Leaders as Readers

Macgregor Duncan and I have a piece out today in the Australian Literary Review, looking at what Australian politicians should and do read. Full text here, and results from our survey of federal politicians here. We had a lot of fun writing the piece (which ranges afield from my usual economics research), so I hope you’ll enjoy it.

We didn’t do as much as one could with the full dataset of pollies’ responses, so part of the reason for posting all our survey responses is the hope that others might analyse them a little further.

Update: John Birmingham reckons some of our pollies might have been stretching the truth a little.

Posted in Australian Politics | 4 Comments

Do Redistributive State Taxes Reduce Inequality?

A few years ago, I did some work on the impact of progressive taxes at the state level (in the US). There’s a theory around that high-income workers flee progressive taxes, and therefore that they have no effect on post-tax inequality (because firms are effectively compelled to raise pre-tax wages in response). My research found no such effects – suggesting that US states could safely make their taxes more progressive without the rich threatening to move interstate. I’m pleased to see that it’s had some effect on the policy debate too – a mention in a CBPP report, which has now been picked up in evidence to the US House of Reps Committee on Finance arguing in favour of more progressive taxes in Hawaii. As an academic, you get resigned to seeing work hit the dustbin, so it’s a pleasant fillup when it makes a difference.

Posted in Inequality, Tax | 3 Comments

Mind the Gap?

My AFR op-ed today is on the economics and philosophy of inequality. Full text over the fold. I’ve hyperlinked the cited studies. Two others that I can also heartily recommend are a paper by Gary Burtless & Christopher Jencks, and another by Christopher Jencks in Daedalus.

Continue reading

Posted in Economics of Education, Inequality, Low Wage Work | 8 Comments

’Grist and the Guys in the Gong

On 20 April, Peter Siminski (University of Wollongong) is hosting a workshop on ‘Frontiers in Human Capital Research’ on 20th of April, featuring Josh Angrist (MIT) as the keynote speaker. Here’s the program.

Posted in Coming Events

Leaders as Readers (prequel)

Macgregor Duncan and I have written a piece on politicians’ reading habits, which will be out in the Australian Literary Review on Wednesday (at which point I’ll post the full spreadsheet of results on my academic website). In the meantime, ALR editor Stephen Romei has written a little teaser article, available in short-form here, and long-form here.

Posted in Australian Politics

Wryside on Gender and Competition

My ABC Radio National ‘Wryside Economics’ segment tomorrow (Tue 23rd) will be on gender and competition, riffing off my AFR op-ed on this topic. Jane Caro is standing in for Richard Aedy (who has the flu this week), so you’ll be spared the spectacle of two blokes discussing gender.

If you miss it, the podcast should be up on the Life Matters website around lunchtime.

Posted in Coming Events

Death and Taxes

In politics, death is a remarkably potent card to play. But its rhetorical power needs to be matched by a bit of substance. Every year, about 130,000 Australians die. Each of these deaths are tragic (I’m not saying this lightly – having attended the funeral of a young bloke last month). But it’s also a fact that because government is about one-third of the economy, and there are hundreds of deaths every day, government policies will invariably affect mortality. In some cases, government money can reduce the death rate. But plenty of other policies potentially increase the death rate. For example:

  • A motorway improvement that induces more people to drive can increase traffic deaths (though it could reduce them, if the earlier road was particularly unsafe).
  • A birth payment that increases the birth rate will probably also increase neonatal and postnatal deaths.
  • A government-funded fun run – like the City to Surf – can lead to additional deaths.
  • An expansion in the size of our military is likely to lead to more soldiers losing their lives in training exercises.

So yes, let’s focus on mismanagement, if it exists. But can we get away from the notion that additional deaths somehow prove that a minister or government is morally culpable?

Posted in Australian Politics | 12 Comments

The Ideas of March

On 20-21 March, the folks at ANU’s Manning Clark House are running the closest thing that Canberra has to a Festival of Ideas: a weekend event titled ‘Fair suck of the sauce bottle: a celebration of Australian language’. Teaser on their website, which promises more updates soon.

