minute, is this the right use of our time? Did we do no harm?

Sigh. Do no harm. I like that. There is much talk lately about developing some ethical code for economists. Perhaps policymakers should adopt one too, just like the one for medical doctors. That is, before scaling up something, we should first make sure that it does no harm.

Saturday, January 29, 2011

The Morality Underlying Econ

From Tyler Cowen on the morality underlying economics:
Even though the predictions of economics are independent of any ethical theory, there are ethical ideas behind normative economic reasoning. An economist who rejects the idea of exploitation in kidney purchases, for example, is treating the seller of kidneys with respect—as a person who is capable of choosing for himself or herself even in difficult circumstances.
Similarly, economists don’t second-guess people’s preferences very much. If people like wrestling more than opera, then so be it; the economist, acting as economist, does not regard some preferences as better than others. In normative terms, economists once again tend to respect people’s choices.
Respect for people’s preferences and choices leads naturally toward respect for trade—a key action that people take to make themselves better off. As we saw in Chapter 9 on externalities, economists recognize that trade can sometimes make the people who do not trade worse off. Nonetheless, the basic idea that people can make decisions and know their own preferences leads economists to be very sympathetic to the idea of noncoercive trade.
Economists also tend to treat all market demands equally, no matter which person they come from. Whether you are white or black, male or female, quiet or talkative, American or Belgian, your consumer and producer surplus count for the same in an economic assessment of a policy choice.
None of this it to say that economists are always right in their ethical assumptions. As we warned you in the beginning, this chapter has more questions than answers. But the ethical views of economists—respect for individual choice and preference, support for voluntary trade, and equality of treatment—are all ethical views with considerable grounding and support in a wide variety of ethical and religious traditions.
Perhaps you have heard that Thomas Carlyle, the Victorian-era writer, called economics the “dismal science.” What you may not know is that Carlyle was a defender of slavery and he was attacking the ethical views of economics. Economists like John Stuart Mill thought that all people were able to make rational choices, that trade not coercion was the best route to wealth, and that everyone should be counted equally, regardless of race. As a result, Mill and the laissez-faire economists of the nineteeth century opposed slavery, believing that everyone was entitled to liberty. It was these ethical views that Carlyle found dismal. We beg to differ.

Thursday, January 27, 2011

Hans Rosling Goes 3D

The data visualization guru at it again. HT: econjeff

As econjeff rightly points out though, 1) one may have objections with the scaling of income and life expectancy, 2) there's a failure to note the lag in Africa's progress. Is convergence really that sure a thing?

Wednesday, January 26, 2011

Rizal Sent No Remittances

This took a while but Rizal historian, Ambeth Ocampo responded to my email. I asked whether as a migrant, Rizal sent remittances home:
Rizal did NOT send money home, he was supported by his relatives back home during his studies and even for publication of his books. He worked in Hongkong but didnt need to remit because his parents and spinster sisters joined him. Rizal only gave money to his family after he won the lotto when he was an exile in Dapitan.
The context of course was my post a while back on Winnie Monsod and her claim that you'd have to be in the country to help the country. Recall, she virtually called those who left the country, especially the educated, traitors. I asserted that if this were true, by her standards, then we cannot possibly conceive of Rizal as a hero since a) he spent his working life mostly away from the country and b) now we know he did not send back remittances. He is even worse than today's migrants. But we consider him our national hero.

I am still interested in the question on how big a portion of Rizal's post-university life he spent outside the country. I want numbers. My guess is a big chunk.

Wednesday, January 19, 2011

Don't Miss Out on the Arbitrage Opportunity of the Day

I wanted to alert everyone to the arbitrage opportunity of the day up at Living Social.

Standard economic theory suggests that we should act rationally and have an infinite demand for this product. Alas, 527,980 people, including me, have already acted accordingly.

I'm trying to figure out what's in it for Amazon in this one. I have some theories. A. They must believe that enough people would eventually lose this or forget that they purchased such a card, that they are able to recuperate the 50% subsidy they are giving to people. B. They are using this as some advertising stint to increase future demand for their service. C. This is a scam. Hopefully not.

What other things could they be thinking of?

Full disclosure: If you refer 3 friends, Amazon gives you the card for free. If you click on my link and buy the card, you'd essentially be my referral.

