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Tuesday, December 30, 2014

Every Juan Can Fly

While the public continues to express outrage over Cebu Pacific's mishandling of its holiday operations when 100 flights were delayed on Christmas Eve, today I thought it might be worth reflecting on the bigger picture. After all, it's the end of the year. And while in no way do I wish to defend Cebu Pac, I wish to point out that in fact the Philippines is in the midst of amazing growth in air travel as noted recently by the World Bank's Philippine Development Report.

Air passenger traffic has more than tripled in the past decade from over 8 million passengers in 2005 to almost 30 million in 2013. Yes, that's correct -- tripled. Domestic passengers went from 7.2 million to 20.3 million in the period while international travelers increased from 9.7 million to 17.3 million passengers.1
Source: World Development Indicators

Source: Civil Aeronautics Board

A major development has been that prices have dramatically fallen. Austria (2001) notes that a PAL flight from Manila to Cebu cost around Php 2000 in 1997. That same PAL flight now, if you check online, costs at most Php 2,270 for a February flight. So in real terms, that's a 46% decrease -- the equivalent price in 1997 amounts to Php 3,773 while it now merely costs Php 2,045 in 2010 prices. That tagline "Every Juan Can Fly" is increasingly becoming a reality.

Now I understand the terrible inconvenience Cebu Pacific must have brought on Christmas Eve, especially since many hold Christmas to be the single most important day of the year and Filipinos are known as migrants, living in many places in the country and abroad. I myself had a flight delayed for hours during a similar time last year and remember how I fumed.

But maybe this time we can spare a moment to take in a larger perspective and perhaps even be grateful. Only a few years ago, there would have been nothing to complain about. Many of us would not have had access to flight.

1. Note though that there appears to be some discrepancy over the total numbers reported by the World Bank and the Civil Aeronautics Board. I am in particular suspicious about that dramatic increase in the first figure between 2009-2010 but couldn't pinpoint what it is (a change in reporting methodology?). Nevertheless, the numbers remain astounding.

Friday, October 17, 2014

Do locals even work in the UAE?

As a migration researcher, I make it a point to collect facts and interesting stories about international migration whenever I read about them in academic papers or in the news. You know, in case they come in handy in small talk. I cannot always talk about complicated regressions.

Sometimes some facts still startle me, like this one:

"96% of the total labor force in the UAE" are foreign workers.


"[We estimate] on average migrants [in the UAE] are remitting about 85% of their monthly income"

I mean I know there are a lot of foreign workers in the middle east, but I didn't quite know the magnitude. And I know a lot are remitted. But 85% of one's income? That's large.

These figures come from a new paper by Joseph, Nyarko, and Wang. They have a high frequency dataset with administrative records on income disbursements and remittances home of most migrants who live in the UAE. They try to piece together the motivations for remittances: altruism, consumption, savings, equity, or debt repayment.

Monday, October 13, 2014

Happy Uber Drivers

Economists overwhelmingly agree that Uber improves lives that we just had to try this one firsthand. We are now Uber drivers in this household.

Now please don't worry dear advisor because I am still working on that paper we talked about. But in the meantime last weekend's rate, brought about by real-time supply and demand, was $35 per hour. We kept being reminded through SMS: Go out! Too few drivers. There was a Michigan football game.

Uber, Tinder, Airbnb, Grabtaxi, Jobstreet -- it continues to amaze me how all these applications have made our lives easier. And they do so by having one thing in common: bringing search costs down. Who would have thought so much progress could be made by improving matchmaking between
  1. driver and passenger (Uber, Lyft, Grabtaxi)
  2. male and female (Tinder) or
  3. male and male, female and female (Grinder)
  4. tenant and traveller (Airbnb)
  5. employer and job applicant (Jobstreet, JobsDB)
  6. donors and entrepreneurs (Kickstarter)
  7. seller and buyer (Craigslist, eBay)
I am eager to try what's next.

