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Thursday, July 30, 2015

Words are Cheap? Then Make Them Costly

A lot of times, it is difficult to credibly convey information. If you want to marry someone, for example, it might be hard to be taken seriously if you simply ask without an engagement ring. You may really, really want to work for a particular firm, but writing it down on the cover letter won't be believable, just because every other job applicant does the same.

The chief problem is that words are cheap. In economics, this is referred to as the signaling problem: if signals are cheap, then they become noise.

So let me just marvel a little bit about this solution by the American Economics Association for the job market in economics. I'm getting more excited because I'm participating next January. The AEA's solution is to make signals costly by limiting the number of signals you can send to employers to two:

In mid-November, each registered JOE candidate on the economics job market will have the opportunity to register and designate no more than two departments (or other employers) to whom to send a signal of particular interest. The AEA will transmit these signals to the departments the candidates choose. (Signals will not be made public.) Employers do not need to do anything to register to receive signals; signals will be sent automatically to the email address provided at the time the JOE listing was submitted.

The idea is to improve match quality. If employers receive a signal, then they will know for sure that you are interested in them because it was costly for you to send one of your two signals.

If you think about it, this serves the same function as an engagement ring. Part of the reason why engagement rings work is that they cost a lot.

I do wonder however why we haven't quite seen the same feature in similar settings like job websites. It does seem like employers can benefit in some manner from getting better signals from applicants. Or in dating apps like Tinder. Wouldn't matches be better if swiping right on a person could only be done once for a period of time?

Friday, July 24, 2015

A Test of Topic Sentences

A wise investment our economics department made this summer was to hire a writing consultant. So for one full week a consultant helped PhD students improve on drafts of our job market papers. I thought this was genius since right up there on the list of valuable things they do not teach you in grad school is how to write well, and most of what you end up doing as a student is in fact writing, not analyzing.

I wanted to share one of the cool things I learned in the process and that is to make sure topic sentences capture the main point of paragraphs. If a topic sentence is currently not working out, then sometimes it's just a matter of using your second sentence as your first, or reordering phrases within a paragraph. Regardless, you will have to make it easy for readers to skim. Otherwise, you will easily lose attention.

If topic sentences are well constructed, then one test is to see whether you can make a coherent paragraph out of them. Consider this paragraph for example taken from a famous paper by Mankiw, Romer, and Weil

This paper takes Robert Solow seriously. The paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Yet all is not right for the Solow model. We therefore augment the Solow model by including accumulation of human as well as physical capital. To test the augmented Solow model, we include a proxy for human-capital accumulation as an additional explanatory variable in our cross-country regressions. After developing and testing the augmented Solow model, we examine an issue that has received much attention in recent years: the failure of countries to converge in per capita income. Finally, we discuss the predictions of the Solow model for international variation in rates of return and for capital movements. Overall, the findings reported in this paper cast doubt on the recent trend among economists to dismiss the Solow growth model in favor of endogenous-growth models that assume constant or increasing returns to scale.
It reads smoothly and it's actually a paragraph made entirely of topic sentences from the introduction. It summarizes the whole paper.

To be sure, this is probably something I should have already learned in middle school. But I've found that keeping this in mind has improved my writing of my job market paper tenfold.

In case anyone is curious, our writing consultant was Varanya Chaubey. Highly recommended.

Monday, July 20, 2015

Peruvian Japanese Nikkei

Peru has a history of Japanese immigration. Starting in the early 1900s, several waves of poor Japanese laborers emigrated in search of work to this land "full of gold" that had a mild climate and rich soil.

Today, the influence of Japanese immigration in Peruvian culture is still felt most especially in the country's food. It has given birth to a cuisine known as Nikkei, a fusion of Peruvian and Japanese, which has become a gastronomic sensation in Europe, or so they say. I had never heard of it.

