Market for kidnapping

The Hostage Business
"Few sectors have endured the economic downturn of recent years better than kidnapping. Confidence in big banks and stock markets might be shaky, but the crudest form of trade — abducting and bartering people — seems alive and well. Gregory Bangs, the kidnap-and-ransom manager for Chubb Group, an American insurance company, said that patterns of kidnapping around the world are “almost inverse” to that of the global economy. “In a recessionary environment, the kidnapping rate goes up,” he told me. More companies are requesting kidnapping and ransom insurance — Bangs reported a 15 to 20 percent jump at Chubb over the past three years — than ever before. But why? What makes kidnapping and ransom, or K.& R., such a growth industry?
In April, speaking at a security conference in the Nigerian capital Abuja, Mike Okiro, then the inspector general of the national police, shared a revealing fact. He estimated that the total amount of ransoms paid in Nigeria between 2006 and 2008 exceeded $100 million."...

"But as long as families and governments and companies continue to pay ransoms, Okiro told me, “there will be no end to it.”
The U.S. government concurs. Discussing the Somali pirates in April, Secretary of Defense Robert Gates said companies that paid ransoms to the pirates were “part of the problem.” “Clearly, if they didn’t pay the ransoms, we’d be in a stronger position,” Gates added. (When a terrorist organization is involved, paying a ransom can actually put individuals and companies in violation of U.S. laws, including the Patriot Act.) As Erik Rye, an adviser for hostage affairs at the State Department, puts it, “If you’re out there feeding the bears, the bears are going to keep coming into the camp.”
...
"The contemporary kidnapping-and-ransom industry emerged in the late 1970s in response to rampant kidnappings in Colombia and throughout Latin America. Globally, for the next 25 years, most cases occurred in Latin America. But political and economic developments have begun redrawing the map of kidnapping hot spots. Chase still considers Colombia “the most mature market” for kidnapping because Colombian perpetrators have been at it the longest — although incidents decreased after President Alvaro Uribe began to take on the country’s guerrilla movements in 2002. There were 465 reported cases in Colombia last year (down from almost 3,000 in 2002). Mexico now has the most kidnappings, with an estimated 7,000 in 2008, though this number has stayed steady in recent years. In fact, Latin America’s share of total reported kidnappings fell to 42 percent in 2008 from 65 percent in 2004.
Gregory Bangs, the K.& R. manager at Chubb, doesn’t foresee the global market flattening out anytime soon. He said new markets were flourishing outside Latin America. Two emerging markets are in Africa and the Middle East; together their share of reported cases nearly quadrupled between 2004 and 2008. During that time, Somali pirates seized dozens of ships off the Horn of Africa. The ships were usually insured, and the pirates made off with increasingly large sums. In postwar Iraq, criminals relied on kidnapping to raise money, and Al Qaeda used kidnappings and beheadings to spread terror. The Taliban have also turned to kidnapping to raise money. And in Nigeria, what began with MEND quickly expanded. Foreigners are still kidnapped in Nigeria, but because many international companies have pulled their employees out of the country, the majority of cases now involve Nigerian victims. The range of victims seems to keep expanding. Kidnappers have grabbed children on the way to school. This summer, two politicians from central Nigeria were abducted; when their relatives couldn’t pay the ransom, the captors freed the two men to go and find the money — but only after they left their wives as collateral. "
...
"Chase said the proof-of-life question — and the way it is handled — often defines the case. “It’s always comforting when they talk about the P.O.L.,” Chase said. “They’ve done this before. They know the form. They know how the game is played.”

Deferred acceptance in Ghanian school choice

Kehinde Ajayi, a Ph.D. Candidate in the Department of Economics at the University of California, Berkeley, is studying school choice in Ghana. She recently sent me a 2005 document from Ghana's (then) Ministry of Education and Sport "that the government produced when the Computerised School Selection and Placement System (CSSPS) was initially introduced."

It describes a version of a deferred acceptance algorithm (a clearinghouse algorithm that has been discovered a number of times and places, but that game theorists associate with Gale and Shapley 1962), and describes an essential feature, which is that if student A would have displaced student B at school S had he ranked school S first, he will also displace student B at school S even if he ranks school S second (or lower). This is what makes it safe to list schools in your true order of preferences.

"4.2 Displacement
a. Selection on Merit
The computer places all qualified candidates into their first choice schools using the ranking order. The aggregate score of six subjects of each candidate is used to do the ranking.
b. Displacement of 1st choice candidates by 2nd choice candidates as a matter of merit or better performance
The ranking may displace 1st choice candidates with 2nd choice candidates; this will be on merit and not choice. The following table is an illustration:
"Kwasi and Kofi make the following choices of schools and programmes.
...[Table showing that Kwasi, with an aggregate 'score' of 400 ranks Anglican as his second choice, while Kofi, with a score of only 350 ranks Anglican as his first choice...]
"Suppose the cut-off for Science Programme for Opoku Ware is 420 and that for Anglican School is 350, Kwasi is sent to Anglican to compete with first choice candidates for science Programme because his aggregate score is just below the cut-off for Science Programme for Opoku Ware School. Kwasi is then sent to Anglican to compete with the first choice science candidates. Since Kwasi’s aggregate score is higher than that of Kofi’s, Kwasi will then displace Kofi."

School choice in San Francisco, Chicago, and Cambridge MA

Changes in school assignment procedures are being discussed in San Francisco, Chicago, and even Cambridge, MA.

In San Francisco, the redesign is well under way, and the school board has a link to the redesign process: What Have We Done So Far.

An impresssive parent-organized blog outlines the San Francisco Student Assignment system, and the current process intended to reform it, initiated by the San Francisco Unified School District. One of the early posts assembles some of the relevant materials, including the SFUSD page about the Student Assignment Redesign (including some history and legal context), and the
SFUSD technical description of the current Student Assignment Process (which can now be found here).

Chicago has begun to rethink its school choice system; see New Proposed Admission Policy Information


In Cambridge, Parag Pathak proposed that a strategy-proof mechanism replace the old Boston-style mechanism (no longer used in Boston); see School Assigning Process Criticized--MIT professor presents a possible solution to the problem

New York City High School choices are due Dec 4

These days I follow the NYC high schools from a distance, but it's gratifying to see some of the long lasting changes that Atila Abdulkadiroglu and Parag Pathak and I got to help put in place (described here, and for those really interested in technical detail, here).

Here's some advice on ranking schools, from a contemporary observer at InsideSchools.org: HS applications due Dec. 4: How to rank the schools

"Your favorite should come first. You don’t need to play guessing games or set up an elaborate strategy. You have nothing to lose and everything to gain by ranking your top choice number one on your list because schools won’t see how you ranked them.
However if you are applying to a school for which you do not qualify — say you want to apply to a school that accepts only Manhattan residents and you live in Queens — you are wasting a spot on your list if you put it down. Likewise, if a school looks for students with an 85 average or above and your GPA is 70, your chances of getting accepted are slim to none.
What about the schools that tell you, you must put them first, or they won’t consider you? According to the Department of Education, that policy was done away with several years ago. Schools no longer see who lists them first, and they have to come up with their own ranking of students from first to last."

Kidney exchange in People Magazine

In the Nov 30 issue, with Johnny Depp on the cover.

"The chain's home base is the University of Toledo Medical Center, where transplant surgeon Mike Rees performs operations and coordinates the program through his nonprofit, the Alliance for Paired Donation. People enter the chain because they need a kidney and have a friend or family member who is willing to donate, but who isn't a match. Once they enter the chain, Rees's staff inputs their names, blood types and other information into a database of other patient-and-donor pairs; the computer then matches would-be donors and recipients."

The article is referring to a recent reunion of the 20 people involved in Rees' first pioneering non-simultaneous extended altruistic donor (NEAD) chain.

Another organization that has been successfully pursuing NEAD chains among other options is the National Kidney Registry founded by Garet Hil. Here's an article about a recent exchange of theirs: Two couples from Bronx, Jersey exchange kidneys through computer organ donation program.

See here for some more technical material on kidney exchange.

The signaling deadline for the economics job market is midnight tonight

A quarter of new Ph.D.s who failed to signal last year reported that it was because they missed the deadline. The deadline is midnight tonight.

You can register and select your signals here. If you're on the job market, send your signals now.

(You probably don't want to send them to a department ranked higher than the one you are graduating from, and you might want to send them to departments that you don't think will get too many signals. See the Coles et al. paper for the data.)

good luck to all.