Saturday, October 11, 2014

Bangladesh's bank robbers

To rob a bank in Bangladesh, no need for guns writes Tahmima Anam in the NYTimes. No need for robbers even. Take out a loan.
...the bigger thieves are hiding in plain sight, and sanctioned by the banks themselves. They are the loan defaulters: people and businesses who borrow money from banks with no intention of repaying the debt. The problem, it seems, is the way Bangladesh’s banking sector is organized. 
...The international standard for loan defaults is currently at about 2 to 3 percent. In Bangladesh, it is over 12 percent. In a recent study conducted by the Bangladesh Institute of Bank Management, the percentage of nonperforming loans in state-run banks is as high as 29 percent. 
...This means that an enormous amount of capital is taken out of the banking system, and banks must compensate for this loss by keeping interest rates high. Currently, Bangladeshi banks’ interest rates range between about 9 percent and 16 percent, while deposits earn between 6 percent and 12 percent.
Such a classic case of adverse selection.

HT to @nancymbirdsall over at twitter.

Friday, October 10, 2014

An even larger force than remittances

Today's TedTalk features Dilip Ratha, talking about the hidden force in today's global economy -- remittances.
Here is a fact that might surprise you: 413 billion dollars, 413 billion dollars was the amount of remittances sent last year by migrants to developing countries. Migrants from developing countries, money sent to developing countries — 413 billion dollars. That's a remarkable number because that is three times the size of the total of development aid money. And yet, you and I, my colleagues in Washington, we endlessly debate and discuss about development aid.
Indeed, there is much to love about remittances apart from the fact that they're massive and have already surpassed foreign aid. As Dilip points out, they act as insurance, usually being sent when unfortunate events occur. We know this in the Philippines, as typhoon after typhoon, we have come to benefit from donations of our brothers and sisters abroad. Remittances are also properly targetted, as opposed to aid or government programs that we sometimes suspect are corrupted. Remittances go straight to the pockets of those who need them, because why else would a household send a member abroad if they did not need additional money?

But in the end, all of this of course might just be the tip of the iceberg. Migrant savings could be massive as well, since migrants do not send back everything. We do not have a great idea on how much migrants bring home, when they do eventually return. And what do they use that money for?

But even if migrants don't return, would that at all be bad? Imagine a world where poor migrants were able to bring their whole families abroad and had no need to send remittances? Migrants could double, even triple, their earning power. There are big gains that could be made. Dilip didn't say, but a friend once remarked, one sure fire way to increase the amount of remittances is for richer countries to allow more poor workers from developing countries to come in.

Remittances are today's hidden force in the global economy. But an even larger hidden force could be international migration.

Wednesday, October 8, 2014

Getting back writing

You may have noticed but I was gone for the past 6 months, though I'm slowly starting to write again. I feel the need for a quick explanation.

I was in the Philippines working on two projects. One was on an experiment about financial education and access to finance among migrant households. The idea is basically that financial education is popular these days, and we are interested in measuring how much it could benefit migrant households, whom many suspect waste their remittances (though please see my view on that claim). You can read a short write-up here.

For a separate project, I also conducted an experiment on Filipino firms, the details of which I do not yet wish to disclose. But the results so far appear exciting and I'm furiously rushing to write that paper. I'm due for a short presentation this November here at Michigan. I'm hoping this could be the final key to unlocking that PhD.

So I haven't been reading much, which is a shame. And as a result, I haven't been writing much. Nor posting on twitter or any sort of social media. I operated on blinders just trying to make the most of my time back in Manila.

I'm slowly starting to get back to the rhythm of posting every now and then, and looking to learn from all of you.

Monday, October 6, 2014

No Left Turn

In a move that they probably hoped would ease the flow of traffic, the government decided to implement a no left turn at the junction of Kamias Rd and Kalayaan Ave. As I was weaving through traffic one day, traffic enforcers camped at the side looking to catch violating drivers. But what I noticed was that cars instead drove straight through, made a U-turn nearby, and went back to the intersection to turn right. It amazed me, and perhaps it shouldn't have been. People are smart. And the no left turn was effectively undone.

