Viva la revolution!

From the job market paper of Alex Solis:

Does limited access to credit explain some of the gap in schooling attainment between children
from richer and poorer families? I present new evidence on this important question using data
from two loan programs for college students in Chile. Both programs offer loans to students who
score above a threshold on the national college admission test, providing the basis for a regression discontinuity evaluation design. I fi nd that students from relatively poor families who score just above the cutoff have nearly 20 percentage points higher enrollment than students who score just below the cutoff. Access to the loan program effectively eliminates the family-income gradient in enrollment among students with similar test scores. Moreover, access to loans also leads to higher enrollment in the second and third years of college. These findings suggest that differential access to credit is an important factor behind the intergenerational transmission of income in Chile. 

Here also the blog post about the paper.

This is a very welcome contribution in terms of evidence related to the increase in enrollment when credit constrains are relaxed, but we still need to know what are the dynamic effects of the debt burden for these families and, more importantly, the elasticity price of enrollment, given Chilean higher education is the most expensive in the world..... more than credits are needed to fix the problems that unleashed the student's revolution!

Inflation and the quality of music

WOULDN’T IT BE NICE
(TO HAVE A BIT MORE INFLATION)? (Pierre-Louigi Vezina)

I think that there is a little problem with endogeneity here, but still the message is appealing and make you think about priorities in life...

Louigi finished the PhD in Geneva in my generation and is editor of Rigotnomics. 

surprise, surprise.........

professor doctor was re-elected in The Gambia!!

Political fiction: CIA interventionism and development

In occasion of the upcoming elections in DRC, I am wondering how would this country be if Patrice Lumumba had not been assesinated 50 years ago, in a plot that involved secret intelligence services from USA and Belgium. 


Taking the political fiction exercise further, what if the CIA would have not helped to kill Omar Torrijos and Jaime Roldos?... and if they would have not participated in the military coup in Chile and Cambodia? 


Given the counterfactual does not exist, we can just speculate with the effects. E.g. here there is very powerful empirical evidence of how increased political influence arising from CIA interventions during the Cold War was used to create a larger foreign market for American products.

The earnest search for a mirage

Finally!! my maestro of development, Jean-Louis Arcand, has a blog!!

I had to struggle to understand the meaning of the intricate title, and here I got the answer.

grande maestro!

German aid transparency

While Germany is one of the few countries in the world, and of course in Europe, that have not cut much development aid funds, I have been surprised for the few external accountability of the aid agencies based in Frankfurt.

While the projects of KfW and GIZ are very ambitious, interesting and potentially very beneficial, I have struggled to find any proper impact evaluation. Even more, it is not just that there is no institutional policy for external expert evaluation, but in general they do not know what this is about.

Another, seemly relate, problem comes to transparency in terms of reporting how the money is spent. Publish What You Fund (PWYF) released the 2011 report with the index of transparency for 58 aid agencies. The World Bank has the highest ranking (more transparent) while China-MOFCOM is at the bottom. The Germans are ranked very badly: KfW is 23th and GIZ is 41th! (besides USAID)

Father, Italy has sinned!

It is not just Silvio the sinner, now Italy as a nation is considered to be condemned by the original sin.

I am not sure that Ugo ever considered that the idea he developed for Latin-America could be used for his own country!

So now seems to be clear, not just developing countries or emerging markets suffer from the course of public debt in foreign currency, but also former developed countries (Italy, Spain, Greece).

APOLOGÍA AL CHORREO

Hockey and development???

From a new paper by Alberto Chong and Pascal Restrepo:

We provide evidence of the Peltzman effect by tracking the professional path of each
hockey player that ended up in the National Hockey League from 2001 to 2006. We
take advantage of the fact that visor use has not always been compulsory throughout
a player’s career, which allows us to compare the change in behavior of users and
non-users of visors when they are forced to use them. We find that whereas the
average penalty minutes per game is 0.8, visors cause a substantial increase of 0.2
penalty minutes per game. Players become more aggressive when forced to wear a
visor, partially offsetting its protective effect and creating potential spillover effects to
other players.

When I arrived to work at the IADB, one of the first stories I heard was how Alberto had an RA the whole summer looking for pictures of hockey players and if their were using visors... now I understand!

If interested in link the Peltzman effect to development related issues, here there is a nice blog post by Dean Karlan.

more on Sachs versus The World

or I should say Sachs versus Randomistas? here and here

Is Jeffrey Sachs in a highway to hell?