The signaling deadline for the econ job market is tomorrow, Tuesday, at midnight

If you are an economist on the jobmarket, planning to be interviewed at the ASSA meetings in January, and if you haven't submitted your two signals yet, now is the time. You can register and select your signals here.

(For everyone else, here is a description of signaling, it's a process by which job candidates can have the American Economic Association send an indication of particular interest to two potential employers out of the many they have sent applications to. The idea is that a limit to two special signals helps employers sort through the many applications they receive when it is time to decide who to interview at the national meetings in January.)

The deadline is tomorrow, Tuesday, at midnight (2400 EST).

The December JOE is out, so there won't be any new job listings before tomorrow.

Now is the time to chat with your advisor, and send your two signals. (It can't hurt and might help, see the paper linked to in yesterday's post.)

The job market for new economists: preliminary report

I chair the AEA ad hoc committee on the job market, and a preliminary version of a report we're writing may be of interest to those on the job market this year (and in particular to those who should be signaling by the end of the day Tuesday). The bottom line for the moment? Don't forget to signal.

The paper is
Peter Coles, John Cawley, Phillip B. Levine, Muriel Niederle, Alvin E. Roth, and John J. Siegfried , " The Job Market for New Economists: A Market Design Perspective," preliminary draft, Nov. 25 2009.
A link to it (which will be updated as the paper proceeds towards completion) is on my market design page here.

Internet resources for the homeless

Being homeless does not necessarily mean being cut off from the internet. The Boston Globe reports Online sites offer a fertile venue for some in need

"On Homelessforums.org, thousands of people post questions and comments about everything from how to stay safe on the streets to where to camp for free. There are pleas for money on CyberBeg.com, which compares itself to a lottery, and Begslist.blogspot.com, which describes itself as a “source for free . . . e-panhandling, online donations, debt help, finding financial resources, and a great place to ask for financial help from the kindness of others.’’

Rules of the road for cars and bikes

In many places where cars and bikes share a road, they customarily (if not legally) follow different rules. In England, a trial program will allow bikes to travel the wrong way down some one-way streets: Cyclists will be given green light to ignore one-way signs.

"Cyclists will be permitted to ride the wrong way along one-way streets under a change intended to encourage more people to give up their cars or use them less.
The Government will announce today that cyclists will be permitted to ignore no-entry signs: a practice already followed by many, including David Cameron, the Conservative leader.
The Department for Transport is authorising a trial in the Royal Borough of Kensington & Chelsea, Mr Cameron’s home authority in West London, in which a small plate saying “Except cyclists” will be attached to poles carrying no-entry signs.
If the trial is successful, the department intends to extend the policy to the rest of Britain and permit thousands of one-way streets to become two-way for bikes. It believes that long diversions around one-way systems are a significant deterrent to new cyclists, who might be less confident about breaking the rules."

On this side of the pond, Brookline MA is trying something similar, although not on the roads that I ride to work: Right way or wrong way? Brookline tries out new bike lanes

Lynne Kiesling at KP has a nice post on whether cars and bikes should obey the same rules of the road: Roads and paths as common-pool resources, and the problem of governing them

The rules of the road are a relatively recent invention: 2009 marks the 100th anniversary of Boston’s first traffic regulations, as issued by the Board of Street Commissioners. Peter DeMarco of the Boston Globe reports A century ago, driving laws tamed Boston’s wild streets.

"Back then there were no street signs, no stop signs, no traffic lights, no double center lines, no traveling lanes, and no yield signs. Automobiles had to battle horse-drawn carriages and wagons, bicyclists, trolleys, and pedestrians for space on the road. And while we joke today about how infrequently we obey traffic laws in Massachusetts, a century ago, there were scarcely any laws to obey."

Of the new laws adopted in 1909 he says:"A number of the laws are still very much in use today. Boston got its first one-way streets, adopted a new rule requiring drivers to “signal if about to turn,’’ and began requiring drivers to pass on the left - all in 1909. Parking within 10 feet of a curb was prohibited, double parking was outlawed (well, at least on paper), and police, fire, and other emergency vehicles (including postal carriers and doctors) were given the right of way.
But the rules also show how little our state’s first motorists actually knew about driving, and how Boston streets were really a free-for-all. Drivers had to be told not to stop in the middle of the street, not to park on sidewalks, and not to drive in reverse. The regulations include basic diagrams, reprinted in newspapers for all to study, explaining how to properly make a right turn, a left turn, and a U-turn - revolutionary stuff in 1909, when license exams consisted of a paltry 12 questions."
...
"Most cars were rudimentary, lacking not only turn signals, brake lights, and treaded tires, but also speedometers, windshields (thus the need for driving goggles), roofs, shock absorbers, power steering, and heat (necessitating leather driving coats and gloves). Steam-engine cars could explode, while hand-crank starter rods could spin back and break your arm. To apply brakes, you pulled hard on a lever. Seat belts, alas, didn’t exist."

Update: a column in the London Times suggests that bike riders will have to become more law abiding if London is to become more like Amsterdam, with high volume bike traffic: Time’s up, bike bandits

The market for fresh turkeys

Frozen turkeys can be produced year round, but fresh turkeys for Thanksgiving all need to be brought to maturity at around the same time. This column from last year's Slate puts the picture into focus: The Turkey-Industrial Complex--How do farmers produce so many birds for Thanksgiving?

"Producing fresh turkeys takes more planning. Market leader Butterball, for example—which grows about one fresh bird for every nine frozen ones—has already begun the production cycle for next year's holiday season. Eggs for breeder birds have been purchased from one of the world's two major genetic suppliers, Hybrid and Nicholas. Those eggs will then be hatched and placed in turkey farms so that they can grow and become sexually mature during the winter. (Butterball needs roughly 28,000 laying hens and 1,700 "stud" toms each year to produce the right amount of fresh turkeys.) Come springtime, these birds will produce the eggs that are destined to become the turkeys we actually eat. Hens produce eggs in 25-weeklong cycles: The first five weeks' worth go toward fresh turkey production, the rest toward the frozen turkey market. Breeder hens are normally used for a single cycle before being slaughtered and processed themselves."

Two edited volumes

Two edited volumes recently arrived in the mail:
Better Living through Economics, edited by John Siegfried; and Studies of Labor Market Intermediation, edited by David Autor.

Here's a link to one chapter:
Niederle, Muriel, and Alvin E. Roth,''The Effects of a Central Clearinghouse on Job placement, Wages, and Hiring Practice'', in Labor Market Intermediation, David Autor, Editor, The University of Chicago Press, 2009, 273-306.

Early and late matching to career choices

A recent NBER paper by Ofer Malamud finds that students (in Scotland) who get to choose their academic specialty later in their educational careers have fewer changes of career than students who must choose earlier (in England). So, it provides some evidence about why unraveled markets are sometimes inefficient, i.e. on how early matching can result in lower match quality.

Discovering One's Talent: Learning from Academic Specialization by Ofer Malamud

Abstract: In addition to providing useful skills, education may also yield valuable information about one's tastes and talents. This paper exploits an exogenous difference in the timing of academic specialization within the British system of higher education to test whether education provides such information. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality to these fields. Distinguishing between educational regimes with early and late specialization, I derive comparative static predictions about the likelihood of switching to an occupation that is unrelated to one's field of study. If higher education serves mainly to provide specific skills, the model predicts more switching in a regime with late specialization because the cost of switching is lower in terms of foregone skills. Using survey and administrative data on university graduates, I find that individuals from Scotland, where specialization occurs relatively late, are less likely to switch to an unrelated occupation compared to their English counterparts who specialize early. This implies that the benefits to increased match quality are sufficiently large to outweigh the greater loss in skills from specializing early, and thus confirms the important role of higher education in helping students discover their own tastes and talents. http://papers.nber.org/papers/W15522


An ungated version is here.

Designing a course grading system

Noam Nisan at Algorithmic Game Theory tells a funny story about grades for a game theory class. (Don't try this for other subjects...)

Worldwide university rankings, compared to GNP

Rankings have lots of problems, but here is an ambitious attempt to look at universities all around the world.

