Sunday, 31 March 2013

European Economics & Politics

Will the euro exist in 10 years?
How many countries will be in the euro?
Will EU move towards political integration?
Will the ECB keep the inflation targeting as its only mandate?

Thursday, 7 March 2013

How economists think

Politics Aside, a Common Bond for Two Economists

" The field of economics offers a lens through which to view the world. For those who buy into it and pursue it as a career, it provides a foundation of a personal and political philosophy. It forever sets you apart — for better or worse — from mere muggles."

Economists have a very peculiar way of thinking. I have studied economics and loved it. I wouldn't consider myself as the average person.

Why do people vote?
The Paradox of of voting is one of the most analysed topics in Political Science and Political Economy.

For economists, a citizen who bothers voting and is not pivotal, so mostly all the time, is ultra weird.

opportunity cost
thinking at the margin
prisoner's dilemma
why marry

Easterlin paradox: Why don't money bring happines??

For economists, social norms do not exist (at least not yet). Feelings also do not exist. It is extremelly weird for example that when people play the Ultimatum game they most of the times offer 50c to the other player and not what a homo-economicus would do, i.e. offer 1 cent to other player and get 99c himself.

If economists agree on something, the public will almost certainly think differently

Opportunity Cost...


Emmanuel Saez: "Income Inequality: Evidence and Policy Implications"
"Defending the 1%
Comment on the above

Sunday, 13 January 2013

Academically Adrift review

Academically Adrift by Richard Arum and Josipa Roksa

College fees have seen enormous fee inflation the past decades and many have started wondering whether college is actually worth that much investment.Academically Adrift evaluates how much learning is actually happening at US colleges; the verdict? Not much.
The book reads like a journal article more than a book. The authors use a measure of learning, the Collegiate Learning Assessment (CLA), which was designed to assess "core outcomes espoused by all higher education, critical thinking, analytical reasoning, problem solving and writing" to perform their evaluation.
The book is full of data and statistics on how various factors affect academic learning: race, parental education and occupation, family status, hours spent studying, mother tongue, whether the students lives on campus or not, the impact of working part-time while studying, instruction methods, faculty expectations, faculty interactions, courses taken and other. They compare differences across institutions as well as within institutions.

The authors compare the CLA performance of students on their third year to their performance in the same test in their first year of college. The result is that the improvement in the skills measured by the CLA is not significant. The CLA does not measure any learning towards the student's field of study. So if the student had gained significant knowledge in Computer Science, while her "critical thinking, analytical reasoning, problem solving and writing" skills did not improve, the CLA will not capture anything.
Also students said most of their courses required not much effort to achieve a satisfactory grade. On average they about 12 hours per week. Most of the courses did not require the students to read 40 pages or more of readings or write 20 pages of coursework over one semester.

At one point the authors say the following: "Limited learning in the U.S. higher-education system cannot be defined as a crisis, because institutional and system-level organizational survival is not being threatened in any significant way. Parents—although somewhat disgruntled about increasing costs—want colleges to provide a safe environment where their children can mature, gain independence, and attain a credential that will help them be successful as adults. Students in general seek to enjoy the benefits of a full collegiate experience that is focused as much on social life as on academic pursuits, while earning high marks in their courses with relatively little investment of effort. Professors are eager to find time to concentrate on their scholarship and professional interests. Administrators have been asked to focus largely on external institutional rankings and the financial bottom line. Government funding agencies are primarily interested in the development of new scientific knowledge. In short, the system works. No actors in the system are primarily interested in undergraduates' academic growth, although many are interested in student retention and persistence. Limited learning on college campuses is not a crisis, because the institutional actors implicated in the system are receiving the organizational outcomes that they seek, and therefore neither the institutions themselves nor the system as a whole is in any way challenged or threatened.

While in the long term this country's global competitiveness is likely weakened by white-collar workforce that is not uniformly trained at a rigorous level, colleges where limited academic learning occurs in the short term can still fulfill their primary social functions: students are allocated to occupational positions based on their credentials, not their skills , students are provided settings where they can experiment with new forms of social behavior and develop independent identities []."

In other words, nobody has the inventive to change the current system. Then could it probably be the case that the current system works fine? Or could it be the case that one actor is missing from the system? Where are employers for example? Maybe employers should have some stake in undergraduate education so that incentives are better aligned and no money is wasted on "useless" courses.

My personal opinion of the book is that it is not ambitious enough. A lot of data and barely any discussion. I would expect to read the authors' opinion on why CLA skills are relevant, as opposed to field of study learning. For example if IT employers value coding skills more than CLA skills, then probably it is not worth it for a computer science major to learn how to write well or "think analytically".

Employers do say that CLA skills are important, however do the put their money where their mouth is? Why don't employers invest on writing and critical judgement skills for their employees?
Then there is the case of citizenship. For a functioning democracy, the electorate must be well-informed and be able to critically analyse public policies.

Then there is the issue of credentialism  Most students don't care whether they are actually learning anything, all they want is to get a degree with a good enough grade to get a job interview and then a job. I am surprised that the authors have not even mentioned the Spence signalling model of education in the book. According to that model, education is valuable even if it doesn't increase the individual's productivity at all. Education level just serves as a signal to employers to distinguish hard workers from slackers.

There are some ideas at the end of the book on how to reform college education; there are not radical at all though. The authors suggest a method to improve college accountability and transparency on how much learning is actually happening. For me it is a bit like putting the cart before the horse. How can you have have a discussion on how to improve the current system's accountability when you have not talked about why should we keep having the current system at all.

Experimental Economics

MIT economist Josh Angrist’s meticulous ­methods have influenced scholars for two decades. Now he’s zeroing in on what makes some schools better than others.