Sometime in the 1990s, Metro Manila instituted a number coding scheme for cars. Cars were barred from being on the road on particular days depending on their plate number's last digit. That way, there would be less cars on the road to congest the city. But had it worked? I have heard of many anecdotes of "smart" consumer behavior: People switching plate numbers on particular days; people buying fake stethoscopes for exemption from the scheme to pretend to be doctors (as doctors are exempt when they are on call); and the rich just buying new cars. The policy has never been comprehensively evaluated as far as I know. But research on a similar policy implemented in Mexico City provides disheartening news. The scheme increased car consumption. People are smart.

It is a common story that I believe plagues many of our traffic rules in the city. So Manila bans trucks. Did we really expect trucks to simply disappear? Trucks would go elsewhere and traffic too.

As I leave Manila after 8 months, I share the despair of many that the traffic situation has gotten worse. I don't know and am unqualified anyway to offer any good solution. But one thing I know is we will need smarter policy. Policy which will be able to take into account unintended effects. And policy which will be able to outsmart smart people.

Monday, September 29, 2014

Mexico's Corruptour

On fighting corruption, a Mexican NGO has a creative response:
City tours are seldom so scandalous. But the newly formed “Corruptour” takes tourists in an open-air Blue Bird school bus to local landmarks allegedly associated with corruption in this industrial city — such as the burned-out remains of the Casino Royale.  
The casino was doused with gasoline and torched by Los Zetas gang members in August 2011 after its owners didn’t pay protection money. Fifty-two customers and employees were killed, unable to escape as emergency exits were blocked by slot machines.  
The brother of the then-mayor of Monterrey was subsequently spotted in security tapes released by the Reforma newspaper collecting cash from three casinos — which his lawyer called winnings and payments for products from his native Oaxaca state, such as string cheese.  
...Corruptour is trying to highlight the crime, corruption and political shenanigans. “On the tour we can give (people) an explanation on what has happened in different government agencies that have their buildings in the city centre and these places that have become icons of tragedy such as the Casino Royale,” Trevino says. “We tell them there: ‘This has its origin in corruption.’” 
With its blue bus, horror-flick logo and pictures of politicians depicted as pigs, the tour cuts a controversial course through Monterrey most weekends.
A group did something similar here in Manila during the 2010 elections, where they tried to expose public officials who used government infrastructure to campaign. Does shaming corrupt public officials reduce corruption? It could be tough, given as many think corrupt officials are already without shame.

Wednesday, September 24, 2014

What Anthony Bourdain teaches

Fastcompany does a rather lengthy feature of Anthony Bourdain and tries to explain why his food show has come to captivate viewers.

It's got me thinking more about what development writers -- academics, economists, journalists, researchers -- should perhaps strive for every time they report about the poor and underprivileged.
Forget about four-star hotels or luxury spa treatments: Bourdain is on a mission to illuminate underappreciated and misunderstood cultures, whether it's Myanmar or Detroit. He regularly takes viewers to the sorts of places--Libya, Gaza, Congo--that most Americans know only from grim headlines about political strife and body counts. Bourdain does all of this with vivid narrative reporting, stunning visuals, palpable empathy, and a relentlessly open mind... 
"We show up and say, 'What's to eat? What makes you happy?'" Bourdain says. "You're going to get very Technicolor, very deep, very complicated answers to those questions. I'm not a Middle East expert. I'm not an Africa expert. I'm not a foreign-policy wonk. But I see aspects of these countries that regular journalists don't. If we have a role, it's to put a face on people who you might not otherwise have seen or cared about."
I like that, a relentlessly open mind. Because the moment you start asking why people have a hard time getting out of poverty, you get very Technicolor, very deep, and very complicated answers.

I maintain that one of the best things that randomized control trials has ever done to development economics is that it's gotten economists out of their desks and into the field.

Tuesday, March 11, 2014

Kyoto, the City Saved by a Honeymoon?