Posted in Uncategorized

Gender and Competition

My AFR op-ed today is on gender and competition, writing up a series of recent research papers. It would’ve been too cumbersome to mention all the authors, but you’ll find the studies hyperlinked if you’d like to read the original research. Full text over the fold. And of course, please remember that authors don’t choose their headlines.

Continue reading

Posted in Economics Generally | 2 Comments

Another interesting Joyce of words

From BusinessWeek:

Greek government bonds fell after Finance Minister George Papaconstantinou said his country is in a “terrible mess” and compared fixing the nation’s deficit to changing “the course of the Titanic.”

Posted in Uncategorized

Permanent Income Inequality

I have a paper out, looking at income mobility from year to year, and how it affects estimates of inequality. One reason for writing the paper was to address the critique “sure, the US is unequal if you just use annual incomes, but it’s an extremely mobile society from year to year”. The abstract is below (click on the title for the full paper).

Permanent Income Inequality: Australia, Britain, Germany, and the United States Compared
Andrew Leigh
A common critique of most measures of income inequality, which are based on a single year’s income, is that they fail to take account of income mobility. If income fluctuations are large, and individuals can smooth consumption, then high inequality and high mobility may be no worse than low inequality and low mobility. To test this, I use panel data from four countries – Australia, Britain, Germany and the United States – and estimate measures of permanent income inequality that are based on income averaged over multiple years. I find that: (1) using pre-government income, annual inequality and permanent inequality have grown in Germany and the US, while post-government income inequality has grown in the US; (2) comparing levels of annual post-government income inequality across countries, the ranking was the US, Australia, Britain, Germany; (3) comparing levels of permanent income inequality across countries, the ranking of triennial post-government inequality in the most recent year was the US, Australia, Germany, Britain; (4) in the most recent year, the most mobile country was Australia, while the least mobile was Germany. However, as a comparison of points (2) and (3) demonstrates, mobility had little effect on the overall rankings.

For the data wonks, the paper was drafted before the HILDA-CNEF file was released, and I’ve never gotten around to updating it since then.

Posted in Inequality | 3 Comments

We’ll always have (the wrong number in) Paris

I blogged last year on the difficulty I’ve been having in getting the OECD to correctly quote a paper that I wrote on intergenerational mobility. Apparently my friendly ‘oops, you did it again’ emails don’t seem to have any impact. The OECD’s A Family Affair report yet again gets my estimate wrong – putting Australia as one of the most mobile nations in the OECD, rather than middle of the pack (if anyone in Paris reads my blog, here’s the final version of my paper: Australia’s intergenerational elasticity is about 0.25).

Not unreasonably, this has prompted a round of media articles here and overseas. Some of the writeups are very thoughtful – just a pity they’re based on a mistake by the OECD.

(xposted @ Core Economics)

Posted in Inequality

What’s the impact of raising the drinking age to 21?

I’m distracted by other things today, but couldn’t resist the PM’s call for evidence on the costs and benefits of raising the Australian minimum drinking age from 18 to 21. Here are 3 possibly relevant economics papers.

Does the Minimum Legal Drinking Age Save Lives?
Jeffrey A. Miron, Elina Tetelbaum
The minimum legal drinking age (MLDA) is widely believed to save lives by reducing traffic fatalities among underage drivers. Further, the Federal Uniform Drinking Age Act, which pressured all states to adopt an MLDA of 21, is regarded as having contributed enormously to this life saving effect. This paper challenges both claims. State-level panel data for the past 30 years show that any nationwide impact of the MLDA is driven by states that increased their MLDA prior to any inducement from the federal government. Even in early adopting states, the impact of the MLDA did not persist much past the year of adoption. The MLDA appears to have only a minor impact on teen drinking.

