Friday, June 30, 2006

Just how do economists reach their conclusions?


Here's a primer:

Let's start with how economists reach our conclusions. Non-economists might be forgiven for presuming that we construct our arguments in the same way that they do: apply their preferred mixture of values and interests in order to decide whether or not they like a policy, and then assemble arguments to support that position. This might explain why many would view economists as opponents: by the simple act of disagreeing, aren't economists making it clear that we don't share the same values?

Except that's not how we work. Our starting point is always a model: a stylized representation of how the economy works. Once we're satisfied that we have a model that incorporates the main features of interest — this step necessarily involves a certain amount of subjective judgment — we compare what the model would predict if the policy were in place with what would happen without it. The difference between the two predictions is the effect of the policy.

After describing the problems that arise from this fundamental misunderstanding, the author (Stephen Gordon of the University of Laval at Quebec City) goes on to offer some suggestions about what can be done:

Clearly, economists can make a more concerted effort to explain to non-specialists what it is they are saying, and why. This isn't a simple task — economics is a difficult and technical subject — and it's made more complicated by the fact that there are any number of commentators who have built their careers on misunderstanding and misrepresenting what economists have to say.

But it would be easier if progressives made an effort to set aside their distrust of economists and actually listen to what we are trying to say. Yes, you may be forced to re-examine some long-held opinions, but is that really a bad thing? And you may be pleasantly surprised to learn that we too are preoccupied with finding solutions to the problems of poverty and inequality.

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Cross-posted at nanopolitan 2.0; if this is not a good time to make a plug for my other blog, what is?

An analysis of the results of JEE-2006


The Ministry of Human Resource Development (MHRD) has issued a press release about the results of the new, improvedTM Joint Entrance Examination (JEE) conducted in April 2006 by the Indian Institutes of Technology (IITs). It's clear that the Ministry wants a positive spin on the outcome, but it's equally clear that a lot of the news is not all that great. Let's take a look:

Bias against first-timers:

The number of candidates qualified in their first attempt is 2,761, which is 43.50 per cent of the total qualified candidates. This proportion is significantly greater than the corresponding value (28.49 per cent) in JEE-2005. The high proportion of first timers reflects the success of the changed pattern of examination in JEE-2006 in getting more number of students who have been equally good performer in qualifying examination (10+2). Hence, the main purpose of introducing a new examination pattern emphasizing on the importance of school education has been successfully fulfilled. ...

Bias against rural students:

The proportion of successful candidates belonging to towns and villages has also increased to 30.67 per cent [1943 students were from towns (1328) and villages (615), while 4400 were from cities], as compared to 28.02 per cent in JEE-2005 while the percentage has decreased in case of cities from 71.98 per cent in JEE-2005 to 69.37 per cent in JEE-2006. The proportional increase in the percentage from smaller towns further emphasize the success of the new JEE system and indicate reduced dependence on coaching centers which the candidates from town and village have no access to.

Bias against girls:

The application fee for female candidates was half (Rs.300/-) of the fees for male candidates (Rs.600/-). In this respect the new JEE system has also ensured a higher participation of female candidates as evident from the total number of registered female candidates of 58,997 in JEE-2006 as compared to 29,291 in JEE-2005. However, there is only marginal increase in successful female candidates as compared to JEE-2005.

Clearly, there has been significant 'progress' only in the share of seats that went to the first-timers. Progress made by non-urban students is small, but it's at least in the right direction. In the girls' share of IIT seats, the progress may even be deemed 'negative', since their number increased only marginally in spite of a near-doubling in the number of girls who applied for (and presumably, took) the JEE.

The JEE still has a long way to go before it can be held up as an ideal for the other entrance exams to emulate; right now, I would view it only as a deeply flawed exam with in-built biases against girls, first-timers and the rural and the poor.

IMHO, IITs should strive to convert JEE into an exam that fulfills -- at the least -- two primary requirements: (a) It should be a standardizing exam, in the sense that it should allow one to compare the relative levels of different school board exams, (b) it should be a standardized exam, in the sense that its results are less noisy and more predictable. Better yet, the IITs should merge it with AIEEE conducted by CBSE, and seek to make that unified exam conform to these two requirements.

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Let me list a few related posts for future reference:

How good are our entrance exams in 'discovering' merit?

Critiques of JEE by two professors of IIT-K

Women in IITs

Consistent performance

Entrance Exams

Quit smoking ...


Over at Cyborg's Contemplative Corner, Swati is moved by recent news about the terminal illness of a dear one to write a strongly worded post urging smokers to quit smoking. The combined effect of reason and emotion in her post is powerful indeed.