"The Academic Ranking of World Universities (ARWU) was first published in June 2003 by the Center for World-Class Universities and the Institute of Higher Education of Shanghai Jiao Tong University, China, and then updated on an annual basis. ARWU uses six objective indicators to rank world universities, including the number of alumni and staff winning Nobel Prizes and Fields Medals, number of highly cited researchers selected by Thomson Scientific, number of articles published in journals of Nature and Science, number of articles indexed in Science Citation Index - Expanded and Social Sciences Citation Index, and per capita performance with respect to the size of an institution. More than 1000 universities are actually ranked by ARWU every year and the best 500 are published on the web. "

Here are the 2009 rankings.
Two of the top ten are from England (#4 Cambridge and #10 Oxford), the rest are in the U.S. The difference in the "overall score" between #2 and #10 is smaller than the difference between #1 and #2, but this may just have to do with how the scales are normalized. The highest ranked university from a country other than the U.S. or England is University of Tokyo, at #20.

Here is a table of Percentage Distribution of Top Universities by Country with Their Share of Global Population and GDP
Only 15 countries have universities ranked in the top 100, and an additional 24 countries have at least one university ranked in the top 500. The top producers of universities are producing them disproportionately to their share of world GDP or population, for example the U.S. has 55.0% of the top 100 universities, and 30.3% of the top 500, but only 23.6% of GDP and 4.5% of population. (Israel is a big outlier, with 1.0% of the top 100 and 1.4% (i.e. 7 universities ) of the top 500, from an economy with 0.3% of world GDP and 0.1% of population.
I have taught at the universities ranked #1, 25, and 50, and studied at #2 and 7. Based on this limited and skewed sample, and on other universities I know well, I can see that both wealth and the quality of the students are big components of university quality, not always perfectly correlated. (What makes the #1 university so extraordinary is the extent to which it succeeds in assembling so much of both in the same place, and what makes the Israeli universities so remarkable is certainly not their wealth.)

Based on the quality of students from various countries who we see in the U.S., I would guess that, if student quality were the main thing being measured, both Turkey and Iran (each with one university in the #400-500 range) are not getting the credit they deserve. (Many of our students from those places had their undergraduate education at home, and apparently got it at pretty good places; even those who come to the U.S. for their undergraduate education are obviously being drawn from pools of students for whom education is a priority.)
Similarly, there may also be countries where wealth rather than student quality is doing most of the work in putting one of their universities into the top 500, and talented and committed students there might be better advised to study overseas if they can. I'm thinking of Saudia Arabia, with one university in the 400-500 range. A number of Gulf countries have been investing in universities, and it will be interesting to see how well they succeed, and how that changes them if they do.

(A very interesting paper by my colleague Eric Chaney looks at the history of scientific productivity in the Muslim world, and gives some food for thought about what aspects of the general culture might promote vibrant universities: "Tolerance, Religious Competition and the Rise and Fall of Muslim Science")

Final remarks in our market design class

Harvard's new academic calendar and Thanksgiving combined to produce an early end to the lecture part of our Market Design class. I ended with some concluding remarks (here are the accompanying slides: 12.3 concluding remarks ).

One remark is that market design is an eclectic field, drawing on game theory, experiments, computation, and field observation of all sorts (rules are data!).

Teaching the class over the last not-quite-a-decade has been an invigorating intellectual experience. When Paul Milgrom and I began the class (when he spent a year at Harvard in 2001), he had the FCC spectrum auction experience under his belt, and I had the redesign of the National Resident Matching Program under mine, and we had plenty of ideas.

I entertained a faint worry that, at the end of the decade, those might still be the only major applications we had to talk about. But, as things turned out, we can no longer fit all the newly implemented market designs into one course (and Susan Athey will again teach a second semester of Market Design, focused on many recent auction applications, in the Spring). Among the designs we talked about this semester are other health care labor markets, Kidney Exchange, School choice mechanisms, signaling for new economists, internet ad auctions, and more.

I've also been gratified by developments in market design as a field of study. Not only have there been successful applications, there's starting to be an academic literature focused on practical market design, and the theoretical and empirical questions it raises. While there are still some special obstacles that have to be overcome to publish market design papers in general economics journals, we've come a long way since I worried about that in my 2002 paper "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics.

As I remarked in two earlier posts (see Market design is coming of age, and Market design courses this Fall at Harvard and MIT) another sign that the field is healthy is that it is attracting some of the most creative young minds. Some alumni of Harvard and the course who are presently active in market design and/or matching are Estelle Cantillon (with whom I taught the course for two years), Muriel Niederle, John Asker, Nicole Immorlica, Mohammad Mahdian, Michael Ostrovsky, Parag Pathak, Fuhito Kojima, Robin Lee, Mihai Manea, Eric Budish, and Scott Kominers.

Who gets deceased-donor kidneys? Thinking about changes in the rules.

A lot of thought and politics goes into changing the rules for which patients get which kidneys, how long they wait, and how much that should play a role in the allocation decision, as opposed to other criteria having to do with how well each kidney fits each patient, what is the age difference between deceased donor and recipient, etc.

John Faherty at the Arizona Republic has written an informative account of the ongoing debate: New rules change who gets donated kidneys

"Dr. Kenneth Andreoni, chairman of the United Network for Organ Sharing Kidney Transplantation Committee, has been working to develop a better way to distribute kidneys since 2004.
"The current allocation system went in decades ago," Andreoni said. "It was based on good science, but it was a different time."
The system was built to balance utility with fairness.
For utility, doctors required that donated kidneys and recipients be a close biological match. It was the only way to ensure that the recipient's body wouldn't reject the organ, wasting a precious donation.
For fairness, they established a waiting list. The people on the list the longest were first in line for the next matching kidney.
But in the 1980s and 1990s, things began to change. Better anti-rejection drugs helped a recipient accept a kidney even if they weren't a perfect match. Before long, the allocation system that was supposed to balance utility - the likelihood of a successful transplant - with fairness - time on the waiting list - was out of whack.
All that mattered was the wait time.
Frustration grew among transplant doctors. Without the criteria of a tissue match, the system was no longer using science to make the best choices.
Doctors were sometimes putting healthy young kidneys into recipients with only a few years left to live."
...
"The committee is recommending at least two key elements that are almost certain to be part of the new system.
• The first is dialysis time. The current waiting-list system is less fair than it seems, Andreoni said, because some doctors list patients early, at the first sign of kidney failure, while other doctors wait until after other treatments to list their patients. This puts patients in the second group at a disadvantage.
A dialysis-time list would put all patients on equal footing. The longer you have had to endure the treatment, the sooner you can get a kidney.
• The second element is a complex grading system called the Donor Profile Index. Doctors would measure the quality of a donated kidney to determine how well it will work and how long it will last. Then, they would give that kidney to the patient who would most benefit from it.
That means factoring, to a still-undetermined degree, who would get the most use of a new kidney - who would live the longest.
"Right now, whoever is next in line gets the kidney," Andreoni said. "It does not make the best use of the organ." "


Of course, changes like this, when allocating a scarce resource, involve benefits from some people, but not for everyone.

"With the proposed changes to the allocation system, a patient like Ramirez will be more likely to receive a kidney from a younger person, and probably sooner.
"It's a conundrum. A change would be a really good thing for me," she said. "But if I was older, I might be angry. Maybe they have been waiting for a long time." "

That's what makes some changes politically hard. Sometimes phasing such changes in over time may ease the path.

Update: for those of you who don't click on comments, Michael Giberson said... Why not favor patients with an unmatched donor, and so use deceased donor kidneys to trigger a exchange chain. ?

Mixing the deceased donor kidneys with the kidney exchange pool also involves some complicated political issues, since deceased donor organs are regarded as a shared public resource, but live donor kidneys are of course private property.

But in New England we have permission to do something like what Giberson has in mind, called list exchange: see
Roth, Alvin E., Tayfun Sönmez, M. Utku Ünver, Francis L. Delmonico, and Susan L. Saidman, ''Utilizing List Exchange and Undirected Good Samaritan Donation through 'Chain' Paired Kidney Donations," American Journal of Transplantation, 6, 11, November 2006, 2694-2705.

Here's the first paragraph of the abstract of that paper:
"In a list exchange (LE), the intended recipient in an incompatible pair receives priority on the deceased donor waitlist (DD-waitlist) after the paired incompatible donor donates a kidney to a DD-waitlist candidate. A nondirected donor’s (ND-D) kidney is usually transplanted directly to a DD-waitlist candidate. These two established practices would help even more transplant candidates if they were integrated with kidney paired donation (KPD)."

