Monday, 18 March 2013


[via economic logic...] There is a new wp on human-vampire interactions, by Dan Farhat. I always stayed away from this phenomenon, but it seems like economics is ready for the final frontier...
Vampires are a prominent feature of modern culture. Past research identifies the ecological and economic relationship between vampires and living humans under the assumption that 'representative agents' are capable of characterising entire communities. Whether populations of individuals can coordinate themselves sufficiently or not to achieve the same outcomes as the representative agent is not addressed. The purpose of this study is to create a human-vampire ecosystem using artificial social simulation. An agent-based computational model is constructed in which heterogeneous vampire and human individuals engage in one-on-one interaction within a virtual landscape. These interactions result in the emergence of aggregate-level phenomena. Simulating alternative virtual economies under different model calibrations shows under what conditions these emergent phenomena are similar to those produced by the representative agents in previous studies. This article contends that growing human-vampire economies can shed light on an array of social and economic issues even if vampires never existed at all.
Economic logic makes some insightful observations about agent-based modelling in the case of vampire-human interactions... 

Thursday, 14 March 2013

just listen

to the right music, and your age will change. Apparently, this is scientifically proven. Psychological Science reports a study where subjects were asked to give their birthday after listening to different songs; listening to the Beatles ("When I'm 64") actually reduces your age...

Huh? The paper (by Simmons et al.) is actually meant to show how easy it is to get even absurd hypothesis above the threshold for statistically significant rejection. In this case, the researchers a. kept adding to the sample until the "right" result emerged b. used a variety of control variables, only one of which actually produced the desired significance level on the coefficient for the main exogenous variable. It is not quite as wild as the IG Nobel - award winning study demonstrating (with MRI imaging) that there was brain activity in a dead salmon, but it is close...

The authors also propose an interesting list of "best practices" to avoid this kind of data mining. Among them is one that economic history journals would do well to implement - the requirement to deposit the data used for a study in an online archive, where other researchers can try to replicate the results. Most leading economics journals already have such a policy; but economic history journals - despite their emphasis on data (or because of it?) - do not require the posting of data, descriptions, or do-files. 

Thursday, 7 March 2013

Foreign policy

profiles Nico's and my forthcoming paper on the indirect (and positive) effects of the Black Death...

French roast

Here is a paper I wish I had written... this time by two Indian scholars (Pandya and
Venkatesan) working in the US, about the effect of the Iraq war squabbles between France and the US on sales of French-sounding consumer goods. Here is the abstract:

International conflicts frequently prompt boycott calls but scholars dispute whether consumers participate. Theories of conflict and economic interdependence fail to account for marketing that distorts consumers’ perception of product origin. For the 2003 US-France dispute over the Iraq invasion we analyze weekly supermarket sales data from 2500 supermarkets for 8729 grocery brands. Our difference-in-difference estimates show that in weeks with more intense boycott calls sales of French-sounding brands declined. For just the week of March 16 the boycott cost over forty-four million dollars in lost sales. This finding is robust to controls for pro-French sentiment, gas price fluctuations, and possible xenophobic responses. We also find no change in sales of French-owned US-trademarked brands. This study highlights new dimensions of economic integration along which conflict’s effects manifest and contributes precise tests of underlying causal mechanisms. More generally we demonstrate the untapped potential of consumer behavior as a metric of political sentiment.

Wednesday, 6 March 2013

another lament about economic history in Germany...

The German weekly Wirtschaftswoche has a small article about the decline of economic history in Germany. Apart from the fact that they got the offers that some people declined wrong (tough business that, Munich is not Berlin), it is also interesting in a number of dimensions. It laments the fact that some German economic historians now teach abroad. The article is right that chairs are being closed down or re-designated, and that there is little love of economic history in most German economics departments. But in my view, it gets two crucial things wrong.

First, the fact that some Germans teach abroad in itself is not a sign of crisis or decline; it is perfectly normal in a globalized world. What is problematic is the fact that there are almost no foreigners going to Germany to take up teaching positions there - it's the inflows, darling, not the outflows. In this day and age, there is nothing natural about locals teaching local students in their local university; it's a recipe for provincialism.

The fact that only Germans - by and large - teach at German universities of course has something to do with terms and conditions (lots of teaching, lousy pay). If you want to do research, look no further than the May issue of the AER (gated). Every year, they publish the results of their salary survey. The pay rate for full professors at first-tier US research universities (rank 1-15) was $224,000 - for 9 months of the year (that means you can earn another 2/9 of that if you have grant or your employer is generous - we are talking around $273,000 p.a.). The is 47,000, meaning that most salaries fall in the interval $150-300,000. From what I hear and see, not many German offers exceed €100,000 by a healthy margin, if they ever get there [and with much higher taxes to boot). Put another way, if you paid the players in Bayern Munich in relative terms what German professors earn compared to the international market wage, they would be kicking balls in the local league. Why expect a different outcome in academia?