Let's get this straight: THERE IS NOTHING COOL STYLISH OR TRENDY ABOUT SMOKING.Those who in a fit of mistaken bravado continue to smoke in the face of overwhelming evidence about the harm it causes have absolutely no idea of the misery of being afflicted with a deadly disease. Both for themselves, and for their family members. They have no idea of the excruciating physical pain of cancer and its treatments, and the emotional pain of dealing with terminal illness in the prime of life. ...

if you continue smoking, there's a 50 per cent chance that you will die of a smoking related illness. None of us would ever drive a car which has a 50 per cent chance of spontaneously catching fire. None of us would ever consume food with a 50 per cent chance of poisoning you. And yet, many of us would continue smoking, oblivious to the grave risk it poses to ourselves and those around us.

Thursday, June 29, 2006

Defending B-schools


Glenn Hubbard, dean of Columbia Business School, defends B-schools in his column in the Financial Times (the link will go behind the pay-wall soon, so read it now).

Why, then, is the US adding productivity growth when so many other big economies see negative growth in productivity? Those who say the answer is technology have spent too little time in Tokyo, Seoul and Berlin. The fact is, technology is better in many other countries. So US companies did not become more productive by simply buying faster computers. They became more productive by having managers and entrepreneurs who knew how to integrate these investments with new business models to raise productivity. These abilities to think strategically are teachable; and the central classroom for teaching leaders to “pick these locks” is the business school.

The FT link comes via Mark Thoma's Economist's view, which has an extended quote.

Value addition: Check out this great video produced by the students of CBS. Glenn Hubbard is (sort of) featured there! [link via Selva].

Watchful eyes


Neat experiment, with amazing results:

Melissa Bateson and colleagues at Newcastle University, UK, put up new price lists each week in their psychology department coffee room. Prices were unchanged, but each week there was a photocopied picture at the top of the list, measuring 15 by 3 centimetres, of either flowers or the eyes of real faces. The faces varied but the eyes always looked directly at the observer.

In weeks with eyes on the list, staff paid 2.76 times as much for their drinks as in weeks with flowers. “Frankly we were staggered by the size of the effect,” Gilbert Roberts, one of the researchers, told New Scientist.

Sitaram Yechury on CPI-M's stand on quotas


Via Locana's Anand: Sitaram Yechury of the Communist Party of India - Marxist clarifies his party's stand on quotas:

... Mere appeals for a change of heart or behaviour cannot and will not eliminate this obnoxious system [of caste-based social oppression]. In order to do so, we require to bring about a radical realignment in the economic empowerment of these sections. This means the implementation of sweeping land reforms that will empower the vast majority of the socially-oppressed sections. With economic assets as the basis, the struggle against social manifestations of caste oppression can be conducted.

Mere moral outrage or even a correct understanding of the social roots of the problem cannot lead to its elimination unless sweeping agrarian reforms are implemented. It is precisely this that the dominant political leadership of Independent India did not do. It is precisely this that communists seek to achieve. The implementation of land reforms in West Bengal and Kerala may not have eliminated caste identity but have surely led to a quantum decline in caste-based social oppression.

Since we continue to work for such changes elsewhere in the country, our support for reservations, therefore, cannot be seen as the final solution for ending caste oppression. Reservations in the present conditions are a necessity that offer some relief to some individuals in these communities, enhance their confidence in their advance and seek to make them more equal in the vastly growing unequal society in India. However, by themselves, reservations cannot be the final solution to the problem. The final solution can come only with a sweeping agrarian revolution that economically empowers these sections. [...]

Clearly, ... the benefits of [reservations] should naturally reach the most needy sections within the OBCs. Introduction of an economic criteria, which the CPI(M) alone had suggested in the Nineties, was mercifully upheld by the Supreme Court in its definition of the ‘creamy layer’. This will have to be integrated with the OBC reservations in higher education.

The CPI(M), while supporting reservations, is engaged in strengthening the struggles on the larger agenda of the economic empowerment of these sections. This alone can render the caste system and the associated caste oppression as an ‘anachronism’ in modern India.

Wednesday, June 28, 2006

Affirmative Action: the South African model


The latest issue of Outlook takes a look (there's also an accompanying interview of Mathews Phosa, a black businessman):

... Outlook studied South Africa's experience of reversing the debilitating impact of apartheid. In South Africa, though, AA means more than job reservation and seats in universities. As government spokesperson Joel Netshitenzhe explains, "In trying to restore the dignity of the Black majority, which includes Africans, Coloured people and Indians in South Africa, AA took on a much broader meaning."