The paper goes on to report an early NDD chain conducted at the New England Program for Kidney Exchange that passed through the exchange pool, i.e. that included patients with incompatible donors in the middle, with the final link being a donation to someone on the DD-waitlist. We have also done exchanges that may be closer to what Giberson suggests, in which a deceased donor kidney goes to someone in the kidney exchange pool, whose incompatible donor gives to someone else in the pool...whose donor gives to someone on the DD-waitlist.

Incentives for buying health insurance when healthy

My colleague Marty Feldstein worries in the Washington Post about potential incentive mis-alignments in new health care legislation: Obamacare's nasty surprise-Fewer insured, higher costs might be the result


"Here's why: A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual's health condition.
This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums. (Separate accident policies might develop to deal with the risk of high-cost care after accidents when there is insufficient time to buy insurance.) "


HT: Mankiw

Restaurant reservations

An interesting paper by Alexei Alexandrov and Martin A. Lariviere asks Are Reservations Recommended?
From the abstract:

"We examine the role of reservations in capacity-constrained services with a focus on restaurants. Although customers value reservations, restaurants typically neither charge for them nor impose penalties for failing to honor them. However, reservations impose costs on firms offering them. We highlight ways in which reservations can increase a firm’s sales by altering customer behavior. First, when demand is uncertain, reservations induce more customers to patronize the restaurant on slow nights. The firm must then trade off higher sales in a soft market with sales lost to no shows on busy nights. Competition makes reservations more attractive as long as enough customers will consider dining at either restaurant. When there are many firms in the market, it is rarely an equilibrium for none to offer reservations. Second, we show that reservations can increase sales by shifting demand from a popular peak period to a less desirable off-peak time. This is accomplished by informing diners when all peak reservations have been given out. "



And from the Introduction:

"Restaurant reservations are a curious phenomenon. Customers value them, but restaurants give them away. Indeed, firms such as Weekend Epicure have stepped in to profit from the resulting arbitrage opportunity. These “scalpers” reserve tables at popular spots under fictitious names that they share with the first paying party. (Fees are on the order of $35 to $40.) What makes offering reservations even more remarkable is that they are costly to provide. Fischer (2005) identifies three costs to offering reservations. These include additional staff needed to take reservations and added complexity from having to balance the needs of walk-in customers with commitments made to reservation holders. The final consideration is no shows.
Customers can generally fail to keep reservations without penalty, but restaurants suffer if they hold capacity for customers that never come. No shows represent a real problem. Bertsimas and Shioda (2003) report a no-show rate of 3% to 15% for the restaurant they studied. More generally, rates of 20% are not unusual (Webb Pressler, 2003) and special occasions such as New Year’s Eve can push rates to 40% (Martin, 2001).
Why then should restaurants offer reservations? One reason is the operational benefits they provide. Reservations regulate the flow of work. By staggering seatings, a restaurateur can assure that waiters are not overwhelmed by a rush of customers followed by the bartender and kitchen being swamped with orders. Reservations thus allow fast service without excessive capacity (Fischer, 2005). Reservations would then be appealing when either customers are delay sensitive or the firm’s costs increase with arrival variability. Further, reservations may allow a restaurant to estimate demand and improve staffing and sourcing decision."

Misc. repugnant transactions

Environmentalists seek to wipe out plush toilet paper (headline in Boston Globe)
They advocate products made of recycled fibers

"And, activists say, there’s just the foolish idea of the thing: old trees cut down for the briefest and most undignified of ends.
“It’s like the Hummer product for the paper industry,’’ said Allen Hershkowitz, senior scientist with the Natural Resources Defense Council. “We don’t need old-growth forests . . . to wipe our behinds.’’

"The reason for this fight lies in toilet paper engineering. Each sheet is a web of wood fibers, and fibers from old trees are longer, which produces a smoother and more supple web. Fibers made from recycled paper - in this case magazines, newspapers, or computer printouts - are shorter. The web often is rougher.
So, when toilet paper is made for the “away from home’’ market, the no-choice bathrooms in restaurants, offices, and schools, manufacturers use recycled fiber about 75 percent of the time.
But for the “at home’’ market, the paper customers buy for themselves, 5 percent at most is fully recycled. The rest is mostly or totally “virgin’’ fiber, taken from newly cut trees, according to the market analysis firm RISI Inc."

Egyptian Lawmakers Want to Ban Fake Hymen
"CAIRO (AP) -- Conservative Egyptian lawmakers have called for a ban on imports of a Chinese-made kit meant to help women fake their virginity and one scholar has even called for the ''exile'' of anyone who imports or uses it.
The Artificial Virginity Hymen kit, distributed by the Chinese company Gigimo, costs about $30. It is intended to help newly married women fool their husbands into believing they are virgins -- culturally important in a conservative Middle East where sex before marriage is considered by many to be illicit. The product leaks a blood-like substance when inserted and broken."...

"Kotb noted that a medical procedure that reattaches a broken hymen by stitching is illegal in Egypt and can cost hundreds of dollars -- prohibitively expensive for the poor. But many women still secretly seek it out in fear of punishment for pre-marital sex.
Such punishment could include slayings at the hands of relatives, a practice more commonly referred to as honor killings and common in the more conservative tribal areas of the Middle East."

Harvard housing

Harvard sophomores, juniors and seniors are assigned housing randomly, with some details that require strategic thinking. The objective seems to be to make the Harvard undergraduate houses fairly homogeneous (while allowing friends to form small groups). But it wasn't always so.

An unpublished paper that recounts some of the history, and the previous market designs for housing allocation, is THE HARVARD HOUSING LOTTERY: RATIONALITY AND REFORM, by Susan M. Collins and Kala Krishna

It's an interesting read, and an important kind of market design paper. Rules are data, and histories of rule changes, and how they succeed and fail, are often one of the clearest windows through which to view the obstacles that allocation processes have to overcome to work well.

Non-simultaneous kidney exchange chains

Quite a few kidney exchange chains, starting with a non-directed (altruistic) donor, have been done non-simultaneously, since the first non-simultaneous extended altruistic donor (NEAD) chain went through so successfully. The idea is that the need for simultaneity is reduced when a chain starts with a non-directed donor, since no incompatible patient-donor pair is left waiting for a kidney after giving one.

Here's an article about a recent non-simultaneous chain in Maryland: the article gives a good idea of the multiple reasons why non-simultaneity might be desirable. First, it relieves logistical constraints involved with scheduling multiple operating rooms (not to mention waiting rooms and recovery rooms), and second, it allows the chain to continue in the future.

""Four people who otherwise would not have had matching donors now have lifesaving kidneys - from people they've never met. And this transplant chain was set in motion by a man who simply wanted to donate a kidney to someone in need," says Matthew Cooper, MD, director of kidney transplantation at UMMC and associate professor of surgery at the School of Medicine, who oversaw the series of surgeries.
Only a handful of hospitals in the country have performed large kidney transplant exchanges such as this one. The procedures, which took place over two days in four operating suites at the medical center, required extensive coordination and planning not only in the operating rooms, but also in the waiting rooms.
Because the right to privacy for the donors and recipients is protected throughout the process, transplant coordinator Debbie Iacovino arranged separate waiting areas in different parts of the hospital for their families to ensure anonymity.
The kidney exchange started with a 59-year-old man from a suburb of Boston, Mass., who offered to donate a kidney to someone in need. His kidney was given to a Maryland man who was not a match with his intended donor, a woman who is also from Maryland. The woman was matched with a 10-year-boy from Catonsville whose kidneys were failing because of a congenital abnormality.
A friend of the boy's family, a 50-year-old lawyer from Catonsville, gave his kidney to a 64-year-old Florida man, whose wife was a donor for 74-year-old man from Virginia Beach, Va. The Virginia man's son-in-law will be a "bridge" donor, who will give his kidney to a yet-undetermined recipient at a later date, which will allow the chain of transplants to continue."

Here's a video interview:
Video FourWay Kidney Exchange An Interview with Dr Matthew Cooper
http://www.spokenword.org/program/865751 21 minutes

"UMMC's director of kidney transplantation Dr. Matthew Cooper provides an overview of the four-way kidney exchange that involved eight patients from four states on November 2 and 3. Dr. Cooper talks about paired kidney exchanges, how this four-way exchange came about, what happened during the two days of surgery, the significance of this procedure for the people involved and much more."

