31 October 2012

Poverty in Japan

Noah Smith smacks down Bryan Caplan on the causes of poverty in the US with some simple comparative analysis:
Or perhaps Caplan is just dead wrong. Perhaps his preconceived notions about poverty, developed in self-imposed isolation from the actual phenomenon, are simply not an accurate guide to extant reality. 
As it happens, I have had a fair bit of contact with the Japanese poor. In general, although they do engage in more bad behavior than other Japanese people, they engage in less bad behavior than middle-class people in America. In general, they work very hard, abstain from drugs, don't have children out of wedlock, and obey the law. Every day they get up, slave away diligently and conscientiously for 8 or 10 hours at a mind-numbing menial job at pittance wages, and every night they return to sleep on the floor of tiny bare rabbit-hutch studio apartments barely larger than my bathroom. They were born well-behaving and hard-working and poor, and they will die well-behaving and hard-working and poor. Every day, even as people like Bryan Caplan inadvertently mock their struggles, the Japanese poor make a mockery of Caplan's prejudices and stereotypes. 
If I had never seen the Japanese poor - if my only contact with poverty had been with the American poor, who tend to bully and rob people like myself at alarming rates - then I expect I would find Bryan Caplan's thesis quite reasonable, and even obvious. But that is why, if you want to know what is actually going on in reality, you have to get outside your bubble. 

28 October 2012

Cash transfers in Northern Kenya

The BBC have a short clip here of the new DFID Minister Justine Greening visiting the Hunger Safety Net Programme in Northern Kenya, where eligible households are said to get $40 every couple of months via a "Smartcard."

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OPM is managing the evaluation of the project: you can see the Year 1 impact report here.

24 October 2012

Surveys, lions, and suicide bombers

The opening paragraph of the OPM survey manual is fucking cool:
OPM has an ability to carry out surveys in amazing places, ranging from the deserts of Northern Kenya via the mountains of Pakistan to the tiny islands of the Maldives. People deal with the usual challenges of sand, snow, sea sickness, and occasionally with hazards such as lions or suicide bombers.

23 October 2012

The impact of remittances on poverty in Nigeria

"the receipt of internal remittances reduces the poverty headcount of households by 11.14% and poverty gap by 9.7% while the receipt of international remittances reduces poverty headcount, poverty gap and squared poverty gap by almost 100%"
From a new working paper by Nnaemeka Chukwuone, Ebele Amaechina, Benjamin Okpukpara, Evelyn Iyoko and Sunday E. Enebeli-Uzor (via the Partnership for Economic Policy).

18 October 2012

New media, new work

So Newsweek has announced that it is closing its print edition, a few days after Alan Rusbridger was forced to deny that the Guardian has similar plans. Andrew Sullivan, who blogs at the Newsweek-owned "Daily Beast" reflects
The shift in my own mind has happened gradually. Even up to a year ago, I was still getting my New York Times every morning on paper, wrapped in blue plastic. Piles of them would sit in my blog-cave, read and half-read, skimmed, and noted. 
Until a couple of years ago, I also read physical books on paper, and then shifted to cheaper, easier, lighter tablet versions. Then it became a hassle to get the physical NYT delivered in Provincetown so I tried a summer of reading it on a tablet. I now read almost everything on my iPad. And as I ramble down the aisle of Amtrak's Acela, I see so many reading from tablets or laptops, with the few newspapers and physical magazines seeming almost quaint, like some giant brick of a mobile phone from the 1980s. Almost no one under 30 is reading them. 
I sympathise. I look at the Guardian website almost every day, but I can't remember the last time that I actually bought a paper copy. Sullivan continues
I also began to wonder what a magazine really is. Can it even exist online? It's a form that's only really been around for three centuries - and it was based on a group of people associating with each other under a single editor and bound together with paper and staples. At The New Republic in the 1990s, I knew intuitively that most people read TRB, the Diarist and the Notebook before they dug into a 12,000 word review of a book on medieval Jewish mysticism. But they were all in it together. You couldn't just buy Kinsley's perky column. It came physically attached to Leon Wieseltier's sun-blocking ego. 
But since every page on the web is now as accessible as every other page, how do you connect writers together with paper and staples, instead of having readers pick individual writers or pieces and ignore the rest? And the connection between writers and photographers and editors is what a magazine is. It defines it - and yet that connection is now close to gone. Around 70 percent of Dish readers have this page bookmarked and come to us directly. (If you read us all the time and haven't, please do). You can't sell bundles anymore.
Which is exactly how I read these days. The Guardian website is basically the only "bundled" media I consume. The rest is a personally selected collage wrapped up in my Google Reader account, consisting of all the important economics, development, and Africa bloggers, academics, with a couple of comics (Dilbert, XKCD), and my favourite Guardian and FT weekend columnists thrown in. This is quite a natural progression, given that it is almost (marginally) costless for me to do this. [Warning: Descent into wild conjecture and ill-thought out theory rapidly approaching]. Coase's theory of the firm bases the existence of companies on the role of transaction costs. As transaction costs external to the firm disappear, so does the reason for the firm. Which leads to an atomised media economy, where individuals are firms.

