Sunday, June 22, 2008

Must Read Macro for the Day

Calvo vs Krugman;

Guillermo Calvo is one of my favorite economists. But — you know there had to be a but — I just don’t buy his latest missive. Still, it’s important that we have this debate: something awesome is happening to oil and other commodities, and figuring out what it means is crucial

Indian Superstars

Kabir Bedi

Diana Hayden

The tipping point in Zimbabwe

Chris Blattman asks Should Mugabe be denounced?. Now that Zimbabwe Opposition Leader Pulls Out of Runoff, maybe he may reconsider his views.

Hate Speech best seller of the Day

Jerusalem Post reviews an insane book;
Sina, who runs Faith Freedom International - an Internet forum dedicated to debunking Islam - calls himself "probably the biggest anti-Islam person alive." The publication of his latest book, Understanding Muhammad: A Psychobiography of Allah's Prophet, will likely cement that position. In it, Sina suggests that Islam's central figure suffered from a series of mental disorders, including narcissistic personality disorder, temporal lobe epilepsy and obsessive compulsive disorder.

"These disorders," he says via telephone, "can explain the phenomenon known as Islam... which is nothing but one man's insanity."

Sina grew up a non-practicing Muslim. Raised in Iran, educated in Pakistan and Italy and now living in Canada, he began jousting with believers in the 1990s. What bothered him, he tells The Jerusalem Post, was not the penchant for jihad and intolerance that certain fanatical Muslims displayed, but the foundation for such ills in the Koran and core Islamic texts.

Book recommendation; In the Footsteps of the Prophet: Lessons from the Life of Muhammad by Tariq Ramadan

Celebrity endorsements for World Bank

"By committing to help wild tigers, the World Bank is sounding its intention to be a global leader in biodiversity conservation. I commend this commitment and look forward to seeing it in action."

-Harrison Ford

What do the readers think? I've no comment- after all World Bank's motto is a World Free of Poverty.

Parenting Advice from Steven Pinker

Pinker goes on to suggest that we'll probably never really know exactly what part genetics plays in the differences between races and genders - "it's a taboo field of academic research" - but he has been prepared to accept that the claim that men and women's talents - and, by extension, those of different races - overlap but are not identical is quantifiably defensible. "Those who argue this is nothing more than racism or sexism are guilty of statistical illiteracy," he says. "Besides which, just because someone may have a genetic predisposition towards doing a particular thing, it doesn't follow they will automatically do it." Pinker himself is a case in point. While most scientists would accept that humans are genetically programmed to reproduce, Pinker has steadfastly resisted the temptation.

This could well be just a reflection of the relatively low status he gives parents in child development. "The idea that children are passive repositories to be shaped by their parents has been massively overstated," he says. "A child's peer group is a far greater determinant of its development and achievements than parental aspiration." Large parts of government social policy, too, are governed by the principle that parents are central to child development. So what does he suggest government should do instead? "It's a tough one," he admits. "But I think it would be better off looking at how cultural change is effected within society."

His views on parenting don't make him an easy person to interview. The standard practice is to try and draw together various threads from childhood to present a coherent portrait of how a life and ideas have been shaped. Yet all that goes out of the window with Pinker if you want to play by his rules. So what sort of him would be talking to me now if he hadn't had Jewish parents and hadn't been born in Montreal in the 1950s? "You mean if I'd been kidnapped at birth and placed with a working-class family somewhere completely different?" he laughs. "There are a lot of variables, but there's a better than average probability I would have been doing something in much the same scientific and intellectual fields."

Like most kids, Pinker had no real idea of what he wanted to do. "I used to like reading," he offers. "We had a set of encyclopaedias and I must have got through about 90% of them." So he was a bit of a nerd? "Yes. Wait, I mean a bit. I did have friends and I did subscribe to Rolling Stone." He was also a bit of a hippy on the sly - still is, you suspect, as he keeps his hair unfashionably long - and when the time came to go to college, he signed up for the year-old Dawson's College in Montreal. "It promised interdisciplinary courses and alternative styles of learning. I'm glad I went, but I came to realise there was something to be said for more traditional learning.....