At the heart of AA in South Africa is the government's endeavour to apply the principle of equality embodied in the Constitution. This has been done by introducing a slew of legislations to ensure that all sectors of the society reflect, over time, the country's racial demographics, and, consequently, rectify the skewed structures of employment and business ownership inherited from the apartheid era. Today, according to the South African Institute of Race Relations (SAIRR), Africans make up 79.3 per cent of the population, Whites 9.3 per cent, Coloured people 8.8 per cent and Indians 2.5 per cent. Ideally, in an equitable South Africa, these numbers should be reflected in all aspects of South Africa's socio-economic life.

Laws, such as the Employment Equity Act (No 55 of 1998), have been passed to realise the avowed objective. But the cornerstone of AA in South Africa is the broad-based Black Economic Empowerment (BEE) Act. It intends to increase Black ownership and control of businesses and ensure that the workforce, including senior management in each entity, reflects the country's racial make-up. The government can issue codes of good practice and set specific AA targets for various economic sectors.

For example, in the healthcare sector, about 25 per cent of businesses should be in Black hands by 2014, and 30 per cent of senior managers have to be Black by 2010, rising to 60 per cent by 2014, with half of them being women. The mining sector's objective is to achieve 26 per cent Black ownership of mining firms in 10 years. The agriculture sector's 2014 target is to pass 30 per cent of agricultural land to Blacks, as well as provide a further 20 per cent to them through leaseholds.

I have said this before, and I will say it again: from the point of view of non-beneficiaries, affirmative action is no different from quotas. If diversity is the goal of AA, for example, just how would you assess its outcome? By monitoring the number of beneficiaries from the disadvantaged groups, and comparing that number against some target to see if the progress is satisfactory. The South African example is illustrative.

Eisenhower and the US Interstate Highways


On the 50th anniversary of the Interstate Highways in the US, CR4 (a site that looks and feels so much like slashdot) has a five part series that looks at the history, politics and engineering of this grand system of highways. Fascinating stuff.

Part 1: A Giant Nationwide Engineering Project

Part 2: Roots of the Roads

Part 3: The Politics of Passage

Two more should be out later this week; I will add the links when they are published.

MSNBC also has a story on how the highways "moved America into another lane".

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Thanks to Krish for the pointers.

Of International Advisory Boards and Dabbawallahs


Two interesting news reports today from the world of B-schools.

Today's Economic Times reports:

The Indian Institute of Management-Ahmedabad (IIM-A) board on Monday decided to form an International Advisory Council (IAC) — the first by any Indian B-School — to examine, discuss and recommend IIM-A’s long-term strategic orientations. [...]

Several reputed universities and business schools have such councils. Such bodies do not have any decision-making powers and they function purely as advisory bodies. The mission of IAC, which will be a body of leaders from the fields of education, business, management and academia with wide international experience and perspective, would be to examine, discuss and recommend IIM-A’s long-term strategic orientations.

This is a great move, and I hope it catches on. In a post from a year ago, I noted two similar initiatives: an academic audit at Mysore University, and an (external) scientific advisory board at the Inter-University Centre for Astronomy and Astrophysics.

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ET also reports that the Indian School of Business (ISB) invited the dabbawallahs of Mumbai to lecture to its students:

When ISB invited the dabbawallahs to speak to their students and share some of their trade secrets, the least they expected was a power point presentation . But Raghunath Medge, president of the Nutan Mumbai Tiffin Carriers’ Charity Trust and Gangaram Talekar, the secretary, showed how deceptive appearances can really be.

The budding management graduates sat riveted as Medge explained that the 5,000-strong workforce that confronts traffic and crowds in Mumbai everyday to deliver about two lakh lunch boxes is actually illiterate or semiliterate. [...]

“There were three main things that I gathered from the lecture. The first one is, keep things very simple; do not complicate stuff. Secondly, make use of the available infrastructure. Do not try and do things out of the box, things that are not available to you, and thirdly , always have a back-up . That is the best resource,” said Indira, an ISB student .

The dabbawallahs also discussed how their organisation had become a subject of study in top B-schools in Indian and abroad, and how they recently secured Six-Sigma ISO certification.

>

Ashutosh Varshney on Affirmative Action


Via an e-mail alert from Shivam Vij: An interesting debate about the Malaysian version of affirmative action between Ashutosh Varshney and Pratap Bhanu Mehta. I don't really have any comment to make, but I am thankful to both of them for their informative pieces.

Ashutosh Varshney's article, which also has some info about the Sri Lankan version of affirmative action.

Pratap Bhanu Mehta's critique.

Finally, Ashutosh Varshney's rebuttal.

Tuesday, June 27, 2006

Kumari L. A. Meera Memorial Trust


My friend and colleague, B. Ananthanarayan, requested that I spread the word about the Kumari L.A. Meera Memorial Trust:

Last November saw the 20th anniversary of the tragic death of L. A. Meera at the University of Pennsylvania in a senseless act of homicide. She had been a first year graduate student at the Physics Department there and the event took place over the Thanksgiving weekend. She had studied in St. Stephen's College Delhi and at IIT Madras, first for her M. Sc. in physics and then for an M. Tech in computer science, and then wanted to switch back to physics.