Of course, the wife and I had to have a sample on our recent trip to Lima. On a friend's tip, we went to Osaka, where we tried some of the most unique and memorable dishes we've had for a while: ceviche with raw tuna, lime, and cilantro; sushi with crunchy bits of quinoa; then nigiri coated with butter and bits of truffle (okay, maybe this last one isn't exactly Peruvian), and others. But I've found there's truth in the way wikipedia puts it: the flavors brought "together the best of the elegant and delicate cuisine of Japan with the freshness and spicy punch of Peru."

I kept thinking about how people fear immigration might lead to some cultural deterioration. Well does it? There's nothing scientific about the above observations. However, Nikkei is yet another example to me, that if food is any evidence, immigration leads to anything but cultural deterioration.

Thursday, July 16, 2015

(Mis)accounting for the Brain Drain

Brain drain is often measured by counting the number of educated individuals living outside their country of birth. Such is the basis of the widely used Docquier and Marfoulk database, which calculates the rate of brain drain for each country. The database casts international migration in a poor light. One might be alarmed, for example, to learn that brain drain in Ghana is 44.7% of the total number of tertiary educated individuals born in the country.

Migrant-sending countries view international migration often with significant unease because of brain drain. The argument is that they lose out too much on human capital that they had paid to train. But what if, contrary to current assumptions, many individuals acquire their education after they migrate. Then such widely cited brain drain numbers overestimate the brain drain.

I like this new paper by Ozden and Philipps which brings to light precisely this issue. They make use of administrative data on all doctors in the US which lists an African country as a place of birth. One nice feature of the dataset is that it allows to distinguish between where an individual was born and where they were trained.

We find that almost half of African-born doctors were trained outside their birth country. On the flip side, around 15 percent of all doctors trained in Africa were actually born outside the continent. There is significant variation across countries in terms of age of migration levels, implying that many African doctors migrate after years of service and that their human capital is not completely lost to their birth countries. In short, global labor and education markets for high-skilled professionals are integrated in more nuanced and thought-provoking ways than assumed in the literature.

If anything, it's probably time to rethink our standard measure of the brain drain, and even gather better data on it.

Or perhaps, even question the very concept and usage of the term. Here's Michael Clemens for instance on why we should probably start avoiding using the pejorative "brain drain" in favor of a more neutral term like "skill flow." My favorite quote: "picture reading a journal article on female labor force participation that calls it the “family abandonment rate.”

Sunday, July 12, 2015

The Clinton Cool

The National Geographic channel yesterday featured the 90's. It was the perfect show to reminisce: they were going down their list of 5-6 events that defined the decade and I was trying to play the game to see how many matched my own list.

So when they started talking about Bill Clinton, I thought they would certainly feature the Lewinsky scandal. Instead, they highlighted his appearance on the Arsenio Hall talk show. I might have been too young to remember it.

Apparently, Clinton was then struggling with his presidential candidacy - he was being accused of smoking marijuana as a student. So his campaign team had this unusual idea to go with the notoriety and feature him in a late night talk show. Now this was at a time when it was uncommon for presidentiables to do this.

Here's that video of him on the show, playing "Heartbreak Hotel" on the saxophone. He wore Ray-ban shades.

Some say this was the moment he won the election. After this appearance, he surged in the polls by around 23%, catapulting him ahead of Bush.

Tuesday, July 7, 2015

On Key Moments that Precipitate Social Change

In case you missed it, a cool graph from Bloomberg Business depicting the speed with which Americans changed their minds on key issues: from interracial marriage, prohibition, women's suffrage, and most recently, same-sex marriage.

For change to occur, it appears that a triggering event is crucial, or at least some form of critical mass needs to develop. It's an interesting social theory, if it holds. I do remember that in the Philippines, the assassination of Ninoy Aquino precipitated the fall of Marcos' dictatorial regime and led to People Power.

I do suspect some counter-examples to this one though, since these appear to be select instances. For instance, I wonder about what this graph looks like for gun laws.

Then there's the more interesting question, why do some social movements fail to take off?