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Tuesday, January 31, 2012

The Pay Per Tweet

This one's from James Choi's blog, which is a delight to follow.
The weirdest thing about the rumor that Kim Kardashian gets paid $10,000 for a Twitter endorsement is that it’s true. ...  
The pay rate for endorsing companies like Old Navy, Toyota, Best Buy, and American Airlines is determined by the size of a celeb’s following and how that group responds to his tweets with shares and retweets. On that sliding scale, Snoop Dogg (6.3 million followers) is in the top tier of payments, on the upside of $8,000 apiece, while Paula Abdul (2.2 million followers) falls somewhere in the middle, in the $5,000-each range, and Whitney Port (800,000 followers) falls in the bottom tier, making around $2,500 per tweet. But there are outliers.
When introduced self-destructing Charlie Sheen to Twitter, he was paid about $50,000 per tweet. ...
Of course Charlie didn’t write those tweets himself. No celebrity does. Instead, they’re composed by hungry young tweet ghostwriters whose job it is to broadcast a celebrity’s voice in 140 characters.
We all get riled up about how high bankers get paid, but how come I've never heard of anyone complain about celebrities and basketball stars?

Do we believe people are paid their productivities? Standard models in economics say that people are, given the usual assumptions of perfect information, no market power, etc. If we don't believe people are paid what their worth, what is it that doesn't hold?

Sunday, January 29, 2012

Digicams Reduce Election Fraud in Afghanistan

An interesting new paper by Michael Callen at UCSD:
Elections in developing countries commonly fail to deliver accountability because of manipulation, often involving collusion between corrupt election officials and political candidates. We report the results of an experimental evaluation of Quick Count Photo Capture---a monitoring technology designed to detect the illegal sale of votes by corrupt election officials to candidates---carried out in 471 polling centers across Afghanistan during the 2010 parliamentary elections. The intervention reduced vote counts by 25% for the candidate most likely to be buying votes and reduced the stealing of election materials by about 60%.
Link from the Center for Global Development. Wish I was still working there so that I could attend this event.

Lessons for the Philippines?

Wednesday, January 25, 2012

How Much is a Year of School Worth?

Ah yes. No other topic in the field has launched a thousand regressions -- the theme of my last two weeks.  For some reason, my labor and development class have separately arrived at this topic at the same time without any coordination. How much does an additional year of school increase a person's income, holding everything else constant? That is, what is the returns to education?

Estimates vary but it's around 7% for the US. That is, an additional year of schooling increases earnings by 7% on average. The number is higher for developing countries. In Brazil, it's over 10%, according to a paper we were just discussing by Lam and Schoeni (Lam is my professor). Psacharopoulos pegs it at 11.2% for low income countries and 11.7% for lower middle income countries like the Philippines. He has a nice paper comparing the rate of returns in different places here.

Interestingly, Duflo provides evidence (in a really nifty paper [I can't link to the published version]) that the estimates are probably overstated. She makes use of a large scale increase in school construction in Indonesia as a policy experiment. Nonetheless she finds a rate of return in the range of 6.8-10.6%.

I'm wondering whether anyone has done work estimating it lately for the Philippines. This one's quite dated. I assume it could be tricky given that educated people have a higher unemployment rate than less educated ones. Plus, international migration is nontrivial.

As for me, I am personally left to reflect on the question, what is the rate of return I get from getting a PhD? I have a sinking feeling it's very small. It doesn't matter. I have other things I maximize on.

Tuesday, January 24, 2012

Are Institutions Insignificant?

Or in other words, is President Aquino's emphasis on "kung walang corrupt, walang mahirap" overstated? Francis Fukuyama weighs in:
Over the past decade the mantra in both development studies and comparative politics has been “institutions matter”—that is, you aren’t going to get economic growth or other human development objectives in the absence of institutions like rule of law, transparent and accountable governments, low levels of corruption, and the like. 
The empirical basis for this assertion is actually much weaker than many of us would like to think, however. Plenty of countries, beginning with China, have grown very rapidly over the past generation in the absence of what is now called “good governance.” Indeed, the US and Britain charted the industrial revolution with governments that were substantially more corrupt and less capable than they are today. 
...The Bank of England became independent only in 1998; there is no British constitutional court and therefore no judicial checks on legislative power; not just 2/3s but a fifty percent plus one majority in the House of Commons is sufficient to overturn any law in the land, including any protecting England’s fabled press freedoms.
Whenever I read articles like this, I wonder -- what exactly do people mean when they say "institutions"? Do we know what it is? How do we measure it?

