EC101: Links for 26th December, 2019

  1. On some articles about Baumol’s cost disease.
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  2. A topic that is very, very dear to my heart: teaching economics better, and to younger folks.
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  3. A topic on which I changed my mind this year, and therefore this year ought to count as a success. Props to Murali Neelakantan for helping me do so! On patents.
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  4. Two sets of links about this year’s Nobel. One set is rather informative
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  5. While the other is more critical.

Etc: Links for 22nd November, 2019

  1. Timothy Taylor tells us about the time when Hayek spoke about the inadvisability of the Nobel Prize in Economics… while receiving it himself. It is a speech that reads well.
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  2. “With that in mind, the journalist Oliver Morton has made the marvelous suggestion that if at least some abstemiousness is due to shyness and the inability to find partners (while the promiscuous have relatively little trouble in this regard), then the answer might be to establish a government-funded dating service: bring us a used condom and we’ll get you a date.”
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    I cannot remember how and where I chanced upon this article, but I can assure you that I thoroughly enjoyed reading it. Steven Landsburg on why more people should have sex, and how that might benefit society – but only up to a point. If you are confused and intrigues, I strongly recommend reading this article.
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  3. “Trapped in the eye of this storm, Joumban and Mae Seang press their faces against each other. With her trunk, Mae Seang gently touches Joumban’s mouth, his tusks, his eyes. He responds in kind. They wrap their trunks around each other and rub foreheads. What must they make of all this?”
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    A gratifyingly long read about elephants, including how to purchase one. By the way, what this reminded me the most of was (if I recall correctly) an MRU video about buying slaves in Africa, and the elasticity of supply. Via the consistently excellent The Browser
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  4. “Now, thanks to a new initiative by the Internet Archive, you can click the name of the book and see a two-page preview of the cited work, so long as the citation specifies a page number. You can also borrow a digital copy of the book, so long as no else has checked it out, for two weeks—much the same way you’d borrow a book from your local library. (Some groups of authors and publishers have challenged the archive’s practice of allowing users to borrow unauthorized scanned books. The Internet Archive says it seeks to widen access to books in “balanced and respectful ways.”)”
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    Wikipedia’s supply chain.
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  5. “But the work of D’Agostino and a handful of other pioneering ketone researchers over the past decade has also led scientists at Harvard, Yale, and other top institutions to consider the diet’s potential to treat other diseases. Siddhartha Mukherjee, an oncologist and the author of The Emperor of All Maladies, a Pulitzer Prize–winning history of cancer science, is among those interested in whether the ketogenic diet could have a role in cancer therapy.”
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    On the unexpected benefits of the ketogenic diet.

EC101: Links for 17th October, 2019

  1. “In order to combat global poverty, we must identify the most effective forms of action. This year’s Laureates have shown how the problem of global poverty can be tackled by breaking it down into a number of smaller – but more precise – questions at individual or group levels. They then answer each of these using a specially designed field experiment. Over just twenty years, this approach has
    completely reshaped research in the field known as development economics. This new research is now delivering a steady flow of concrete results, helping to alleviate the problems of global poverty.”
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    A simple primer on the work that Duflo, Benerjee and Kremer have won the Nobel Prize for.
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  2. “The first general comment is the idea of randomisation is hardly anything new for researchers who have studied or followed Indian development. The Planning Commission started something called Programme Evaluation Studies way back in 1954 which more or less studied the same thing. Agriculturists — both practitioners and researchers — have also used similar techniques of RCT to see what agricultural intervention worked.In my own research on banking history, I saw how Syndicate Bank started programmes on agricultural and rural development based on near similar ideas of randomisation. To be fair, the 2019 laureates have advanced these ideas using techniques from sampling, statistics, and econometrics to draw finer inferences.”
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    Amol Agarwal over at Moneycontrol points out a more nuanced understanding of both this year’s Nobel Prize as well as the Nobel Prize for Economics in general. Well worth reading!
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  3. The NYT profile on this year’s Nobel Prize.
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  4. “The significance of what Angrist and Pischke termed the “credibility revolution in empirical economics” can be seen in the John Bates Clark Medal awards given to researchers who participated in that revolution. Between 1995 and 2015, of the fourteen Clark Medal winners, by my estimate at least seven (Card, Levitt, Duflo, Finkelstein, Chetty, Gentzkow, and Fryer) are known for their empirical work using research designs intended to avoid the problems that Leamer highlighted with the multiple-regression approach.”
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    Mostly for those truly interested in economics, but Arnold Kling points out how more people should know about Ed Leamer.
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  5. Heavily, heavily recommended: this is the longer version of the first link above, again by the Nobel Prize committee itself.