Kyoto was on the list of cities to be bombed, together with Hiroshima, during WWII. I had not known when I visited just a few days ago. It was, in fact, target number one.

The Target Committee had deemed Kyoto as a prime target because dropping the atomic bomb on the city would have produced maximum psychological damage. The minutes of the committee's second meeting, preserved here, is chilling:
(1) Kyoto - This target is an urban industrial area with a population of 1,000,000. It is the former capital of Japan and many people and industries are now being moved there as other areas are being destroyed. From the psychological point of view there is the advantage that Kyoto is an intellectual center for Japan and the people there are more apt to appreciate the significance of such a weapon as the gadget. (Classified as an AA Target)
Story has it that Kyoto would have been destroyed, had it not been for Henry Stimson, US Secretary of War. You see, he had visited Kyoto, enroute to the Philippines, and loved the city so much he later held his honeymoon there. Some say that it was because of this connection, established while traveling, that he eventually objected so heavily to its destruction. And Kyoto got spared.

It's hard to care about places you've never been, and correspondingly, to peoples you've never met. And for this reason -- even for only this reason -- I wish I, and more people, could travel more.

In the meantime, at least I got to enjoy the mystical streets of Kyoto with fellow grad students for spring break. I took this beautiful photo below. So many were walking around in colorful kimonos. Those far down the street appear to be geishas. It's strange to realize, had history run a slightly different course, that many of these sights I saw would have been lost.

It is indeed a lovely city.

HT: Nitya for the story.

Thursday, February 27, 2014

What do the People Say they Want (from probably the largest global survey ever)?

Survey says, overwhelmingly, a good quality education. Better healthcare is number 2, followed up by better job opportunities. But last on the list is, action on climate change.

The Washington Post reports on real-time results from an ongoing survey by the UN that is answered by over 1.4 million people over the world. The data is accessible here. Play around with it; it's pretty cool.

I've always seen the problem of climate change as the same problem of why the common room in shared apartments is always the dirtiest. The tenants are aware of it, even despise it, but nobody wants to start cleaning up because the costs of doing so are private, while the benefits are shared by all. And so is it with climate change: cleaning up entails costs whose benefits are probably realized far in the future when the present generation is dead. Unilateral action by countries to tackle climate change entails costs, while the benefits are shared by all.

Now if only there was such a thing as a world government... The world is in need of global citizens.

HT to Ian Thorpe, @ithorpe.

Tuesday, February 25, 2014

In case you've missed it, the Philippine Government has recently launched, a web portal that holds government datasets, making them easily available to the public. It is one of my favorite new initiatives of this administration - a testimony to transparency, open government, and participatory governance. While the site still needs more content, I can only hope that in the coming months, many can make use of the data that's already available, not only to generate cute infographics, but hopefully to produce high-quality analytic work that is helpful to governance. I often criticize the government, but I believe it deserves applause in this case, for starting something fresh and promising.

Original Image from Open Data Philippines' Facebook Page

In the meantime, I've been mulling over about why we haven't seen quite the same movement take-off for civil society: NGOs, think tanks, and news organizations. It was civil society that was active in calling the government to become more transparent, and they are even now mostly behind the push for the passage of the Freedom of Information Act, and yet, it remains difficult to obtain data from this very sector. Shouldn't we soon also push for a movement like

Typhoon Haiyan makes the case for civil sector transparency more readily apparent. When the storm hit, the government immediately launched FAiTH, the Foreign Aid Transparency Hub, to track foreign government donations. You can see from the site that there was a total of $551 million dollars pledged. But what you can't see is how this money was actually spent, and when. Most of this money went to NGOs. But there is no easily accessible site where you can find how their work is going and how they have spent (or haven't spent) the funds. Some organizations were diligent early on in providing updates, like Ayala Foundation. But it seems this hasn't continued. If you wanted to get data, you had to contact each organization one by one, most of whom fail to reply. I know, because I tried.