Perhaps the very reason there is scant empirical evidence on the effect of good institutions on development is because it is simply poorly defined, or people just can't agree on what it means and therefore talk over each other's heads. Fukuyama here rebuts by presenting himself, scant empirical evidence.

I do suspect sometimes that we what we mean by "institutions" is simply everything else that we can't explain or understand -- that is, the residual. Any thoughts on this from someone more knowledgeable?

Friday, January 20, 2012

The Twitter Democracy that is Sweden

And here you thought the Philippines' "More Fun in the Philippines" campaign topped them all.
In December, officials from the country's tourism board decided that they would hand over the reins of their @sweden Twitter account to a different citizen each week.  
So far, the project, which has been called "the world's most democratic Twitter account," has featured tweets from a female priest, an advertising executive and an organic sheep farmer, Reuters reported.  
This week, Sweden's tweets are from Hanna, "just your average lesbian truck driver."
"Gosh, I really enjoy being @sweden," tweeted Hanna. "They'll have to grab the account out of my dying hands.
I like the Swedes more and more. Open, diverse, and democratic, But I wonder how they fare on migration policy.

Hat tip to Marginal Revolution. The full article is from Global Post.

Wednesday, January 18, 2012

Are CCTs encouraging poor children to attend terrible schools?

In case you've missed it, Lant Pritchett and Berk Ozler have been going at it in the blogosphere on conditional cash transfers (CCTs). Here's the first post with Pritchett questioning whether CCTs raise enrollment but force poor children into terrible schools.
Take Uttar Pradesh in 2010. By the end of lower primary school (grade 5) only one in four children could divide. Even by grade 8, the end of upper primary only 56 percent could. Similarly, by grade 5 only 44 percent could read a level 2 paragraph and by grade 8 still only 77.6 could. A large plurality of children, even of those that had persisted and been promoted through eight full grades or primary school—roughly 8000 hours of available total instruction—were either illiterate or innumerate or both...
Suppose you are a child from a poor household approaching adolescence in Uttar Pradesh who has struggled through years of schooling without learning anything, been promoted from year to year with no attention to your actual learning, perhaps even regularly beaten or threatened by teachers. You might consider dropping out of this “fierce” thing called school. 
But wait. The development technocracy with its latest rigorous research methods and can-do, expansion of “what works” attitude has the solution to your drop-out problem: they will threaten your mother. This is a wildly new popular class of programs called “conditional cash transfers” which has spread from its origins in Mexico and Brazil to over 30 countries.
Also, have economists got themselves confused about the "conditional" on  "conditional cash transfers?" Berk Ozler provides an excellent reply.

What are the learning effects of CCTs, aside from their enrollment effects? It does seem that this is a good research question to pursue moving forward. For now, I am a bit sympathetic to Ozler's argument but only because Pritchett's claim needs more evidence aside from an anecdote.

Ah, if only these sort of fierce debates also appeared in our politics. This Corona impeachment is a historical event for our country but how I wish we also debated our social programs/policies with as much gusto and careful presentation of evidence and analysis.

Wednesday, January 11, 2012

Intelligence is irrelevant

The people who fail to graduate from MIT, fail because they come in, encounter problems that are harder than anything they’ve had to do before, and not knowing how to look for help or how to go about wrestling those problems, burn out. 
The students who are successful, by contrast, look at that challenge, wrestle with feelings of inadequacy and stupidity, and then begin to take steps hiking that mountain, knowing that bruised pride is a small price to pay for getting to see the view from the top. They ask for help, they acknowledge their inadequacies. They don’t blame their lack of intelligence, they blame their lack of motivation. 
During my freshman year, I almost failed out of differential equations. I was able to recover and go on to be very successful in my studies. When I was a senior, I would sit down with the freshmen in my dorm and show them the same things that had been shown to me, and I would watch them struggle with the same feelings, and overcome them. By the time I graduated MIT, I had become the person I looked up to when I first got in. 
You feel like you are burnt out or that you are on the verge of burning out, but in reality you are on the verge of deciding whether or not you will burn out. It’s scary to acknowledge that it’s a decision because it puts the onus on you to to do something about it, but it’s empowering because it means there is something you can do about it. 
So do it.
I got this from a post by Ben Casnocha. It's apparently from a Reddit thread of a HS student asking for advice about applying to MIT.