Long Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities
Robert Kaestner, Benjamin Yarnoff
We examine whether adult alcohol consumption and traffic fatalities are associated with the legal drinking environment when a person was between the ages of 18 and 20. We find that moving from an environment in which a person was never allowed to drink legally to one in which a person could always drink legally was associated with a 20 to 30 percent increase in alcohol consumption and a ten percent increase in fatal accidents for adult males. There were no statistically significant or practically important associations between the legal drinking environment when young and adult female alcohol consumption and driving fatalities.

Alcohol and Marijuana Use Among College Students: Economic Complements or Substitutes?
Jenny Williams, Rosalie Liccardo Pacula, Frank J. Chaloupka, Henry Wechsler
College campuses have been cracking down on underage and binge drinking in light of recent highly publicized student deaths. Although there is evidence showing that stricter college alcohol policies have been effective at discouraging both drinking in general and frequent binge drinking on college campuses, recent evidence from the Harvard School Of Public Health College Alcohol Study (CAS) shows that marijuana use among college students rose 22 percent between 1993 and 1999. Are current policies aimed at reducing alcohol consumption inadvertently encouraging marijuana use? This paper begins to address this question by investigating the relationship between the demands for alcohol and marijuana for college students using data from the 1993, 1997 and 1999 CAS. We find that alcohol and marijuana are economic complements and that policies that increase the full price of alcohol decrease participation in marijuana use.

Of course, the issue that we also need to consider are the magnitude of the benefits that young people gain from drinking (if you find this hard to swallow, pretend the proposal was to reduce road deaths by banning all drinking). I haven’t seen any good empirical evidence on this point, but it’s a critical one.

In the Australian context, Harry Clarke or Jenny Williams would be my go-to people if I was a journalist writing a story on this topic. Any other papers or experts that readers can suggest?

Update: Here’s Harry Clarke’s view on the issue.

(xposted @ Core Economics)

Posted in Health economics | 1 Comment

Life Matters, and so does suicide bombing

My Wryside economics segment on Life Matters this morning discussed Eli Berman’s work on the economics of terrorism. If you’d like to listen to it, you can find it here.

Posted in Economics Generally

New econ-talks

The 2010 Research School of Economics Seminar Series kicks off with two seminars that are slightly out of sync with our regular time slots.

Prof Robert Haveman, University of Wisconsin – Madison
Friday 12 February, 3:30-5:00pm 
Seminar Room E, Coombs Building, ANU
‘Understanding the Mechanisms Behind Intergenerational Persistence: A Comparison Between the US and UK’
with Jo Blanden (Surrey University, UK), Kathryn Wilson (Kent State University, US), and Timothy Smeeding (University of Wisconsin-Madison, US)

Prof Bobbi Wolfe, University of Wisconsin – Madison
Tuesday (instead of Monday) 16 February, 12:00-1:30pm
Room 1012B (Faculty Suite), H.W. Arndt Building (25A)
‘On increasing our understanding of the income-health gradient: a focus on studies of children’

For information on future seminars, please visit our website.

Posted in Coming Events | 1 Comment

A randomised trial of mentoring programs for female faculty

A new US randomised trial suggests that mentoring programs can have surprisingly large effects:

Can Mentoring Help Female Assistant Professors? Interim Results from a Randomized Trial (unstable ungated link, stable gated link)
Francine D. Blau, Janet M. Currie, Rachel T.A. Croson, Donna K. Ginther
While much has been written about the potential benefits of mentoring in academia, very little research documents its effectiveness. We present data from a randomized controlled trial of a mentoring program for female economists organized by the Committee for the Status of Women in the Economics Profession and sponsored by the National Science Foundation and the American Economics Association. To our knowledge, this is the first randomized trial of a mentoring program in academia. We evaluate the performance of three cohorts of participants and randomly-assigned controls from 2004, 2006, and 2008. This paper presents an interim assessment of the programs effects. Our results suggest that mentoring works. After five years the 2004 treatment group averaged .4 more NSF or NIH grants and 3 additional publications, and were 25 percentage points more likely to have a top-tier publication. There are significant but smaller effects at three years post-treatment for the 2004 and 2006 cohorts combined. While it is too early to assess the ultimate effects of mentoring on the academic careers of program participants, the results suggest that this type of mentoring may be one way to help women advance in the Economics profession and, by extension, in other male-dominated academic fields.

