30 December 2011

Last minute donations

If you're into giving and tax deductibility and American, tomorrow is your last day (if you're not American or into giving - New Year resolution to save some lives?). I would highly recommend taking a look at Givewell's recommendations - hours of serious research into making your money go the furthest. 

29 December 2011

So, You Want to Be a Scientist?

Is apparently a real thing. My mum just turned on BBC Radio 4 to a set of listeners calling in with questions that they would like to try and answer with an experiment - does windy weather make kids act up at school - do cows really lie down just before it starts to rain - and a panel discussing the practicalities of possible experimental design.

From the website, here is Brian Cox on what makes a good experiment;
"experiments are the most important part of science"

27 December 2011

Impact of Labour Migration on “Children Left Behind” in Tajikistan

The most emblematic quote on the necessity of migration, viewed as a constrained choice, was given by a group of young boys from non-migrant families, who considered themselves lucky (and rich) enough never to have to migrate themselves:
“Those people who go to Russia do not go on a whim, but out of despair, from a bad life. They are willing, for the future of their children, to endure many hardships. They have no other choice.”
From a report just published by UNICEF (and prepared by OPM). Like sweatshop labour, many on the left seem to see migration driven by desperation as a problem. When clearly it is that desperation due to poverty that is the problem, and uncomfortable symptoms such as poor quality jobs and migration are actually generally alleviating the problem (not that more shouldn't be done to address poverty directly).

22 December 2011

Life lessons from playing poker

Duncan Green is offering a small bet that the charter city in Honduras won't work. Here's the thing, sometimes its worth making the bet even if the odds are stacked against you, because you also have to take into account the payoff to success. An economist would call this expected value. Even if there is only one card in the deck that can complete my hand, and I am very likely to lose the round, I should still call a £5 raise if there is £500 in the pot that I could win.

Even if the odds of a Charter City taking off in Honduras are 1 in a thousand, its still worth a punt if the payoff could run into the billions.

So what odds do you say Duncan? I'll give you £10 if it fails and you give me a £1000 if it works?

Edit: Andrew reminds me about opportunity costs. If I only have £6 left then it would be silly to call a £5 raise on such long odds. The opportunity cost is playing the next round, where I might have better odds of winning a smaller amount. But if I have £500, then I can afford to take a smart £5 gamble with low odds of winning. So its a question of the overall budget constraints too. I'm not convinced that there are huge opportunity costs associated with the needed investment in a Honduran Charter City, relative to overall government expenditure (the idea is to encourage private investment for most of the construction). 

18 December 2011

Why Hitchens supported War on Iraq?

Hitchens is a devotee of Orwell; some have suspected a self-conscious desire to emulate him, right down to the jacket photographs with accompanying cigarette. Yet many admirers of Orwell admit to a stab of envy: he was lucky to be writing in such epic times, they moan, reporting on the titanic struggles of the twentieth century; if only we were blessed with such material, we too could reach those heights. By this light, reporting on Cyprus in the 1970s was all very well, but Guernica it was not. 
And then along come the September 11 attacks and suddenly there is a subject worthy of these would-be Orwells’ talents. Why squander such a moment with on-the-one-hand-on-the-other equivocations? Better, surely, to light another cigarette, reach for the Remington portable, and fire off a thousand words of antifascist denunciation in the spirit of Eric Blair.
New York Review of Books (via someone in my twitter stream)

14 December 2011

Eurozone labour markets not in everything

88 % of all surveyed employers stated that they had job vacancies between July 2010 and July 2011, out of which 37 % did not succeed to fill all of these jobs. Out of these, one in four tried to hire workers from abroad, but only about half succeeded. In particular large enterprises with 500 and more employees hired workers from abroad. In most cases, these foreign workers came from the European Union or the European Free Trade Area, but about half of the employers did also or exclusively recruit staff from third countries.  
Almost half of the employers with unfilled vacancies stated that they did not even consider this option. They explained this often by saying that they lack knowledge about the administrative procedure. Small and medium-sized enterprises perceived this obstacle more strongly than large employers. Furthermore, employers frequently stated to have been discouraged by the complexity of the procedure. Finally, many employers expected prospective labour migrants to lack German language skills.
From a new OECD survey, and one of the reasons why the eurozone is not an optimal currency area.