Here again is Jeffrey Sachs trying to make a public defense of the evaluation of the Millennium Villages Project (MVP).

He claims that "MVP is based on rigorous measurement, detailed comparison of the villages with other sites, and peer-reviewed science." He claims  list of the scientific publications{the list was deleted!} publications using MVP data, but (with all respect) non of the journals that were in the list before the page was deleted  is specialized in development economics or impact evaluation. Even more, I think he ought to directly address the "scientific counterevidence", like the one from the CGD guys (more about this here).

If the road to hell is paved with good intentions, maybe Sachs is in a highway to hell.... on the positive side, I at least must say that I admire that he is not comfortable with staying at his office to give advice to the world, but he tries to implement some real policies.

The essence of treatment heterogeneity

If the effect of a treatment is heterogeneous and the decision to take-up is based on individual characteristics unobservable to the econometrician, then we are in the presence of "essential heterogeneity".  This concept was coined by Heckman and he has been working in the issue for more than 2 decades, producing various papers with co-authors (including one of my professors from Chile), that are generally obscure and not easy to follow for applied researchers.

Martin Ravallion has a new paper that can be a good starting point to understand the problem. He shows that under  essential heterogeneity  the use of a randomized treatment assignment as an IV for take-up can be worse than the naive OLS specification in estimating the causal effect of a program. As a nice extension, he allows the unobserved heterogeneous characteristics to also affect the covariates. 

Open data for all

The Center  for Global Development has launched  an initiative for data transparency, in order to allow researchers to replicate their results. While doing this, they took the opportunity to criticize Jeff Sachs for not doing the same in the evaluation of his millennium villages project.  

the limits of super-markets?

"The limits of superman" is the title of a blog article from FT appeared couple of days ago. It basically proposes that the historically high levels of popular rejection to the Chilean president Sebastian Piñera are related to his lack of charisma, "despite his many assets", what constitutes a failure of technocracy.  It also points that people discontent is related to his way to run the country, "like a corporation and not a state".

This last point is the critical issue. But this is not just Piñera´s fault. Chile was privatized almost completely during Pinochet times (except for part of the copper mines), and now people want to have a more active role of the State in education, health, pension system and other crucial aspects... the problem is not the limit of technocracy, but the limit of markets as substitutes of the State.

Don't take my wrong. Markets are crucial for development, and the excessive participation of the State can be very harmful, as we know from long time ago. But the same argument goes in the other direction, extreme market freedom can be equally harmful. And Chile is the paradigmatic example. An important lesson for development theorists and practioners.   

the war of the sexes ... or the war of the genders?

Is competitiveness determined by sex or gender? Here the interesting answer in a new paper by Flory, Leonard and List:

 Using a dataset with over 700 subjects from Malawi who vary across a broad range of ages, we find that the gender gap in competitiveness in fact disappears as men and women grow older. We also find that culture can significantly affect both the gender gap and the change in the gender gap with age. Similar to Gneezy, Leonard and List (2009) we compare matrilineal and matrilocal cultures to patrilineal and patrilocal cultures. Not only is the gender gap significantly smaller in matrilocal societies, but there is much smaller change in the competitive preferences of women in matrilocal societies when compared to patrilocal societies. Gender is a combination of culture and biology and we find that the way women react to competitive environments changes with their age (potentially determined by hormonal changes as women age) and by their culture.

ht: Development impact  

Social networks in microfinance

Finally Banerjee, Duflo and Jackson (and a 4th co-author I don't know) have came out with a version of their paper about networks in diffusion of microfinance in Indian villages:

We exploit arguably exogenous variation in the importance (in a network sense) of the people who were first informed about the program. We first show that the eventual take-up of microfinance in a village is higher when the first people to be informed have higher eigenvector centrality, a recursive measure of importance in a network. Next, we estimate several structural models of diffusion through the networks to determine the relative roles of simple information transmission versus other forms of peer influence. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that once informed an individual’s decision is not significantly affected by the participation of her acquaintances. This specific model of information diffusion fits the data better than a model where people’s decisions are simply correlated with what their network neighbors do and does a very good job in replicating the aggregate patterns found in the data.

They have information for 43 villages, so I think nobody has yet more village-level data about networks than the one we had collected in Gambia! (of course, villages in India are in average much more bigger than in West Africa)

ht: Julien Labonne

German speaking self-plagiarism?