Gaming the Liver Transplant Market (by Jason Snyder)

When my colleagues and I began talking to transplant surgeons about the design of kidney exchanges, it was initially sometimes hard to convince them that incentives played a big role in organ allocation. (I sometimes heard a variation of "Professor, incentives may be important in economics, but not in medicine; no one chooses to become sick.") But explanations were made easier by a 2003 legal settlement in which some hospitals paid fines for pretending their patients were sicker than they were, to give them increased priority on the waiting list for deceased donor liver transplants: Illinois: Prosecutor's Diagnosis Is Fraud.

By the time of the settlement, the rules for determining priority on the waiting list for livers had already been changed to depend on more objectively verifiable criteria, to reduce the ability of hospitals to game the system on behalf of their patients. A recent paper by Jason Snyder of the UCLA Anderson School of Management looks at the effect of this change:

"Gaming the Liver Transplant Market" Forthcoming at The Journal of Law, Economics, & Organization
"Approximately 6,000 transplants are performed annually and, on average, 2,500 people die while waiting for a liver. There is substantial variation in the number of transplant centers across markets; some markets have only one firm while other markets have multiple participants. Prior to March 1, 2002, a major determinant of whether a patient would obtain a liver was whether they were in the intensive care unit (ICU). Patients in the ICU jumped to the top of the priority list regardless of how sick they actually were. There is considerable anecdotal evidence suggesting that in order to obtain livers for their patients the transplant centers created faux-ICUs where relatively healthy people were put in the ICU to strategically advance their positions on the waiting list. After March 1, 2002, the allocation of livers changed to a system where livers were allocated solely on clinical indicators of sickness. ICU status was no longer a factor in determining whether a patient obtained a liver or not. This policy resulted in, if anything, an increase in the sickness of the average patient at transplant and a dramatic discontinuous decrease in the number of patients who were in the ICU at the time of their transplant. This seemingly contradictory behavior is consistent with centers strategically misrepresenting the health of their patients prior to the policy reforms.

"Using the policy change to examine changes in ICU admission behavior, I find that after the policy changed the use of the ICU decreased more in markets with more firms. I also find that after the policy changed the percentage of relatively healthy people in the ICU decreased more in markets with more firms. Finally I show that these results are non-linear in the number of firms in the market. Moving from one firm to two firms in the marketplace is associated with dramatic changes gaming behavior, but there is little difference between two firms and three or more firms."

Louis Menand on the market for PhDs in English

Louis Menand, in Harvard Magazine, has many interesting things to say about the Ph.D. in English literature and the market for Ph.D.s in English and the humanities. The Ph.D. Problem: On the professionalization of faculty life, doctoral training, and the academy’s self-renewal

"English was one of the fields surveyed in the two studies of the Ph.D. It is useful to look at, in part because it is a large field where employment practices have a significance that goes beyond courses for English majors. What the surveys suggest is that if doctoral education in English were a cartoon character, then about 30 years ago, it zoomed straight off a cliff, went into a terrifying fall, grabbed a branch on the way down, and has been clinging to that branch ever since. Things went south very quickly, not gradually, and then they stabilized. Statistically, the state of the discipline has been fairly steady for about 25 years, and the result of this is a kind of normalization of what in any other context would seem to be a plainly inefficient and intolerable process. The profession has just gotten used to a serious imbalance between supply and demand."

"The Berkeley study, “Ph.D.s—Ten Years Later,” was based on lengthy questionnaires sent to just under 6,000 people, in six fields, who received Ph.D.s between 1982 and 1985. One of those fields was English. People who received their Ph.D.s in English between 1982 and 1985 had a median time to degree of 10 years. A third of them took more than 11 years to finish, and the median age at the time of completion was 35. By 1995, 53 percent of those with Ph.D.s that had been awarded from 10 to 15 years earlier had tenure; another 5 percent were in tenure-track positions. This means that about two-fifths of English Ph.D.s were effectively out of the profession as it is usually understood. (Some of these people were non-tenure-track faculty, and some were educational administrators. Most of the rest worked in what is called BGN—business, government, and NGOs.) Of those who had tenure, less than a fifth had positions in the kind of research universities in which they had been trained—that is, about 5 percent of all English Ph.D.s. "
...
"The placement rate for Ph.D.s has fluctuated. Between 1989 and 1996, the number of starting positions advertised in history dropped 11 percent; in art and art history, 26 percent; in foreign languages, 35 percent; and in political science, 37 percent. Yet every year during that period, universities gave out more Ph.D.s than they had the year before. It was plain that the supply curve had completely lost touch with the demand curve in American academic life. That meant if not quite a lost generation of scholars, a lost cohort. This was a period that coincided with attacks on the university for “political correctness,” and it is not a coincidence that many of the most prominent critics of academia were themselves graduate-school dropouts: Dinesh D’Souza, Roger Kimball, Richard Bernstein, David Lehman. Apart from their specific criticisms and their politics, they articulated a mood of disenchantment with the university as a congenial place to work.
There were efforts after 1996 to cut down the size of doctoral programs, with apparently some positive effect on the job market. But time-to-degree numbers did not improve. In the sixties, the time-to-degree as a registered student was about 4.5 years in the natural sciences and about six years in the humanities. The current median time to degree in the humanities is nine years. That does not include what is called stop-time, which is when students take a leave or drop out for a semester or longer. And it obviously does not take into account students who never finish. It is not nine years from the receipt of the bachelor’s degree, either; it is nine years as a registered student in a graduate program. The median total time it takes to achieve a degree in the humanities including stop-time is 11.3 years. In the social sciences, it is 10 years, or 7.8 as a registered student. In the natural sciences, time-to-degree as a registered student is just under seven years. If we put all these numbers together, we get the following composite: only about half of the people who enter doctoral programs in English finish them, and only about half of those who finish end up as tenured faculty, the majority of them at institutions that are not research universities. An estimate of the total elapsed time from college graduation to tenure would be somewhere between 15 and 20 years. It is a lengthy apprenticeship."

"... The system works well from the institutional point of view not when it is producing Ph.D.s, but when it is producing ABDs. It is mainly ABDs who run sections for lecture courses and often offer courses of their own. The longer students remain in graduate school, the more people are available to staff undergraduate classes. Of course, overproduction of Ph.D.s also creates a buyer’s advantage in the market for academic labor. These circumstances explain the graduate-student union movement that has been going on in higher education since the mid 1990s. "

"The key to reform of almost any kind in higher education lies not in the way that knowledge is produced. It lies in the way that the producers of knowledge are produced. Despite transformational changes in the scale, missions, and constituencies of American higher education, professional reproduction remains almost exactly as it was a hundred years ago. Doctoral education is the horse that the university is riding to the mall. People are taught—more accurately, people are socialized, since the process selects for other attributes in addition to scholarly ability—to become expert in a field of specialized study; and then, at the end of a long, expensive, and highly single-minded process of credentialization, they are asked to perform tasks for which they have had no training whatsoever: to teach their fields to non-specialists, to connect what they teach to issues that students are likely to confront in the world outside the university, to be interdisciplinary, to write for a general audience, to justify their work to people outside their discipline and outside the academy. If we want professors to be better at these things, then we ought to train them differently."

Humanities job market: priming the pump

The American Council of Learned Societies has decided to give the job market for humanities Ph.D.s a boost, in the face of the tough job market expected this year. It looks like their stimulus package is well designed:


"The American Council of Learned Societies announces a new initiative to address the serious employment challenges faced by many of today’s new Ph.D.s while also supporting teaching at universities and colleges. The ACLS New Faculty Fellows program will allow 50 recent Ph.D.s in the humanities and humanistic social sciences to take up two-year positions at universities and colleges, where their particular research and teaching expertise will benefit the receiving institution. Awardees will commit to teaching three semester-length courses each year and receive an annual stipend of $50,000, a $5,000 annual research and travel allowance, health insurance, and a $1,500 one-time moving allowance. The program is supported by a generous grant from The Andrew W. Mellon Foundation.
Applicants for this program must be nominated by the university that awarded their Ph.D. In this first iteration of the program, nominations are limited to the 60 U.S. members of the Association of American Universities, each of which has designated a liaison for the ACLS New Faculty Fellows program. Possible applicants at participating institutions are encouraged to contact their advisor or department or program chair for further information on the program.
Read more: Stimulus for Humanities Job Market "


The link gives the following additional information:
"All 60 U.S. members of the Association of American Universities have been invited to nominate candidates who do not have a tenure-track position and who will have received a Ph.D. between January 2008 and December of 2009 in the humanities or the "humanistic social sciences," defined as including history, anthropology and such areas as political theory, historical sociology and economic history. The AAU members may nominate between 5 and 40 individuals, based on the size of the Ph.D. classes they produce each year in the humanities.
From these nominees, 50 finalists will be selected based on statements about their teaching and research interests.
Then the AAU universities and a few dozen liberal arts colleges (the latter group is still being defined) will be able to offer positions to the finalists, provided that the universities agree to pay one-third of the costs and the colleges one-fourth of the costs. The AAU institutions will not be allowed to offer positions to their own Ph.D.'s. Any finalists who don't get a job offer will get a one-year stipend of $35,000."