What’s striking about this is that the intervention is only a 2-day workshop. I can’t quickly locate an up-to-date reference for the salary value of an top-tier publication, but let’s conservatively guess that it’s $100,000 of lifetime income. Given that participants are foregoing only a couple of days of their own time, that suggests they ought to be willing to pay at least $25,000 out of their own pockets to attend. (Naturally, this only works in partial equilibrium, since there are fixed number of articles published in top-tier journals each year.)

Posted in Economics of Education, Universities | 1 Comment

Miscellaneous links

Nearly every ranking of economics journals uses citations to measure and compare journals’ research impact. Raw citation data, however, include a number of factors that generally are thought to mismeasure impact. For example, under the view that a citation in a top journal represents greater impact than a citation elsewhere, it is usual to weight citations according to their sources. The most common means by which weights are derived is the recursive procedure of Liebowitz and Palmer (1984) (henceforth LP), which handles the simultaneous determination of rank-adjusted weights and the ranks themselves.

Alas, the lists to be used by the ARC in assessing research under the ERA (including the economics list) have eschewed this approach. Instead, they’re using the pre-1984 method of ranking journals by asking senior people in the field wot they reckon.

Posted in Uncategorized | 4 Comments

Alt-worthy, or an epic fail?

The ANU Commonwealth Bank has a billboard outside, advertising ‘Student options is heaps good’. Should I be worried?

Posted in Universities | 1 Comment

The Size of Nations

Ever wondered why there are so many countries in the world? My AFR op-ed today attempts to provide an answer. Full text over the fold.

Continue reading

Posted in Global issues, Trade & Development | 5 Comments

Now there’s an idea people should copy

Most of the time, low-cost interventions have barely any impact. So it’s refreshing occasionally to read about small things that make big differences, particularly when the results come from a rigorous randomised trial. From the Dee-Jacob economics of education factory…

Rational Ignorance in Education: A Field Experiment in Student Plagiarism (stable gated link)
Thomas Dee and Brian Jacob

Despite the concern that student plagiarism has become increasingly common, there is relatively little objective data on the prevalence or determinants of this illicit behavior. This study presents the results of a natural field experiment designed to address these questions. Over 1,200 papers were collected from the students in undergraduate courses at a selective post-secondary institution.

Students in half of the participating courses were randomly assigned to a requirement that they complete an anti-plagiarism tutorial before submitting their papers. We found that assignment to the treatment group substantially reduced the likelihood of plagiarism, particularly among student with lower SAT scores who had the highest rates of plagiarism. A follow-up survey of participating students suggests that the intervention reduced plagiarism by increasing student knowledge rather than by increasing the perceived probabilities of detection and punishment. These results are consistent with a model of student behavior in which the decision to plagiarize reflects both a poor understanding of academic integrity and the perception that the probabilities of detection and severe punishment are low.

Posted in Economics of Education

Value-Added NAPLANs?

On the eve of public reporting of NAPLAN tests throughout Australia, Ben Jensen (ex-OECD, now running the education program at the Grattan Institute) has a new report on the topic. His key argument is for value-added scores (which will be possible when/if we get 2010 test data). The money quotes:

In this report we advocate that:

The current measures of school performance published on the ‘My School’ website should be replaced with value-added measures of school performance because:

  • Their greater accuracy creates a fairer system, particularly for schools in lower socio-economic communities;
  • A focus on student progress rather than performance at a single point in time serves a variety of policy objectives and is more effective in improving instruction and school education.