No doubt that the "Frey affair" has created enormous polemic and has opened a deep discussion about research ethics in Economics as well as questioning on the incentives of the "publication industry" (described as prostitution by Frey himself). After the original self-plagiarism issue with Titanic data appeared, various other potential cases have raised. Recently Frey has written a letter to the ("dismayed") editors of JEP, basically recognizing his mistake. 


The reason to rise the issue again is a recent analysis that relates Frey's behavior as part of the "German(-speaking) academic environment", where "the typical German professor publishes a lot of rather insignificant articles, in particular book chapters and "Festschrifts." These works are rarely original, and are not expected to be so." The comment had immediate impact in the blogsphere (e.g. here). 


Since I have recently moved to this "environment" I would like to hear the opinion of my colleagues about this point. I can see that there is a tension between the traditional German way and the now international (Anglo-Saxon?) standards of academia. Various Economics Departments (like here in Frankfurt, and also in University of Zurich, where Frey was kind of outsider for what I have heard) have started adopting structures similar to American and UK universities. It is likely that the tension between the traditional and the new academic structures creates incentives for self-plagiarism?? (something probably not considered as a problem in the former system) 


I also think that the strong emphasis in the Handelsblatt ranking can partially influence in this behavior. 


Anyhow, for what I have seen, I think that generalizing the "Frey affair" to the whole German(speaking) academic system is exaggerated.   

The other 9/11

Just to refresh memories in the commemoration of the 10th 38th anniversary of the 9/11.



An here Chomsky's version of the comparison.

The microfinance symphony

The global network of borrowers-lenders for Kiva microfinance institution.  This is a very beautiful way to present data!!


Intercontinental Ballistic Microfinance from Kiva on Vimeo.

ht: chrisblattman.com

About higher education in Africa

Shanta Devarajan (World Bank Chief Economist for Africa) had a new paper about higher education in Africa (with 2 co-authors). He is a well-known pro-market economist, and his recommendations are accordingly.

While he is obsessed about excessive government intervention (I think related to the Indian case), I am nowadays worry about the other side, excessive market intervention. Coming from a country considered a serious candidate to be "developed", Chile, where in this moment the whole tertiary educational system (and extreme market oriented solutions) is under fire by most of the society, I would like to share some "comparative thoughts".

While I tend to agree with that introducing "cost sharing" of higher education can be a good principle in order to reduce the financing problem and reduce some regressive subsidies, I doubt that this can be effectively implemented. When higher education went from free to paid in Chile (around 30 years ago), never really happened that fees from the rich when to scholarships to the poor. The general improvement in living conditions made a lot of people go to the university, and the Government answer was giving subsidized credits to those that couldn't afford the fees. The result was a skyrocket increase in fees, now the highest in the world. The big problem in a system with differentiated fees is to identify the “real poor”, something I doubt can be done effectively in Africa.

The ideal for me is that "the rich" get properly taxed (progressive taxation) and then everyone pays small fees in a University funded with these taxes. Since this is not feasible in Africa, the best would be a system that combines: (small and regulated) direct fees + (small and specific) credits + (targeted) scholarships + help to prepare examination tests + incentive to establish private universities (that offer internationally funded scholarships and are regulated by some internationally recognized body, or by some partner external university of excellence) …. I know this still very idealistic.

In terms of the contents, I tend to disagree that the Anglo-Saxon tertiary system of education is what Africa needs. While I think this is the best for a country like Chile, where we need professionals with adaptability and mobility, capable to understand the general picture and applied in different fields, we can do that because we have a critical mass of very specialized and high qualified professionals like engineers, lawyers, physicians, etc… this clearly not the case in Africa. There is the need to train these professionals, requiring 4-5-6 years of specialized studies, particularly because few of them can have the luxury of affording a master degree (even less a PhD) after 4 years of a “general” bachelor. Instead, I think technical institutes that allow getting a degree in a couple of years should be promoted in parallel with universities that offer the very specialized degrees. Also, since most of the people in Africa have some kind of “profession”, with knowledge acquired by practice, institutions that can certify that a person have determined skills and knows the techniques required to perform determined jobs can be a good solution for workers.

There are a lot more to discuss, and I hope this topic will continue in the mind of academics, policy-makers and development practioners....

to blog or not to blog?

DAVID MCKENZIE and BERK ÖZLER, form the World Bank's relatively new blog "Development Impact" are blogging a series of analyzes about the impact of blogging. The first one about the impact on citations, the second one impact on recognition and effective policies.... so far, their methodology is not too credible, and similar to many impact evaluations they have criticized, full of endogeneity and selection bias... I hope they will improve in the next reports of the series.