Monday, January 9, 2012

India became poorer because it had become richer?

Paradoxically, one of the main reasons that India (and the rest of the world) became poorer was because India had grown less poor.
That is Angus Deaton in his presidential address at the 2010 AEA meetings critiquing the recent revisions to the international poverty line that moved it from $1 per day to $1.25 per day. The change increased the number of poor people by half a billion people.

The international poverty line is calculated by averaging the national poverty lines of the 15 most poor countries. India used to be in this group. But when it became richer, it graduated from this group, raising the poverty line.

I am studying this incredibly complicated business of trying to count the global poor. It seems like a dry topic but it surprises me how there are still many debates even about such a basic issue of counting. It is important of course that we continue to talk about this: we usually cannot change what we cannot count very well.

I am turning sympathetic to Deaton's case that maybe we should just ask people if they think they're poor.

Sunday, January 8, 2012

Do Children Choose Rationally?

As we delve into utility theory for our next class, my intermediate micro students are asked to reflect upon this wonderful 2001 paper by Harbaugh et al. in the AER exploring one of the most central arguments in economics. Do people actually behave rationally? Do children?
In this paper we report on the results of an experiment that tests whether children make rational choices about consumption goods. We studied 7- and 11-year-old children and, for comparison, college undergraduates. The experiment tests variations on what might be seen as the most basic requirement for rationality, namely that choices must obey transitivity. If a person picks A when given a choice between A than B, and B when given a choice between B and C, then barring indifference rationality requires that he must pick A when given a choice between A and C. We also examine how rationality, as measured by several different tests of transitivity and by a simple measure of the size of the violations, changes with age and mathematical ability.
...We presented our participants with 11 different choice sets. Each choice set was a list of between three and seven bundles, with each bundle consisting of a number of small bags of potato chips and a number of boxes of fruit juice. We used goods that would typically be consumed quickly because we wanted as little possible interaction between decisions in the experiment and outside influences...
...Using this experiment, we find that at age 7 children's choices about consumption goods show clear evidence of rationality, though also many inconsistencies. By age 11, choices by children with below-average mathematical ability are as rational as choices by adults with above-average intelligence, although even these adults' choices show many inconsistencies. Based on our results, we conclude that, to the extent the assumption of utility maximization is useful for modeling choice behavior by adults, it is also appropriate for children...
The most common critique I still hear against economics is that economists assume away irrationality. Our models are inappropriate, divorced from reality. Although this may hold some truth, I argue that assuming rationality is still the baseline case to consider. Inasmuch as physics benefits from first analyzing a frictionless world, social science benefits from first looking at the ideal case and then putting in place certain imperfections.

Also, there is now a whole subfield in the profession devoted to exploring what happens when people act irrationality.

Thursday, January 5, 2012

More Fun in the Philippines

The new slogan doesn't particularly strike me, but the campaign seems promising, especially if it is able to utilize social media effectively, as it looks poised to do (I hope it does!). You can almost imagine the website being highly interactive, where tourists can post their Philippine adventures and locals can give tips -- a virtual place to meet up.

Here's the link to the website #itsmorefuninthephilippines

I did my part today during the first day of classes by introducing myself to my students as a native Filipino who grew up in the country where the legendary Manny Pacquiao hails. This generated reactions from Floyd Mayweather fans, as expected. But I did promote the Philippines as a wonderful country to visit.

There are over 9 million Filipinos overseas - 10% of our population. These folks make the most natural ambassadors to potential tourists in the country. The challenge lies in how to mobilize this group to get their friends, their friends' friends, to take another look at the Philippines,

I hope those at tourism can make use of them, us, somehow.