HT: Itay Fainmesser who will be at the ASSA meetings in Atlanta

Market for lesson plans

College professors sell textbooks, business school professor can profit from case studies, and now there's a market for lesson plans for elementary and middle school classes: Selling Lessons Online Raises Cash and Questions .

The "cash" in the headline is clear enough, while the "questions" seem to be of two kinds. The first is about intellectual property, who owns what:
"While some of this extra money is going to buy books and classroom supplies in a time of tight budgets, the new teacher-entrepreneurs are also spending it on dinners out, mortgage payments, credit card bills, vacation travel and even home renovation, leading some school officials to raise questions over who owns material developed for public school classrooms."

The other kinds of questions involve the repugnance we sometimes see raised by markets for things that used to be given away or handmade:
"Beyond the unresolved legal questions, there are philosophical ones. Joseph McDonald, a professor at the Steinhardt School of Culture, Education and Human Development at New York University, said the online selling cheapens what teachers do and undermines efforts to build sites where educators freely exchange ideas and lesson plans.
“Teachers swapping ideas with one another, that’s a great thing,” he said. “But somebody asking 75 cents for a word puzzle reduces the power of the learning community and is ultimately destructive to the profession.” "

The internet is a big facilitator here:
"Just about every imaginable lesson for preschool through college is now up for sale — on individual teachers’ blogs as well as commercial sites where buyers can review and grade the material.
Teachers Pay Teachers, one of the largest such sites, with more than 200,000 registered users, has recorded $600,000 in sales since it was started in 2006 — $450,000 of that in the past year, said its founder, Paul Edelman, a former New York City teacher. The top seller, a high school English teacher in California, has made $36,000 in sales.
Another site, We Are Teachers, went online last year with a “knowledge marketplace” that includes lesson plans and online tutoring."

Signaling for interviews in the Economics Job Market: Registration opens tomorrow

Here is the American Economic Association's announcement of the 2009 mechanism for Signaling for Interviews in the Economics Job Market

"The AEA coordinates a mechanism through which applicants can signal their interest in receiving an interview at the January meetings. From November 16, until December 1, shortly after the December JOE comes out, each applicant on the economics job market can register and designate no more than two departments (or other employers) to whom to send a signal of particular interest. On December 3, the AEA will transmit these signals to the departments a candidate has chosen. (Signals will not be made public.)

Please see Signaling for Interviews in the Economics Job Market for a detailed description as well as the Terms of Use and Privacy Policy. "

Those already registered may select or update signals until Midnight, EST on December 1, 2009. This is a firm deadline.

In each of the years when signaling has been available (2006-9), about 1,000 signalers have used the system (almost all choosing to send 2 signals). Around 25% of JOE listings have received at least one signal in each of those years. So signaling has been pretty widespread, with lots of senders and receivers.

So, that said, should you signal? Or perhaps there's some reason not to signal?

In a December 2008 survey of those appearing on departmental lists of job candidates, 66% of respondents reported signaling. Of the remaining 33% of respondents, 26% reported that they missed the deadline, 21% reported they didn’t know about the mechanism, 41% thought signaling wouldn’t help their chances of getting a job, and 5% thought signaling would hurt their chances of getting an interview.

On this last point I can offer some reassurance; in our surveys of department recruiting committees, there is no indication whatsoever that anyone regards a signal as a negative indicator in deciding whether to offer an interview.

There is also some indication that signals help, at least sometimes (again from survey data, since we don't have direct access to data on who gets interviews), particularly for signals sent to employers who don't receive an excessive number of signals. (The 21 employers receiving the most signals received about 1/6 of all signals: ten of these employers are in the Boston, NY, and D.C. metropolitan areas.) Overall, a signal seems to increase the likelihood of an interview by around 6 percentage points.

I think it is sensible for most candidates to send the two signals they are allotted. I think the most you can expect a signal to do is to cause someone at the signaled department to take one more look at your dossier, and consider whether it makes sense to include you on their already pretty full schedule of interviews, given your interest. So, choose your signals with that in mind, and they may work for you.

(I hope to have a paper ready for circulation reasonably soon, with my colleagues on the AEA job market committee...)

Nothing human need be foreign to economics

Economists like to think of Economics as a broad church that welcomes investigation of a wide range of human activity from many viewpoints. Nothing human is foreign to us. Non-economists (and perhaps some economists as well) take a much narrower view of what economists can and should investigate, and how well we can do so.

An inadvertently hilarious juxtaposition of those two views comes in a column in The Guardian: Our speechless outrage demands a new language of the common good--Market theory closed down public discourse about injustice. But we urgently need to describe what we should value

The author opines: "But don't look to economists to get us out of this hollow mould of neoliberal economics and its bastard child, managerialism – the cost-benefit analysis and value-added gibberish that has made most people's working lives a mockery of everything they know to value."

She then goes on to suggest that the evils of economics may be remedied by philosophers, and praises Amartya Sen's new book The Idea of Justice.

The joke of course is that the author of the column is blissfully unaware that Amartya is an eminent economist, and the winner of the 1998 Nobel prize in economics.

Needless to say, justice is an excellent thing for economists to study, and strive to understand and achieve.

A grave problem of supply and demand

Grave sites, once sold and occupied, are intended to be occupied for a very long time, and their sale can't easily be negotiated if more valuable uses turn up. So there is less turnouver than in other kinds of real estate, with predictable consequences, as this Globe article attests: Supply limited, demand eternal, graveyards fill up.


"Provincetown’s shortage, while unusually acute, underscores a broad and burgeoning problem in the crowded Northeast. With land expensive and limited acreage available in large swaths of Eastern Massachusetts, budget-crunched communities are struggling to buy sites for new burial grounds as their existing cemeteries fill up."
...
"In Provincetown, many who have reserved burial plots are relative newcomers to the town, and in response, town officials this week passed a rule restricting burial plots to those who have maintained a principal residence for at least two years. Still, that was a short sojourn, some said, for a chance to spend eternity in a slice of heaven.
Said Lemme, the cemetery supervisor: “We might have to make that a little stricter.’’ "

School choice, and separation of church and state

As a beneficiary of both a democratic and a religious tradition, I think that separation of church and state is good not just for states (if they happen to be liberal democracies), but also for religious communities (if they aspire to be self governing). In Britain, there are state funded religious schools, so school choice issues for religious schools get resolved by secular courts: Who Is a Jew? Court Ruling in Britain Raises Question .

"Britain has nearly 7,000 publicly financed religious schools, representing Judaism as well as the Church of England, Catholicism and Islam, among others. Under a 2006 law, the schools can in busy years give preference to applicants within their own faiths, using criteria laid down by a designated religious authority. "

The case in question is wending its way through the appeals court process. But it appears that, by accepting state funding, Britain's religious communities have let the state into the church, so to speak.

Update:Dec. 15. British High Court Says Jewish School’s Ethnic-Based Admissions Policy Is Illegal
Update: January 10: Faith schools facing admissions curb

Incentives in Chicago school choice

The Chicago Sun Times reports:
"Poring over data about eighth-graders who applied to the city's elite college preps, Chicago Public Schools officials discovered an alarming pattern.
High-scoring kids were being rejected simply because of the order in which they listed their college prep preferences.
"I couldn't believe it,'' schools CEO Ron Huberman said. "It's terrible.''
CPS officials said Wednesday they have decided to let any eighth-grader who applied to a college prep for fall 2010 admission re-rank their preferences to better conform with a new selection system.
Previously, some eighth-graders were listing the most competitive college preps as their top choice, forgoing their chances of getting into other schools that would have accepted them if they had ranked those schools higher, official said.
Under the new policy, Huberman said, a computer will assign applicants to the highest-ranked school they qualify for on their list.
"It's the fairest way to do it," Huberman told the Chicago Sun-Times editorial board Wednesday."

This is the same issue that led to the redesign of the Boston school choice system.

HT Parag Pathak

update: see earlier stories on the changes in the Chicago magnet school program here and here.