The Nobel Prize in Economics, 2019

Abhijit Banerjee, Esther Duflo and Michael Kremer have won the Nobel Prize in Economics for the year 2019.

Does Giving Aid Work?

When I teach classes in development economics, I often speak about the Easterly-Sachs spectrum*. Without getting into long, boring details, here is the point: William Easterly is of the opinion that giving aid does more harm than good. At the other end of the spectrum is Team Sachs: no way are countries ever going to develop without aid.

Now you, I and everybody else we know may have an opinion about this spectrum, and we could spend the rest of our lives arguing about our opinions. But if the issue is ever to have a chance of being settled, we need evidence, one way or the other.

Where to get that evidence from? How?

This year’s Nobel Prize has been awarded to the three people listed above for their attempt(s) at answering these questions.

The issue is impossibly difficult to deal with. Say you give aid to a country, and say the country does well next year. How much of the improvement was because of your aid? How much of the improvement would have taken place any way? Might it be the case that the improvement would have been (horror!) even more had you not given the aid? What if you gave aid to improve, say, primary healthcare for youngsters, and educational outcomes improved. Did kids learn better because of the aid given for healthcare? And on and on, making the issue all but impossible to resolve.

Nobel Prizes ought to be given for making all but impossible to resolve issues tractable, and from that viewpoint, this is an excellent choice.

The way the Nobel Prize winners sought to resolve this issue was by setting up experiments. Or, to use the jargon du jour, by setting up Randomized Control Trials. Or Impact Evaluations, if you will.

What are RCT’s?

Malaria is a frustrating disease to think about, because one the simplest ways to deal with it is to prevent it. And prevention is, for the most part, simply caused most effectively by using mosquito nets. And so an NGO called TAMTAM started distributing mosquito nets in Kenya.

Would people buy the nets if they weren’t subsidized? What if they were partially subsidized? What if they were free? This example is drawn from Poor Economics, but the idea is very simple (to describe, at any rate!): find out what works by experimenting.

Whichever method works best, well, deploy it.

Banerjee, Duflo and Kremer have all run a series of experiments on a variety of issues to figure out precisely this: which method is working best? Set up, as carefully as possible, an experiment to find out what works, and to what extent. Read Alex Tabarrok’s post over on Marginal Revolution to get a sense of some of the experiments that have been carried out.

There have been experiments carried out on gender, on mosquito nets, on savings behavior: the works. If you are curious about what kind of experiments have been carried out, this is a useful website.

So, awesome! Right? Well…

A long(ish) video, but here’s one of the dissenting voices.

 

But still…

All of the above being said, RCT’s have been fairly interesting in terms of helping us understand how a specific part of the world works for a specific period of time.

More than that is difficult to say, but that doesn’t mean at least that much shouldn’t be said!

Additional Links

  1. A book about randomized control trials.
  2. The latest book by Duflo and Banerjee (not out yet!)
  3. The Twitter thread announcing the news, from the official Nobel Prize Twitter handle.
  4. Via Niranjan Rajadhakshya’s Twitter feed, an old profile he had done of Banerjee and Duflo.
  5. Here is an old talk given by Michael Kremer on RCT’s.

Thursday’s links, needless to say, will be other posts written about this years prize winners.

The Bottom Line

Work done by Banerjee, Duflo and Kremer has helped us uncover some surprising truths, changed our guesses about what would happen to y if x was done, and we have come along much more in terms of the science of setting up credible, well designed, carefully constructed experiments. Whether or not you agree with their current popularity, they have aided our understanding of the world we live in, and that ought to be celebrated.

Congratulations!

 

 

 

 

 

 

*Duflo and Banerjee speak about this at the very start of their excellent book, Poor Economics, which is where I got the idea from, of course.