Pinker certainly shows no signs of abandoning his successful formula of mixing the counter-intuitive with good science. He had sleepless nights before the publication of The Blank Slate - "I knew I was going to get vilified for it in some quarters" - and he'd do well to get in a good supply of sleeping pills before his next book comes out - on how the world is now a far safer place, with fewer wars, genocides and homicides than at any time in its history. But is there a chance his controversy will become the norm and that he'll end up as a national institution just as his old sparring partner once was? "I like ice hockey," he laughs. "No one is ever going to ask me to write about that as a metaphor for life. It's just a bunch of people beating the shit out of each other chasing the puck." Sounds like as good a metaphor as any to me."


Urban congestion

China Quarterly Update, June 2008

A Simple Proposal to Make Exam Grading Easier

Mike Myers 'Love Guru' movie offends some Hindus

Barack Obama is a "choice architect" aiming to implement "libertarian paternalism

Chris Blattman's Links I Liked

Inside a 9/11 Mastermind’s Interrogation

Ten things for India to achieve its 2050 potential

In Turkey, Bitter Feud Has Roots in History

China’s One-Child Rule, Post-Earthquake

Pay For It: Radical Water Privatization for Poor Countries

Where Does the Money Go? Best and Worst Practices in Foreign Aid

Advice to impressionable young minds who want to change the world

Big Picture's LinkFest

The Perfect Siesta

Two Bubbles, Two Paths

A theory of military dictatorships

What Happens if We’re Wrong?;
The key word is “consequences.” I learned this lesson many years ago from studying Blaise Pascal, a French mathematical genius in the 17th century who spelled out the laws of probability more clearly than anyone before him. This was a thunderclap of an insight that, for the first time, gave humanity a systematic way of thinking about the future.

Pascal was both a gambler and a religious zealot. One day he asked himself how he would handle a bet on whether “God is or God is not.” Reason could not answer. But, he said, we can choose between acting as though God is or acting as though God is not.

Suppose we bet that God is, and we lead a life of virtue and abstinence, and then the day of reckoning comes and we discover that there is no God. Well, life was still tolerable even if less fun than we might have liked. Here, the consequences of being wrong would be acceptable to most people.

Suppose, however, we bet that God is not, and lead a life of lust and sin, and then it turns out that God is. Now being wrong has put us into big trouble.

RISK management, then, should be a process of dealing with the consequences of being wrong. Sometimes, these consequences are minimal — encountering rain after leaving home without an umbrella, for example. But betting the ranch on the assumption that home prices can only go up should tell you the consequences would be much more than minimal if home prices started to fall.

Stolper-Samuelson for the real world

"Canada's managers are under-achievers"

Nixonland: One, Two, or Many Americas?

The IMF as a reserve manager

Why Is Oil So High? Pick a View

Nothing Sells Like Celebrity

What if Adam Smith was right about poverty?

Steven Pinker: The evolutionary man

There is a better way to stop bank failures

Did the Iraq War Cause High Oil Prices?

James Poterba on Insurance Pricing

Region: You've developed a significant body of work on asymmetric information in insurance markets, much of it with Amy Finklestein. In a recent paper with Amy and Casey Rothschild, “Redistribution by Insurance Market Regulation,” you estimate the efficiency costs and distributive impact of regulations that prohibit insurers from looking at buyer characteristics in determining prices. Are the cost and impact quantitatively significant? In an age when genetic testing is growing ever more sophisticated, what is the policy import of such findings?

Poterba: I am fascinated by insurance markets and the contracts that are available to individuals. This strikes me as an important and somewhat understudied area. My work with Amy and Casey tries to understand what happens when regulations preclude insurance companies from using some information to set insurance prices.

There are many examples of such regulations. Many states limit the data that firms can use to price automobile insurance. We consider the market for retirement annuities. In the United States, a firm cannot offer different pension payouts to men and women with the same salary history and years of service, retiring at the same age, even though life expectancy for women is several years longer than that for men at typical retirement ages.