A few years ago, I had the unfortunate experience of trying to obtain data. An organization, which shall remain unnamed, had published an excellent investigative piece on the political economy of how government was distributing funds. So I requested for their raw data to replicate the analysis and see if I could add insights. Access denied. They said they were protective of the data, given that their research assistants had worked hard to obtain it. It's best, they said, that I collect the same data myself. Now I concede this is reasonable, and I do not wish to generalize much from this personal experience, but it has since left me wondering about why civil society, who should lean towards providing public goods, has been reluctant to become more open, while they call on government to become more so.

Must we not also push for civil society to become more open with their data? Some will say that it costs resources to do this. Others will be reluctant because why should they release data that they could potentially be criticized about? But these obstacles have not been an excuse for the government in its recent push for greater transparency. I salute them.

Data is the next great public good, and there has been an increased movement around the world towards openness. I hope we realize it is not only government that should provide it. The next big movement should be about

Tuesday, February 18, 2014


Imagine if your physician said to you one day, upon diagnosing you had a common cold, that what you need is to bleed. Perhaps a liter of blood would do the trick, he says, or maybe more. You'd be repulsed, wouldn't you? You'd never return to this quack again.

But had this been the recent past, you might have been more receptive. Bloodletting, after all, persisted right up until the early 1900s. It was common treatment for almost all medical ailments. Barbers bled you -- hence those red-and-white poles that have come to signify barber shops. They opened your veins using sharp instruments called lancets. If you were lucky, they used leeches. The practice was so widespread, the French imported 40 million leeches a year in the 1830s for medicinal purposes.

It is well known today that bloodletting is ineffective and in many cases harmful to patients, but it took around 2000 years to discover it. Reading about the old practice today is cringe-inducing. Physicians brought suffering, when they thought they were doing good.

I have often been asked by old friends, since arriving from abroad, what it is exactly that I research as a graduate student, and I often like to start my explanation with bloodletting. Around 1835, Pierre-Charles-Alexandre Louis decided to evaluate the merits of bloodletting. He looked at 77 patients with a case of pneumonia and divided them into two groups: those who were bled 1-4 days after illness and those who were bled late, 5-9 days after. It was important that both groups were as comparable as possible, and were of the same age. He applied statistical analysis to compare outcomes between both groups. And his results were, as he remarked then, "startling and apparently absurd." It seems that bloodletting did not decrease, but increased mortality. 44% of those who bled early died, while only 25% for those who bled late did. Below is his wonderful figure reproduced, which I've taken from the internet:

Today, drugs in the US can no longer be legally sold without having been subjected to clinical trials that establish them to be safe and effective. Evidence plays a critical role.

In the field of development and public policy though, the careful evaluation of programs and policies is now only becoming more commonplace (but mostly with NGOs and not governments). It is an exciting development. Although I doubt that there are many "bloodletting" programs out there, it is not obvious which ones are ineffective and wasteful of resources. The job is to discover these and understand how to make them better. It is an endeavor I find great importance in, and try to contribute to, as a graduate student.

Thursday, February 6, 2014

Why are Remittances Primarily Consumed, Not Invested?

It is a concern that dominates the migration research agenda, but I hear it too often with practitioners as well: migrant households do not spend their remittances well; they consume rather than invest. Hence, we should conduct financial training and entrepreneurship programs.

Michael Clemens and Timothy Ogden points out in a new paper why such assertions could be flawed:
It should not surprise anyone that migrant households do not tend to invest most of their remittances. Overseas work is often attractive precisely to those households that lack profitable investment opportunities at home (Basok 2000; Clemens and Tiongson 2012). ...
... If households are investing in migration, most of them have assessed the benefits and costs of that investment relative to other investments they could make—and determined that migration is superior to most other options. The surprise would be to see migrant households investing massively in assets other than the asset of having family members abroad, since they have already made big sacrifices to invest in migration, revealing that it is one of their best options—at least until the migration investment option is already exploited. ...
... Second, there is extremely little evidence that remittances are less likely to be invested than any other kind of income. If we want to know why most remittances are not invested, we need to ask why most income is not invested, that is, why there are few investment opportunities at the origin. This question is more difficult but vastly more useful.
I had the pleasure of speaking to Michael about this a few years back. I can still remember his striking analogy: if migration is indeed an investment, then why is our first reaction always to ask why its returns are not invested? Hasn't the investment been already made? It is similar to asking an investor who earns a killing from his stock market portfolio why he uses his money primarily to eat better food and buy better clothes. It would be strange to accuse him of not investing his returns in other stocks or of not starting a new business. He is probably already choosing his best investment available. So he buys a watch or a fancier cellphone. Who are we to say there's a better investment and he is making all but the wrong choices?