Morality of buying kidneys (and brokering them)

Robby Berman, the founder and director of the Halachic Organ Donor Society (www.hods.org ), has an opinion piece in today's YNet: Buying kidneys is moral

It begins:
"I am responsible for the needless deaths of more than 100 Jews. All were victims of kidney disease, literally and figuratively dying on dialysis. They pleaded with me to introduce them to people willing to sell their kidneys, and I refused to do so because it is illegal.
If media reports are true, however, Sammy Shem-Tov and Dimitry Orenstein of Jerusalem did work as a kidney shadchanim (matchmakers) - saving hundreds of lives. Their motives weren’t pure. It took lots of money to get them to break the law and risk prison. So who acted morally and who did not? To me the answer is obvious. They are heroes even if they became wealthy in the process. "

It goes on to make some arguments related to repugnance.

School choice and school capacity

Deciding what is the capacity of a popular high school is tricky in a city that uses school choice. Here's an article from the NY Times about Francis Lewis high school in Queens, in NYC. It is way over 'capacity' because it is popular: At School in Queens, Success Draws Crowd.

(To put it another way, capacity is flexible, and so are students; some eat lunch at 9am, since the lunchroom has to be scheduled all day...)


Following the publication of the story, the Times published some letters to the editor from proud former teachers and students at Francis Lewis (including one from a famous economist).

More Milgrom

Northwestern has put up a page of material following the 2009 Erwin Plein Nemmers Prize in Economics Lecture and Conference, including Paul's slides, and a video of his lecture.

There are also links to the slides and bibliographies of the talks given on Friday (including the 10 minute presentations given by panelists; now I'm working on my 1 minute talk...)


Vijay Krishna (Pennsylvania State University): Auctions and Information[Presentation and Bibliography - PDF]

Larry Ausubel (University of Maryland): Auctions with Multiple Objects[Presentation - PDF] [Bibliography - PDF]

Panel Discussion: Market Design.Moderated by Rakesh Vohra (Northwestern University)
Susan Athey (Harvard University) [Slides]
Preston McAfee (Yahoo! Inc.) [Slides]
Paul Milgrom (Stanford University) [Slides]
Alvin Roth (Harvard University) [Slides]

Stephen Morris (Princeton University): Trade and Information[Presentation - PDF] [Bibliography - PDF]

Bengt Holmstrom (Massachusetts Institute of Technology): Agency Models[Presentation - PDF] [Bibliography - PDF]

John Roberts (Stanford University): Organizational Economics[Presentation - PDF]

And here is my previously posted unofficial conference photo.

College admissions: the costs of having too many acceptances

The Chronicle of Higher Education has a story on Ithaca College which illustrates some of the difficulties of the college admissions process from the colleges' point of view: Ithaca College Overshoots Its Admissions Mark and Pays a Price. (This link may need a subscription, so here's a longish excerpt that gives the idea...)

"In a year of unusually high uncertainty over admissions at private colleges, Ithaca College appears to have missed its target by a larger margin than most.
Now it is dealing with the financial consequences—even paying 31 students up to $10,000 each to defer their enrollment for a year—and adjusting its admissions policies and financial-aid spending plans in response.
Ithaca had aimed to enroll 1,700 to 1,750 new freshmen but found itself with an incoming class of 2,027 for this fall.
Ending up with a class that is 20 percent larger than expected is certainly better than having to operate with a class that is 20 percent under target. But "coming in heavy" with a class, as this circumstance is known in the field, can often bring its own short-term and long-term costs, and create some added financial instability.
"They have to feed that animal for four years," said George Dehne, a longtime consultant to colleges, whose firm does not count Ithaca as a client. "It looks like someone took their hands off the wheel."
The feeding includes extra spending for financial aid, for additional instructors (Ithaca had to hire several dozen), and for a new temporary residence hall, constructed in six weeks at a cost of $2.5-million."
...
"Ithaca had suffered a decline in freshman enrollment in 2008, falling 11 percent below its budgeted target of 1,600. Many of the steps it took over the past year to enroll the entering class in 2009 were designed to compensate. The steps included lowering selectivity (Ithaca accepted 73 percent of its 2009 applicants, compared with 59 percent in 2008) changing its merit-aid policy so money could be spread among more applicants, and intensifying "yield" efforts to get more admitted students to attend.
Other colleges did the same things, according to a survey released last month by the National Association for College Admissions Counseling.
But Ithaca lacked some of the levers colleges traditionally use to give themselves more control over admissions, most notably the early-decision option.
Many colleges use early decision to lock in a portion of their class early in the admissions cycle, which helps reduce some of the risks inherent in later stages of the process, when institutions decide how many students to admit outright and how many to place on the waiting list."
...
"Mr. Maguire, Ithaca's new enrollment-management chief, ... said the college is reinstating early decision, two years after dropping it. Without it, he said, Ithaca didn't have a solid picture of its admissions situation until very late in the process. Freshman deposits came in with a "huge spike at the very end of April.""


"The Cost of Too Many Freshmen
Ithaca College made several adjustments in policies and spending after enrolling 20 percent more students than it expected to this fall. These included:
Reinstituting early decision, to give the college more control over admissions earlier in the process.
Raising admissions selectivity for the fall of 2010 to reduce the admit rate.
Erecting a temporary residence hall in six weeks at a cost of $2.5-million.
Allocating up to $1.2-million in additional funds to hire nearly 50 part-time faculty members, two new full-time faculty members, and to pay 30 current full-time professors overload pay for teaching extra courses.
Providing 20-percent reductions on room charges, and paying the cable-TV bills, for students who had to be housed in lounges.
Offering admitted students up to $10,000 each to defer their enrollment for a year (Ithaca says 31 students took the offer, at a total cost of about $250,000).
Providing $2,000 in incentives to upperclassmen to move off campus. "

College admissions in the UK, update

The Times offers British students a Good University Guide, with some advice on navigating the various parts of the British college admissions process, including the scramble known as "clearing," and the difficulties of taking advantage of re-graded exams.

Act fast to snap up a place
Competition to make it to university through clearing will be more intense this year as applicants chase fewer places

Guide to Clearing: essential information on universities in the clearing system
John O’Leary outlines some of the pros and cons of 40 UK universities likely to be offering the most places through clearing this year


A-level system will not help students 'trade up'
Pupils who do better than expected in exams will miss out on places at leading universities because courses are already full.
"Those who are unfairly marked down in A-level exams could lose their place, even if they successfully appeal and later get a higher grade. Some courses are closed to British applicants even though they still have places for foreign students. This is because for financial reasons the Government restricts the number of British students that universities can recruit. Overseas students pay higher fees and do not receive the grants or subsidised loans available to home students. "


There's also a guide to the mysteries of college admissions on this side of the pond: How to get into an American university
Students are increasingly looking across the Atlantic for university – but the application system can seem daunting.

"One of the main differences between the US and here is that there is no central body that handles the admissions, as Ucas does in the UK. "


Here are my earlier posts on British college admissions:

University admissions in the UK, and University admissions in the UK: admissions formulae

Mazel tov to Methodist Hospital in San Antonio

A Methodist milestone: 50th paired donor kidney exchange transplant

"The transplant team at Methodist Specialty and Transplant Hospital performed their first exchange procedure in March 2008 and completed the 50th procedure just 19 months later, with 42 of the exchange transplants performed in just the past 10 months. "

Update: here's a link to the hospital's news release, which makes clear that they are performing all these exchanges primarily among patients in Texas: Methodist Specialty and Transplant Hospital Reaches National Milestone with 50th Paired Kidney Exchange Transplant

Competition among stock exchanges

The NY Times has a story about how New Rivals Pose Threat to New York Stock Exchange.

"While the exchange has been under assault since the beginning of the decade, its decline has accelerated in recent years as aggressive competitors have emerged. Today, 36 percent of daily trades in stocks that are listed on the New York Stock Exchange are actually executed on the exchange, down from about 75 percent nearly four years ago. The rest of are conducted elsewhere, on new electronic exchanges or through dark pools. "

..."Unlike the Big Board, the new electronic exchanges are virtually unknown outside financial circles. Direct Edge, the largest, is in Jersey City. Another, the BATS Exchange, is based in Lenexa, Kan. Both are only about five years old. But each now accounts for about a 10th of daily United States stock trading. "

I'm reminded of Estelle Cantillon's paper with Pai-Ling Yin on a battle between London and Frankfurt exchanges: Competition between Exchange: Lessons from the Battle of the Bund

Market designers at the Milgrom/Nemmers Prize conference

A multitude of market designers. Here's a photo of

Bob Wilson, Paul Milgrom; and Parag Pathak in the near background: Faces to recognize, and names to conjure with.