13 December 2011

Questions to which the answer is no

‘if the reallocation of jobs across sectors, and increasingly countries is happening quicker and quicker, due to the exponential growth of technological innovation – then at some point are the productivity gains outweighed by the social damage they do?’
Moussa Haddad, quoted by Duncan Green in an interesting discussion of the new World Development Report on jobs. I'm inclined to think that Duncan is mostly wrong, but in an interesting way. I think he underestimates the insider-outsider problem with labour unions in many developing countries, possibly because of the same rose-tinted view of the history of labour in Britain, which I also succumb to. To be a British leftwinger means to be on the side of unions. But its pretty hard to reconcile the rosy view with the destructive role that teachers unions play in education in India.

He continues...
the team is 100% economists. Don’t get me wrong, some of my best friends are economists (really) and they obviously have to be central to any discussion about jobs. But where are the anthropologists to discuss the deeper cultural and social meaning of work
At which point my eyes glaze over. But don't get me wrong, some of my best friends are anthropologists....

The title of this post borrowed from John Rentoul's meme at the Indepenent

11 December 2011

The Economics of the Euro

So according to this account from the Economist, it seems that Cameron may just have embarrassed himself this week (via: Chuku Umunna).

Still, the diplomatic mess aside, there is at least a silver lining for the economics profession, in correctly predicting the whole Euro mess. In Tyler's words,
The euro crisis is now here, and it seems our profession should win some of its status back.
The problem is fairly simple. For a stable currency union, you need some way of rebalancing economies running at different speeds. In the US, you have large federal transfers between the individual states, and also large-scale movement of people between states. So if Michigan goes down the tank, it gets subsidised by New York, and its citizens can easily move to another state with more jobs. The eurozone has no such automatic, built-in, large transfers between states, and much bigger language and cultural barriers to large scale movement than within the US.

So to some extent the last 10 years of euro success have been defying some fundamental economic laws of gravity. The latest debacle is basically irrelevant if it doesn't tackle these issues (Gideon Rachman at the FT agrees).

I am no euroskeptic. I love Europe, Europeans, and the convenience of the Euro. And I generally have very little time for the British Prime Minister and the lunatic fringes of his party. But given that Britain is not in the eurozone, I don't really see that trying to make this bold experiment in defying the basics of macroeconomic theory work is much of our business. 

06 December 2011

How to think

via Tyler, a great quote from an essay on the culture of economics by Raquel Fernandez.
Economists essentially have a sophisticated lack of understanding of economics, especially macroeconomics. I know it sounds ridiculous. But the reason why I tell people they should study economics is not so they’ll know something at the end—because I don’t think we know much—but because we’re good at thinking. Economics teaches you to think things through. What you see a lot of times in economics is disdain for other’s lack of thinking. You have to think about the ramifications of policies in the short run, the medium run, and the long run. Economists think they’re good at doing that, but they’re good at doing that in the sense that they can write down a model that will help them think about it—not in terms of empirically knowing what the answers are.
This is why I so instinctively trust economists. Even if I disagree with them or think they are too right-wing, they can usually be relied upon to have thought things through.

02 December 2011

Oxford has more integrity than LSE?

In the spring of 2002 a senior civil servant at the Foreign Office asked Oxford university if Saif could take a master's degree course. "It was made clear … that the FCO would appreciate help in this case since Libya was opening up to the West again." The head of Oxford's department of international development told the FCO that the application would be "unlikely to prosper … because Saif had no social science training, and his prior degree did not meet the requisite quality standard". 
The FCO dropped its request, the inquiry was told.
The Guardian