We should ask instead why other forms of investment opportunities are limited. And this is not simply the fault of wrong choices on the part of migrants.

There is of course probably more to it. Incidentally, I am pondering on this while I myself am involved in an evaluation of a financial training program, aimed at helping migrant households spend better. I hope to get the bigger picture.

Wednesday, January 29, 2014

Philippine Visitors are Integral to Hong Kong's Economy... Maybe Not.

In recent news, Hong Kong cancels visa free access to all Filipino government officials and diplomats for failure to issue a formal apology about the deadly hostage taking that took place in 2010. It could be worse, but it seems that they are threatening to do more.

When I talk to friends about the possibility that HK would eventually scrap visa free access to all Filipinos, most of them scoff at the idea. The Philippines is such an integral part of Hong Kong's economy, they say. And many Filipino visitors would just go to another country and spend their money elsewhere. They would never do that. This seemed plausible, given that I myself had gone to HK several times to shop and spend. But I decided to check the data anyway and figure out how crucial Philippine tourism actually is to HK. I found that perhaps not very much.

Below is a pie chart of total arrivals in HK in 2013 by country of origin. Out of 54 million visitors to Hong Kong, only 705 thousand are Filipinos. That is a measly 1%. On the other hand, tourists from mainland China made up 75%.

Neither are these numbers particularly changed, when you exclude Chinese tourists. Filipino tourists only make up 5% of total arrivals to HK.

Meanwhile, what I can say is, it seems somewhat irresponsible of the Philippine government if it continues to refuse issuing a formal apology that would put a stop to needless sanctions. As I understand it, this is all HK is asking for. It costs nothing, except perhaps the pride of our politicians. No, apologizing does not mean we will always be obsequious to HK or to China, as some argue. This is quite the slippery slope argument anyway. 

An apology is not a sign of weakness. On the contrary, it is a sign of responsible leadership.

[The data source for the charts above are from Hong Kong's Tourism Board]

Thursday, January 16, 2014

A History of Destructive Typhoons in the Philippines: 1930-2013

When Typhoon Haiyan struck, the skeptic that I am hesitated to believe what news outlets reported about the event. It was an emotional time and many sounded sensational. Was it in fact the most disastrous typhoon ever to hit the Philippines? Are extreme weather events indeed increasing in this country? Where was the evidence?

Today, three months late, I have looked at the data. The source is the OFDA/CRED International Disaster Database ( hosted by Universit√© catholique de Louvain. It records natural disasters defined under 4 criteria. I focus on typhoons and floods that have afflicted the Philippines from 1930 to the end of the data, September 2013. Thus, while Haiyan has not yet been entered in the dataset, I include it under the assumption that it killed ~6000 and affected 15M according to the UNFPA.

The results are below. My questions answered in 3 graphs:

Before anyone claims the above as definitive evidence of climate change though, I offer two caveats. Could the increasing incidence of typhoons reflect better capabilities over time to record natural calamities? I am unsure and unfortunately have not read enough about the data to judge. But there appear to be a significant number of zeros and missing data that occur prior to 1963, so I want to caution readers about this limitation. Next, that natural disasters increase in occurrence could merely be a function of population. Over time, more people are hit by typhoons because there are simply more people. Nevertheless, the data does seem to show that the Philippines is subject to greater risk over time. I am interested in reading further analysis on the topic.