In most settings, a ban on using some information to price insurance transfers resources toward those whom this information would show to be high-risk insurance buyers. In the market for annuities, someone who is expected to live a long time is more expensive to insure than someone who is unhealthy and has a high mortality risk. An insurance company could offer to pay higher monthly benefits to those who are ill or infirm if it could identify them. Sometimes insurance regulations make this difficult or impossible and therefore represent a transfer from one mortality risk group to another.

One of the intriguing questions is the extent to which insurance companies can induce policy buyers to reveal something about their underlying mortality type through the creative design of insurance policies. In Britain, insurers offer both inflation-indexed and nominal annuities. The households who buy the inflation-indexed products, which deliver more of their value at advanced ages than nominal products, tend to live longer than those who buy nominal annuities. This enables insurers to partly distinguish their client base. The extent to which such distinctions can be made is likely to vary across markets and settings.

Read the entire interview on the latest issue of The Region

What Your Stuff Says About You

Snoop: What Your Stuff Says About You

The curse of untidiness;
The clutter industry feeds the addiction. Self-storage has been the fastest-growing part of America's commercial-property business in the past 30 years. There are now almost seven square feet of self-storage for every American. Paying more to store something than it is worth may seem doubly irrational. But it enables people to reconcile caveman clutter with modern minimalism, and allows companies to benefit from a huge business opportunity that includes inflatable salad bars, over-door baseball cap organisers and motion-activated paper-towel dispensers. Since the urge to accumulate stuff is limitless, so is the scope for selling people stuff to keep it in.

The endowment effect
The endowment effect was controversial for years. The idea that a squishy, irrational bit of human behaviour could affect the cold, clean and rational world of markets was a challenge to neoclassical economists. Their assumption had always been that individuals act to maximise their welfare (the defining characteristic of economic man, or Homo economicus). The value someone puts on something should not, therefore, depend on whether he actually owns it. But the endowment effect has been seen in hundreds of experiments, the most famous of which found that students were surprisingly reluctant to trade a coffee mug they had been given for a bar of chocolate, even though they did not prefer coffee mugs to chocolate when given a straight choice between the two.

Expert Political Judgment: How Good Is It?

Philip Tetlock at Google

Why World Bank's Governance Indicators suck,

According to World Bank;

This paper conceptualizes governance and provides a framework for assessing governance quality in comparative perspective based upon governance outcomes. It surveys the composite indexes on quality of governance and provides an in depth review of the widely used Worldwide Governance Indicators (WGIs). This review concludes that WGIs use state of the art aggregation techniques but fail on most fundamental considerations. They lack a conceptual framework of governance and use flawed and biased primary indicators that mostly capture Western business perspectives on governance processes using one-size-fits-all norms about such processes. They almost completely neglect citizens’ evaluations of governance outcomes reflecting any impacts on the quality of life. These primary deficiencies and changing weights, respondents and criteria lead us to conclude that the use of such indicators in cross-country and time series comparisons could not be justified. Such use is already complicating the development policy dialogue and creating much controversy and acrimony. These findings, however, should not be a cause for despair as assessing governance quality is an important task and must be undertaken with care. To this end, this paper lays out a conceptual framework which stresses that governance quality for comparative purposes is most usefully assessed by focusing on key governance outcomes capturing the impact of governments on the quality of life enjoyed by its citizens. These assessments should preferably be based on citizens’ evaluations. Such evaluations are not only feasible but also would be more credible and conducive for meaningful and productive development policy dialogues on improving governance quality.

Iqbal, Kazi and Anwar Shah. (2008). “How Do Worldwide Governance Indicators Measure Up? ”,Unpublished paper, World Bank, Washington D.C.

Inventory of Datasets/Empirical Tools on Governance

Is "good governance" an end or a means?

Thinking about governance and getting a headache

What should the World Bank know and think about governance?