But I still read the Guardian. I suppose that there is a role for organisations to provide the raw news - the unknown unknowns that I don't know I might be interested in, and thus wouldn't search for or subscribe to. Someone who has a culture and values that I think I can trust. 

What does all of this mean, if anything, for the rest of the economy? In my line of work, we already have a similarly atomised economy. Many consultants are independent, and assemble into temporary teams for specific projects, establishing "mini-firms" that come together for a particular task and then disperse. At present the process of assembling these teams is a costly one. Searching for potential team members for very specialised roles and then assessing their quality is time-consuming. These are Coase's transaction costs, and provide a strong case for the existence of consulting firms - transaction costs can be minimized through a centralized process of quality assessment ("recruitment"), which doesn't have to be repeated for every project. This is also why networking is so important. Diamond, Mortensen, and Pissarides won the Economics Nobel Prize in 2010 for developing new models of "frictional" unemployment, driven by this process of search and matching. So this is a costly process with relevance to the wider economy and significant macroeconomic implications. But this large problem also presents a large opportunity. There are big gains to be made from improving this search and matching process. Already some of the biggest firms in the world are ones in the business of search and information sharing. Whether it be through linkedin or some other kind of online database or network - will further reductions in frictional transaction costs lead to further atomisation of the firm? Presumably there is still a role for a "Guardian" - a multi-purpose provider who can tell you about the unknown unknowns - the things that you wouldn't think to search for to begin with, and whose values and culture you can trust. 

Whether any of this makes any sense, and what the implications of this are for youth unemployment, well, you tell me.

What do Africans think about the UN?

There is an interesting paradox here: the people (e.g., Mozambicans) who know least about the UN give it the highest rating, whereas people who seem relatively well informed (e.g., South Africans) have far more mixed opinions.
I'm not sure that paradox is the word they are going for there.... from Afrobarometer

12 October 2012

The State of the Game between Juba and Khartoum

I continue to be fascinated by the nature of the strategic interaction between Juba and Khartoum, without really pretending to understand it very well. As it turns out, Juba's strategy seems to be push ahead with a Kenya pipeline whilst resuming export through North Sudan in the meantime, to give them an alternative option. So what is Khartoum's optimal response to such a move?

A friend suggests that Khartoum's strategy is to continue to create chaos in Jonglei (South Sudan) in order to disrupt future exploration, knowing that a Kenyan pipeline would not be economically viable without further discoveries.

I thought I'd also email someone who is an actual game theory expert, who makes the interesting point that - a little counter-intuitively - it may actually be in Khartoum's interest to encourage the development of a Kenya pipeline, as a way of credibly committing themselves to continued future cooperation on mutually favourable terms.
Paraphrasing the words of the great philosopher Sting, “If Someone Does Not Trust You, Set Them Free“.

05 October 2012

The oil deal

I haven't read any coverage yet, so I've just had a quick skim of the actual agreement (available here, HT: Nicki Kindersley). 

As a reminder, pre-agreement North Sudan wanted to charge half of the value of the oil, or around $36 a barrel. South Sudan wanted to pay $1 a barrel. 

It looks like there is a 

- processing fee - $1.60 per barrel
- transportation fee - $8.40 per barrel for one oilfield and $6.50 for the other
- transit fee - $1 per barrel

so a total of $11 or $9.10

plus a Transitional Financial Arrangement (payoff) of an additional $15 per barrel until a total of $3.028 billion has been paid (at production of 180,000 barrels per day this would take just over 3 years).

So - whilst this seems like a good deal for North Sudan in the short run and a good deal for South Sudan in the long run, my main concern is the hold-up problem. What is stopping North Sudan ripping up the agreement in 3 years, demanding a higher cut, and just confiscating oil (again). Here is Tony Venables from Oxford in a paper on these issues;
Even if the purchaser and investor entered an agreement before the investment is undertaken, ex post the purchaser may act opportunistically, breaking the agreement and only offering a lower price ... 
The hold-up problem between states is radically more severe than that within countries because the whole domain of international law is fragile: essentially, the concept of national sovereignty constitutes a barrier to the enforcement of any contract entered into by states.