The inability to hire foreigners also has to do with the use of German as a language of instruction. Let's face it (with apologies to the French): English is the lingua franca of the modern age; it is to economists, physicists, and statisticians what Latin was to Erasmus. At UPF, all graduate instruction (and 1/4 of undergrad instruction) is in English. You can really only hire foreigners if you forget about the idea that they have to learn one of the hardest grammars in the world.

The second mistake, in my view, is that many German economic historians ended up in an intellectual no-man's land -- not economics, but not really history, either, where echist is thoroughly unloved by historian colleagues increasingly smitten by the weird and wonderful babble of the linguistic turn. Put another way, before people pound the lectern with their clogs demanding to be loved by all and sundry, they could perhaps try to contribute a little more to the intellectual debate in economics. The article cites Davide Cantoni, who - for a year that was much too short - was my colleague here at UPF - to the effect that economic history can thrive if it integrates more into economics. I think that is exactly right: I am actually quite sanguine that the better German econ departments would welcome first-rate applied researchers like Davide with open arms, independent of whether they use old data or not. Now, if only the government found it within its heart to pay professors a reasonable premium relative to school teachers... (the constitutional court the other day declared professor's pay illegal in Germany because it is too low - no joke).

Tuesday, 5 March 2013

extremely good

and equally disturbing: Cormac O'Grada's latest wp is on cannibalism during famies, Eating People is Wrong:

Cannibalism is one of our darkest secrets and taboos. It is the ultimate measure of the resilience or otherwise of civilizational processes to extreme conditions. How common was cannibalism in times of famine in the past? Both the nature of the evidence for famine cannibalism and the silences about it challenge the empirical historian to the limit. After a review of the global historiography, this talk will attempt to assess the evidence for cannibalism during Ireland’s many famines, culminating in the Great Irish Famine of the 1840s.

click here

and lose your will to live. Whoever invented web-based forms should be a non-believer (and right about the absence of an afterlife)...Personally, I think that one of the choice circles of hell should be reserved for them. You see: There was a time when providing a reference for a student or submitting a paper was straightforward. You printed it and mailed it. It took 30 seconds. Sure, it took time to arrive. But since admission decisions take ~6 months, and journals can take up to 2 years easily, it didn't matter.

And today? Every university (and every journal) has its own web-based form, with radio buttons neatly arranged so that you can click on whether the student is in the top 10%, top 5%, in terms of motivation, skill, technical knowledge, etc. Mind you, the categories are always subtly different. Sometimes, you need to provide exact class rank. Sometimes, you can compare with multiple cohorts. I am sure it is tremendously important that one university asks about motivation for proposed course of study, and the next one about interest and enthusiasm for research. And so on. No way to delegate this. What took 5 minutes now takes 20-25 minutes, every time. The effect? I limit references to no more than 5, and that is getting to be too much. So far, so simple, so bad.

Now, let's think about the economics of this. I am sure the web-based forms save somebody's time. Probably that of the secretary of the institution receiving applications. Instead of assembling packages with multiple letters and the application form, they can now just look at the web application - already all in one place. In other words, we found a way to use professors' time on a vast scale to save a tiny bit of secretarial time. I am sure nobody in the admissions office got fired because we can now deal with the applications in half the time. The net result is that a precious - and unpriced - resource is wasted, and a relatively cheap and easily replaced resource - administrator time - is saved. This outcome is thoroughly negative in terms of mapping people's time into output, and using precious resources for what they are best at; it is division-of-labor in reverse. Of course, it would take a social planner to undo this; every single admissions office loves the new system, I am sure, and the professors' mostly don't scream bloody murder about it because everyone is doing it.

Of course, this is only a tiny bit of one's academic duties; why think about it? Because it stands pars pro toto for many other examples of seeming productivity improvements that simply push costs elsewhere, and distort outcomes and incentives. Submitting a paper? You have a manuscript with tables and figures, all where they should be? Please take them apart for the web-based submission. You had a single file? You will now please produce 17 files - one for the manuscript, one for the title page, one for each table and figure - and then the online system produces an integrated pdf with your files (which you already had ready to go).

On hold on the phone when calling your airline or bank? Surely, the average person on hold has a higher opportunity cost of their time than the average operator (more often than not, in India). Total welfare goes down, but some productivity statistic somewhere is being flattered. A huge part of economics is about how individual optimizing behavior can produce sub-optimal outcomes in the aggregate; me thinks someone should consider seriously if the internet and web-based solutions have not just multiplied the "waste someone else's time" form of seeming productivity gains by a factor of 10.

Friday, 1 March 2013

time for a change

It is time for a change - I will join the Economics Department at the University of Zurich, starting January 2014. UPF gave me my first job out of grad school, and I have been happy and productive here. In Zurich, I will join a distinguished and growing group of scholars working in several of my active areas of interest, including the evolution of social norms, macroeconomics, and economic history. I will take fond memories of UPF colleagues and students with me, and I look forward to working in an exciting new environment.