School principals and teachers should be empowered to use value-added measures to improve instruction and school programs. To achieve this:

  • A user-friendly information technology system should be developed that allows school principals and teachers to better analyse and then act upon their own performance data;
  • Education and training to incorporate performance assessment into instruction and school programs should be provided;
  • Resources should be provided for teachers and schools to develop programs based on value-added measures and disseminate best practice.

Value-added measures of school performance should become an important benchmark in school evaluation. School evaluators should make their qualitative judgements of good practice in the context of value-added performance measures;

Value-added measures of student progress should be the basis for categorising schools as under-performing. Developmental steps should be explicit, with additional support for under-performing schools; and

School principals should be granted autonomy to effectively lead the school for which they are being held accountable. Individual teachers have continually been shown to have the greatest impact upon student performance and school principals should be empowered to determine who teaches in their school.

The full report is here.

Posted in Economics of Education | 1 Comment

Let It Rain

I have a new ANU working paper out, titled ‘Precipitation, Profits, and Pile-Ups’.* It arose from an ongoing debate with my wife. She loves it when it rains. I’m normally a bit grumpy about rain. So when she rejoiced about how good rain was for the garden, I’d counter by saying that it made the roads more dangerous. Sure, the vegies are growing better, but how about all those awful crashes?

But while it’s true that roads are more dangerous when it rains, people aren’t stupid. Most of us compensate for rainfall by driving more slowly. Indeed, it turns out that we overcompensate: slowing down more than necessary on days after it has rained. Higher rainfall raises the road toll on the day it falls, but lowers the road toll in subsequent days. On net, more rain means fewer deaths.

Here’s a regression using daily data:

image

And here’s a regression using monthly data:

image

Here’s the abstract (click on the title for the full paper).

Precipitation, Profits, and Pile-Ups
Andrew Leigh
In considering the economic impacts of climatic changes, economists frequently use annual national income as a proxy for social welfare. I show that such studies suffer from a significant bias, arising from the fact that such models typically ignore changes in mortality rates. Using panel data from Australia, I show that rainfall lowers traffic deaths, suggesting that the standard approach may underestimate the true economic cost of droughts.

As Peter Martin points out, the result is counterintuitive. But putting together the daily and monthly results, it’s now pretty clear to me that I’d better smile and agree with my wife. Rain is good, and not just for the garden.

* I’ve put the paper out as a working paper because I couldn’t see myself doing anything with it. So any journal editor who’d like it, feel free to get in touch.

Posted in Environmental Economics | 2 Comments

SimpleTax

I’ve been pushing for several years for a simplified tax filing system, in which the ATO would send all Australians a pre-filled return, with the option of choosing to accept it with a simple phonecall (though if a person wanted to claim deductions, they’d be free to do so). Over the weekend, a piece in the NYT discusses the parallel push now taking place in the US.

The I.R.S., however, isn’t rushing to offer returns that are already filled in. In the 2009 report to Congress of its Taxpayer Advocate Service, it noted that during the 2008 presidential campaign, Barack Obama proposed giving taxpayers “the option of pre-filled tax forms to verify, sign and return.” The report said “it is not feasible at this time” because the agency receives W-2 data from the Social Security Administration and 1099 data from financial institutions too late in the filing season, “much later than most eligible taxpayers would be willing to wait.”

And a cute analogy:

Requiring taxpayers to file returns without being told what the government already knows makes as much sense “as if Visa sent customers a blank piece of paper, requiring that they assemble their receipts, list their purchases — and pay a fine if they forget one,” said Joseph Bankman, a professor at the Stanford Law School.

Posted in Tax | 2 Comments

A randomised experiment to test for gender discrimination

Alison Booth and I have a new paper out, in which we test for gender discrimination in hiring by randomly sending fake CVs to apply for jobs in female-dominated occupations (waitstaff, data-entry, customer service, and sales). These occupations are about 70-80% female.

We find a modest bias in favour of female applicants. Resumes with a female name get a callback 32% of the time, while those with a male name get a callback 25% of the time.