Meera's father founded a Trust in her memory, and recently the Trust established a web site that describes the activities of the Kumari L. A. Meera Memorial Trust. There is an extensive description of its activities. Here's a quick quote:

The Trust has instituted awards and prizes for the encouragement of excellence of Physics in the Indian Institute of Technology, Madras, St. Stephen’s College, Delhi, the Indian Institute of Science, Bangalore and other educational institutions. The Trust organises Public Lectures, Seminars and Meetings in many parts of the country. These have been of interest both to experts and to the lay public.

Meera's personalilty and brief life touched the lives of many who are now scattered all over the world. The trust welcomes contributions from donors who would like to foster the activities of the sort the KLAMMT is involved in. The best way of getting in touch with the Trust is by mail, since there is no one managing the e-mail link at least at the moment.

A professor's whine


Disrespect in the classroom is rampant. Many students don't even know their professor's name or how to pronounce it by mid-term, much less recall the names of faculty members from the previous semester. During a timed lab exercise recently, I had a student call out to me across the room, "Hey, dude!"

Once, while discussing the nature of classroom manners and decorum, I had a woman pipe up from the back row: "Listen, man, I paid $300 for this class, and if I want to sit here and trim my toenails, that's what I am going to do."

From this rant by a pseudonymous professor in the Chronicle. The serious, relentless rant ends on a positive note, though:

just as you feel the bitterness becoming more than you can stand, you get a reminder of what keeps you in the business.

Just today, I got not one, but two such reminders -- e-mail messages from former students thanking me for my rigorous approach to education. Looking back, they said, it not only has helped them in their careers, but in their lives.

I suppose teaching is, like golf, a maddening endeavor. In golf, even after 50 bad shots, if you accidentally hit a beauty, life is good and you love the game and you don't throw the clubs in the lake after all. In teaching, even if you get 50 students who don't care, it's those one or two each term who keep you coming back.

Reminded me of one of the reasons why parents feel that their kids make them happy!

Monday, June 26, 2006

Veerappa Moily on the way forward


Update: The interview is available online.

Veerappa Moily, Chairman of the Oversight Committee that will recommend how the new reservation policy is to be implemented, says a lot of interesting things in an interview with Shekhar Gupta. Just look at the list of ideas that he says are under consideration by his Committee:

Increasing faculty salaries beyond the limits imposed by the Pay Commission, pushing for more public-private partnership in the education sector, ensuring almost a three-fold increase in higher education enrolment and reinforcing “global” brand equity of institutions of excellence.

I have already commented about Moily's management jargon in another interview. There is a bit of it in this interview too:

“I am not just going to fill (the) potholes but build a knowledge superhighway,’’ said Moily.

Confirmation bias


Scientific American carries a wonderful article by Michael Shermer on confirmation bias, which we all suffer from and which makes us "seek and find confirmatory evidence in support of already existing beliefs and ignore or reinterpret disconfirmatory evidence." The article starts with this quote from Francis Bacon:

The human understanding when it has once adopted an opinion ... draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects and despises ... in order that by this great and pernicious predetermination the authority of its former conclusions may remain inviolate.

The article recounts the results of recent brain imaging studies, and their implications. You can get all the details there, but here's a section where Shermer talks about the 'self-correcting' machinery used in science that allows us -- biased mortals -- to avoid pitfalls such as confirmation bias:

In science we have built-in self-correcting machinery. Strict double-blind controls are required in experiments, in which neither the subjects nor the experimenters know the experimental conditions during the data-collection phase. Results are vetted at professional conferences and in peer-reviewed journals. Research must be replicated in other laboratories unaffiliated with the original researcher. Disconfirmatory evidence, as well as contradictory interpretations of the data, must be included in the paper. Colleagues are rewarded for being skeptical. Extraordinary claims require extraordinary evidence.

Warren Buffett's class act


Buffett has pledged to gradually give 85% of his Berkshire stock to five foundations. A dominant five-sixths of the shares will go to the world's largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation, whose principals are close friends of Buffett's (a connection that began in 1991, when a mutual friend introduced Buffett and Bill Gates).

The Gateses credit Buffett, says Bill, with having "inspired" their thinking about giving money back to society. Their foundation's activities, internationally famous, are focused on world health -- fighting such diseases as malaria, HIV/AIDS, and tuberculosis -- and on improving U.S. libraries and high schools.

Awsome. Wonderful. Inspiring.