Monday, January 17, 2011

Classic Milton Friedman in Defense of Free Trade, 1971

A very lucid and convincing argument for free trade by one of the more important economists of the last century. Say what you will about laissez faire economics -- believe in it or not -- but this is pretty compelling. This is my first time listening to Friedman, seeing him on screen. What a good speaker.

The Q&A portion about the Japanese subsidizing its steel is gold. Great example. The part when he talks about taking into account not only what is visible but also what is invisible is at the heart what social science is about. Put in another way, one must take note of the indirect as much as the direct effect.

I must mention I got the link from Michael Clemens, who is a great source of this kind of stuff and my source for a lot of things.

Thursday, January 13, 2011

Public Policy as an Experiment

 Dan Ariely blogs about how we should think about public policy.
For instance, in my ideal world, before implementing any public policy—such as No Child Left Behind or a $130 billion tax rebate or a $700 billion bailout for Wall Street—we would first get a panel of experts from different fields to propose their best educated guess as to what approach would achieve the policy’s objectives. Next, instead of implementing the idea proposed by the most vocal or prestigious person in this group, we would conduct a pilot study of the different ideas. Maybe we could take a small state like Rhode Island (or other places interested in participating in such programs) and try a few different approaches for a year or two to see which one works best; we could then confidently adopt the best plan on a large scale. As in all experiments, the volunteering municipalities would end up with some conditions providing worse outcomes than others, but on the plus side there would also be those who would achieve better outcomes, and of course the real benefit of these experiments would be the long-term adoption of better programs for the whole country.
Exactly my sentiments. Public policy is an experiment, which is why we should treat policy as an experiment. This means a) the starting point must be a pilot program or a study with a rigorous evaluation mechanism, before government enacts large scale changes, b) this should allow us to reverse course once we find that something isn't working. After all, not all of our wonderful ideas should work out.

I think about this in the context of the proposed K-12 program in the Philippines, where the government effectively adds 2 years in schooling for everybody. I am fearful about it. It is an untested idea that is proposed to be  implemented in a large scale. What if adding school years does not help at all? We're going to waste valuable resources. Worse, what if the program had unintended harmful effects?

The proposed program is probably backed by some theory that more education leads to better outcomes. But what works in theory does not always work well in practice. The program might not work in the context of Filipino children. The program might deter families from sending their children to school because the time costs of getting an education is higher. I don't know. Who really knows? We will never know unless we run some small scale program and see what the effects are. If it doesn't work, then trash the idea - at least we didn't have to waste resources making it large scale. If it works, then good.

My frustration with the debates surrounding the issue is that people are arguing about the policy based on  theories they have in their heads. The government says it will do some consultations. But the issue will not get resolved this way. My suggestion is: let's try it, see how it plays out in the small scale, and then decide if we should implement it as national policy.

Saturday, January 8, 2011

The Wikipedia List of Common Misconceptions

I spent quite some time going through this fascinating list. Some of my favorites are:

1. There is no medical reason to wait an hour after eating before going swimming. (Sorry dad, you were wrong about this)

2. A popular myth regarding human sexuality is that men think about sex every seven seconds. In reality, there is no scientific way of measuring such a thing and, as far as researchers can tell, this statistic greatly exaggerates the frequency of sexual thoughts. (And women I think, think of sex, just as much)

3. People do not use only ten percent of their brains... [and] until very recently medical experts believed that humans were born with all of the brain cells they would ever have. (Not true and happy to know this. Now I know I can drink much and not worry about losing brain cells)

4. Prolonged exposure to cold weather such as rain or winter conditions does not increase the likelihood of catching a cold. Although common colds are seasonal, with more occurring during winter, experiments so far have failed to produce evidence that short-term exposure to cold weather or direct chilling increases susceptibility to infection, implying that the seasonal variation is instead due to a change in behaviours such as increased time spent indoors close to others. Viruses spread more easily when humidity is low which is the case during wintertime.

5. Barack Obama is not a Muslim.

Where is the section on misconceptions in Economics? Marginal Revolution has a list here but there are probably more interesting ones. Also, misconceptions about the Philippines? I know one -- the Philippines was not - never - second to Japan. What other misconceptions are there?