The paper is forthcoming in Economics Letters, so it’s very short. Here’s the abstract. To get the full paper, just click on the title.

Do Employers Discriminate by Gender? A Field Experiment in Female-Dominated Occupations
Alison Booth & Andrew Leigh
We test for gender discrimination by sending fake CVs to apply for entry-level jobs. Female candidates are more likely to receive a callback, with the difference being largest in occupations that are more female-dominated.

(xposted @ Core Economics)

Posted in Labour Economics | 8 Comments

Welcome to Qantas – could you please step on the scale?

Today, an anonymous guest post (from someone with an ANU connection) ponders airline pricing.

A recent article in the SMH reports that from February 1, Air France and KLM will begin charging obese passengers 75% of the cost of a second seat if they cannot fit into one seat. This story re-ignited an interesting question I’ve had regarding airline tickets. I have always been perplexed by the issue of pricing after a trip to the Middle East.

After spending far too much money on carpets in the souks, I arrived at the check-in counter at the airport to be told that my ticket only allowed 25kg of baggage and that my recent acquisitions had sent me 5kg over. If I wanted to take them with me, I had to pay the surcharge. The exact amount escapes me, but I was told it was to cover the cost of transporting the extra weight.

What puzzled me about the explanation was that standing at the next check-in counter was a sizable chap (possibly around 110kg) with 25kg of luggage. He wasn’t charged excess since his luggage was on the allowable limit, but if the price of a ticket represents the cost of transporting weight; your weight, surely his net impact on the overall weight of the plane is far greater? (I’m an average male, 175cm tall and weighing around 78kg). With my luggage, my total weight on the plane was 108kg, much less than the 145kg of my fellow passenger.

Simple flight dynamics says that the heavier the plane, the more fuel it will use to fly. Presumably, most other costs of operating an aircraft are fixed (salaries for crew, catering, landing and docking levies, lease payments on the aircraft), which leaves fuel. If the largest variable cost of running a plane is determined by the fuel used to transport the overall weight (plane, passengers and luggage) of the aircraft at takeoff, surely the current pricing mechanism for airline tickets is economically inefficient?

Wouldn’t it be far more efficient to charge people based on their total weight impact on the plane (i.e. body weight plus baggage)? That way, slim travellers with little luggage do not subsidise heavier people with large amount of baggage.

Any theories as to whether the suggestion of our anonymous poster could – well – fly?

(xposted @ Core Economics)

Posted in Economics Generally | 14 Comments

A Form Guide for Universities

In today’s Oz, Philip Clarke and Nicholas Graves write about the ‘academenomics’ of forms. A snippet:

since the internet reduces the cost of collecting information to almost nothing, administrators often collect much more than they need, even if it imposes costs on others. This is what economists would term a negative externality associated with the production of forms.

What can be done to turn the bureaucratic tide?

One solution would be to create an internal market for the collection of information within universities. This would require those filling out forms to be paid a small fee to compensate them for the time taken. … those creating forms would need to equate the value of the information collected with its true cost, thereby reducing the incentive for ever more paperwork.

An alternative solution could be for academics at the receiving end of forms to respond with their own forms. They would do this by sending a stock reply to administrators acknowledging the importance of the form received but pleading limited time and seeking vital information.

Posted in Universities | 2 Comments

ANU Economics Jobs

The new ANU Research School of Economics is now recruiting. Here’s the formal spiel.

Applications are invited for research intensive positions, from Lecturer to Professor.

In an exciting new development, the Australian National University has announced the establishment of a Research School of Economics (RSE) commencing on January 1, 2010.

This new initiative brings together a large group of research economists in Australia under the direction of Professor Warwick McKibbin. The RSE will integrate the School of Economics in the College of Business and Economics the Centre for Applied Macroeconomic Analysis and the Economics Program in the Research School of Social Sciences.