Here's my pre-conference post: Paul Milgrom: Nemmer's Prize Lecture and Conference

The wholesale market for iPhone Apps

Joshua Gans reports: The Wholesale App Market opens.

Fraud in online auctions

Losing Out After Winning an Online Auction

NY Times article discusses deadbeat sellers and fraudulent escrow services.

More on repugnant language

While the Federal Communication Commission continues to regard the broadcast of some words as repugnant, language scholars continue to trace how taboo terms gradually become more acceptable. (See my earlier post Fleeting expletives and wardrobe malfunctions: FCC vs Fox Television and CBS.)


Oxford University Press has just issued a new edition of The F-Word. Their blurb begins:

"We all know what frak , popularized by television's cult hit Battlestar Galactica , really means. But what about feck ? Or ferkin ? Or foul --as in FUBAR , or "Fouled Up Beyond All Recognition"? In a thoroughly updated edition of The F-Word , Jesse Sheidlower offers a rich, revealing look at the f-bomb and its illimitable uses. Since the fifteenth century, no other word has been adapted, interpreted, euphemized, censored, and shouted with as much ardor or force..."

Peer effects in learning and teaching, but not in golf

The October '09 issue of the American Economic Journal: Applied Economics contains three papers on peer effects.* The first of these begins "Is an employee's productivity influenced by the productivity of his or her nearby co-workers? The answer to this question is important for the optimal organization of labor...and for the optimal design of incentives." It then goes on to say that it detects no such effects from the random groupings of golfers in professional golf tournaments.

The second paper does find peer effects in random groupings of cadets at West Point, and the third paper finds that students do better when their teachers have better colleagues, i.e. they find that the teachers experience peer effects as measured by the performance of their students.

*The three papers are:

"Peer effects in the workplace: Evidence from random groupings in professional golf tournaments," by Jonathan Guryan, Kory Kroft, and Matthew J. Notowidigdo.

"The Effects of Peer Group Heterogeneity on the Production of Human Capital at West Point," by David S. Lyle.

"Teaching Students and Teaching Each Other: The Importance of Peer Learning for Teachers," by C. Kirabo Jackson and Elias Bruegmann.

Paul Milgrom: Nemmer's Prize Lecture and Conference

If the creeks don't rise, I'll be at Northwestern this afternoon, listening to Paul speak about "The Promise and Problems of Market Design"

His talk will be followed by a conference in his honor tomorrow.

Here's the abstract of Paul's talk:
"Market design has become an exciting area of economics research, with many of its findings useful for setting detailed rules in real markets. For matching markets, most proposed designs aim to be "straightforward" - making it a dominant strategy for participants to report information truthfully. But some recent matching and auction designs sacrifice incentive-compatibility conditions to give priority to various other desiderata. This lecture reviews the goals of market design and the unavoidable trade-offs that are sometimes required, and explores how economists should seek to resolve these trade-offs. "

Here's the conference lineup:

Vijay Krishna (Pennsylvania State University): Auctions and Information
Larry Ausubel (University of Maryland): Auctions with Multiple Objects
Panel Discussion: Market Design.Moderated by Rakesh Vohra (Northwestern University): Susan Athey (Harvard University), Preston McAfee (California Institute of Technology), Alvin Roth (Harvard University), Paul Milgrom (Stanford University)
Stephen Morris (Princeton University): Trade and Information
Bengt Holmstrom (Massachusetts Institute of Technology): Incentives
John Roberts (Stanford University): Organizational Design

Voters find same sex marriage repugnant in Maine

Maine voters overturn state’s new same-sex marriage law.
"Maine voters overturned the state’s same-sex marriage law yesterday, delivering a potentially crushing blow to gay-rights advocates after a year when their cause seemed to be gaining momentum with legislative and legal victories in four states."...
"The “people’s veto’’ came six months after Maine’s law was approved, and one year after California voters rejected gay marriage by a similar margin."

So same sex marriage has been moved out of the repugnant category in several states by courts, and by legislatures, but not yet by voters. As the AP report notes (ungrammatically),
"Gay marriage measures have lost in every state, 31 in all, in which it has been put to a popular vote. "

The DARPA network challenge

DARPA will pay $40,000 to whoever (whichever team) first reports the locations of ten weather balloons to be inflated December 5, around the U.S. Here is the announcement: DARPA Network Challenge.

Noam Nisan has some thoughts on this at AGT, and points out that very quickly some people started to offer to share the prize among those who would notify them of individual balloon's locations, conditional on the team formed in this way winning. Here's a wiki for people to share market design ideas on how to form a winning team.

Note that this is an aggregation of information problem a little like a prediction market, even though it is for postdiction rather than prediction...

Build your own prediction market

Build your own, using the platform at http://inklingmarkets.com/

Blackmail, legal and illegal

Reflecting on the recent Letterman case, the NY Times ponders The Art of Blackmail


Doing it on your own is illegal, but if you do much the same thing by threatening a lawsuit, it is legal.


"Blackmail is a “wonderfully curious offense,” to use the phrase of Paul H. Robinson, a professor at the University of Pennsylvania Law School and his coauthors in a recent paper. A threat to tell the truth is no crime, and neither is asking someone for money. But if you demand money to prevent the truth from being told, Professor Robinson said, you’ve crossed the line. At its core, he explained, the offense is “a form of wrongful coercion.” "


However you can threaten to sue if a settlement is not reached first, and that isn't blackmail.

"Those confrontations, however, did not cross the line into the criminal realm, he said, because they had been sanitized by lawyering. Attorneys, he noted, can create a legal filing that promises to bring out unpleasant facts in depositions or during trial; a settlement is not, technically, a payoff. He called it “wrapping an extortion threat in a legal cloak.”
It happens all the time, said Gerald B. Lefcourt, a criminal defense attorney in Manhattan. “Threatened lawsuits, and even filed lawsuits, are often no more than blackmail,” he said.

Compensating donors: how about bone marrow?

The National Law Journal reports: Cancer patients seek to overturn ban on paying for bone marrow

"Prohibiting someone from making money for donating an irreplaceable kidney is one thing. But what about donating bone marrow, which replenishes itself within weeks?

That question is at the heart of a new lawsuit, filed Monday, challenging the constitutionality of the federal law that prohibits compensating bone marrow donors. The plaintiffs want to make modest recompense for such donors legal — say, paying partial tuition for a college student or making a mortgage payment for a first-time home buyer.

In the lawsuit filed Oct. 26 in the U.S. District Court for the Central District of California, cancer and blood disease patients and health care advocates are suing U.S. Attorney General Eric Holder Jr. to enjoin enforcement of provisions of the National Organ Transplant Act of 1984 that criminalize compensating donors. They argue the statute violates due process rights and interferes with public health.

"This constitutional challenge is about an arbitrary law that criminalizes a promising effort to save lives," the complaint states. A bone marrow transplant is often the "only hope" for tens of thousands of Americans diagnosed with a deadly blood disease such as leukemia. "There is a desperate shortage of unrelated marrow donors, particularly for minorities," the complaint says.

Offering modest incentives to attract more donors could end that shortage, argued Jeff Rowes of the Arlington, Va.-based Institute for Justice, who is the lead attorney for the plaintiffs. "

Megan McArdle links to the Institute of Justice press release, and suggests that inclusion of bone marrow in the National Organ Transplant Act was simply a mistake.

A paper on bone marrow donation recently appeared in the American Economic Review, you can find an ungated version here: One Chance in a Million: Altruism and the Bone Marrow Registry
by Ted C. Bergstrom, Rod Garratt, and Damien Sheehan-Connor.

The paper argues that (because of the need for bone marrow matches to be perfect on the 6-vector of Human Leukocyte Antigens, and because of different distributions of these by race and ethnicity), we would get more bang for the buck by investing in recruiting more minority donors than additional random donors.

As it happens, for non-minority donors, the present policy in many places is just the opposite of compensating donors; if you want to register as a bone marrow donor you may have to pay the costs, presently around $65.

HT: Mary O'Keeffe and Steve Leider

Update, 11/4/09: Some comment on the legal theory of the case over at the Volokh Conspiracy, with a second and third post here and here and more to come...