Carnival of Podcasts

Arnold Kling Calls Advanced Placement Economics `Horrible'

High Wire: The Precarious Financial Lives of American Families

Hassett Says Media's Economic Coverage Favors Democrats

Phelps Says Rising Oil Prices May Discourage Production

Wieting Sees U.S. Corporate Profits Rising 5% Next Year

Private spooks

The use of private military companies is now widespread, but now there are also private intelligence organisations working closely with government. Business is booming and the worlds biggest private equity company, Carlyle, has just bought part of the big intelligence company, Booz Allen Hamilton

Counselor: A Life at the Edge of History

Banking on gas
Australia's sitting on some of the biggest natural gas fields in the world - and other energy-starved, ravenous nations are starting to bid for it. Australia will have to do some soul searching about how much we keep for ourselves and who to sell it to.

Slavery in Australia

The Economic and Strategic Rise of China and India: Asian Realignments after the 1997 Financial Crisis

Bill of Rights in Australia
Supporters of a Bill of Rights say all that is being proposed is a list of neutral rights to be interpreted by an impartial judiciary. However constitutional laywer Greg Craven argues that proponents of a Bill of Rights seek major social changes without consulting voters.

Understanding the Correlation between Oil Prices and the Falling Dollar- Brad Setser

Educating Talented Scientists for Africa

John Micklethwait: The Economist and globalisation

Globalisation has its many critics but John Micklethwait isn't one of them. He's the current editor of The Economist, the sixteenth since it was first published in 1843, and is one of the leading proponents on globalisation's positive impact and potential.

The story of Morgan Tsvangirai and the Movement for Democratic Change

Alcohol in Australia: a history of drinking

The Muslim Brotherhood of Egypt

Carrots and sticks
These days the carrot and stick approach can be applied to parenting or prison inmates or even employees, but its origins are, of course, in trying to get a horse or donkey to comply with human commands.
How sensible is that approach in the field of animal training today, given what we now know about the language, intelligence and social skills across various species? And does it depend on whether your training is intended to teach them to perform for humans, or to simply not urinate on the lounge?

Starved of science? Agriculture in Africa

The father of radio astronomy

Courage: Guts, grit, spine, heart, and verve.

Health controversies surrounding milk
A1 and A2 are names used to identify different proteins found in milk. the idea that A1 milk may be detrimental to health has been around for a while. Some suggest that there is a link between A1 milk consumption and Type 1 diabetes and some other illnesses. Professor Boyd Swinburn from the School of Health Sciences at Deakin University in Melbourne discusses his review into A1/A2 milk claims for the New Zealand Food Safety Authority.

'Good American Speech' comes from Melbourne
How an Australian invented 'Good American Speech' in the golden age of Hollywood. The historian Desley Deacon tells Jill Kitson about Australia's own Henry Higgins.

Who's a lesbian?
On the case heard last week, in a court in Athens, about the word 'lesbian', in which the plaintiffs are claiming that the prerogative to the term belongs to the inhabitants of the island of Lesbos. They are seeking for a ban to be placed on its use by the gay organisation, the Homosexual and Lesbian Community of Greece.

Burning books

Dan Ariely: Confronting Irrationality

Glenn Loury: The Missing Voice of Jeremiah

Queer Science
Simon LeVay, neuroscientist at the epicenter of the biological basis of homosexuality debate

Ice Sheets and Sea Level Rise: How Should IPCC Handle Deep Uncertainty?

The scientific basis for projections of climate change (in a nutshell)

Global Financial Regulation: The Essential Guide

Pop Finance

Why Civilisations Can't Climb Hills: a political history of statelessness in Southeast Asia

Fixing Failed States

Financial Market Stability

Skills, Rights and Resources in the East Asian Path to Development

Gene Epstein on Gold, the Fed, and Money

Don Boudreaux on Energy Prices

Tuesday, June 10, 2008

Dear Readers,

where are you??....
no updates... life is boring without an new entries on the bayesian heresy blog

Thank you my dear readers- I'm stuck in a place without internet.
Updates will take sometime.