This integration creates exciting new opportunities for economics at the ANU and will improve the research, education and policy outreach capabilities of the ANU in respect of economics. The RSE’s focus is on conducting leading-edge research, providing research-led education and offering expertise to inform the economic policy debate. The new RSE covers the full spectrum of research areas in economics, econometrics and economic history. This includes applied economics and economic theory.

As part of a growth strategy, the Research School of Economics is pleased to invite applications for a number of positions from entry level (referred to as Lecturer – Level B), to full Professor (referred to as Professor – Level E1), or for especially accomplished applicants full Professor (Level E2). Applications are invited from distinguished and emerging scholars both within Australia and from overseas. Applications from both individuals and teams of scholars are welcome. These positions will be research intensive and will require experience in research and research training.

Applications for visiting positions are also welcome.

Appointments may be full time or fractional time and may be continuing or on a fixed term basis. Fractional appointments in conjunction with overseas institutions will also be considered.

Enquiries:
Professor Warwick McKibbin, Director Research School of Economics, T: 02 6125 0301, E: Warwick.McKibbin “AT” anu.edu.au, or
Professor Martin Richardson, Deputy Director Education, T: 02 6125 3582, E: Martin.Richardson “AT” anu.edu.au, or
Professor Andrew Leigh, Deputy Director Research, T: 02 6125 1374, E: Andrew.Leigh “AT” anu.edu.au.

Links to the job ads:

These are research intensive appointments in one of the biggest and most active economics groups in Australia, so please pass the information on to anyone who you think might be interested. Applications close 28 Feb 2010.

Posted in Jobs

The Economics of Terrorism

My AFR op-ed today is on the economics of terrorism, discussing a new book by Eli Berman. He’s not the first empirical social scientist to tackle the topic (Robert Pape and Alan Krueger both have extensive treatments of the topic), but I think Berman’s analysis is the most insightful to date. Full text over the fold.

Continue reading

Posted in Trade & Development | 2 Comments

People should use as much math as me, and no more

New Yorker writer John Cassidy has posted on his website a 1996 interview with the late Paul Samuelson. My favourite snippet concerns the use of mathematics in economics.

I asked Samuelson whether mathematics was now too important in economics.

Rather than answering the question directly, he talked about a lecture he attended in the nineteen-thirties by Lionel Robbins, a well-known professor at the London School of Economics. “Lionel Robbins gave an address saying this math stuff is just a passing fad. I was all of twenty-eight, but I thought, ‘Poor fellow, he just doesn’t realize that he’s missing the train.’ That was just a bad understanding of the dynamics of the profession. Math is a problem for everybody in the profession and it has been for years. We all say, math should be used just up to the point that I have used it, and no more…I always say to our graduate students when they are leaving: ‘As a graduate student at a top-notch university, you tend to lose touch with reality. You have been engaged in puzzle solving and learning a new language. When you emerge, you may tend to think you have been asleep for several years.’ The paradox is that the best people in practical terms are the Jim Tobins, the Bob Solows—the guys who are awfully good at the technical stuff as well.” Samuelson also brought up his colleague Modigliani, whose parking space he may have been occupying, noting “he has done more for Italy than pizza,” and the prevalence of technically adept M.I.T. graduates in the Clinton administration. (They included Lawrence Summers, Joseph Stiglitz, and Laura Tyson.)

“Like herpes, math is here to stay,” he said. “It takes strong math to defeat misleading math. For example, ordinary least squares”—a standard statistical method—“is misleading. It takes more mathematics than ordinary least squares to understand three-stage least squares, co-integration, or unit roots, all of which are improvements on ordinary least squares. But it does lead to a communication problem. The number of people who can communicate effectively, like Paul Krugman, is very small.

Posted in Economics Generally

Supply in Saigon, Heterogeneity in Hanoi, Demand in Danang

My colleagues Brian McCaig and Ha Nguyen are running ANU’s second “Vietnam Economics Workshop”. Their call for papers is over the fold.

Continue reading

Posted in Coming Events, Trade & Development