Would Professor Moriarty have invented an eBay, a Paypal or a Craigslist?

Professor Moriarty was, of course, Sherlock Holmes' nemesis (or was it the other way around)? I ask the question in the title of this post because a much more modern criminal mastermind has just been sentenced. Here's the headline from the London Telegraph: Mastermind behind 'eBay for criminals' is facing jail

"Renukanth Subramaniam, from north London, established the website DarkMarket, which threatened every bank account and credit card holder in Britain and caused tens of millions of pounds of losses.
It was described as a "one-stop shop" for fraudsters buying and selling stolen details such as PIN numbers, account balances, answers to account security questions and passwords for social networking websites.

"The site even offered criminal users a secure payment system, training and advertising space to sell equipment used to clone bank and credit cards.
DarkMarket operated for almost three years as a “criminals only” forum, with more than 2,500 members at its peak, who could buy up to 10 credit card numbers along with other personal information for around £30.
It was shut down after a two-year global investigation in which undercover agents from the FBI and the Serious Organised Crime Agency infiltrated the site by posing as criminals.
A spokesman for Soca called it “one of the most pernicious online criminal websites in the world” and estimated that its victims lost tens of millions of pounds.
Officials said there was a code of “honour amongst thieves” on the site.
There was a secure payment system between criminals – described by Judge John Hillen as a "PayPal for criminals". "

See my earlier post: More on Darkmarket, the Craigslist of Crime

Mentoring (and a pet peeve: maybe women should be athena-ed?)

There are lots of reasons to think that young employees of many kinds may benefit from mentoring, and, because networks of various sorts may be important, employees from underrepresented populations may particularly benefit if their mentor can help them connect.

This is the idea behind the recent NBER report Can Mentoring Help Female Assistant Professors? Interim Results from a Randomized Trial
by Francine D. Blau, Janet M. Currie, Rachel T.A. Croson, Donna K. Ginther

Abstract: "While much has been written about the potential benefits of mentoring in academia, very little research documents its effectiveness. We present data from a randomized controlled trial of a mentoring program for female economists organized by the Committee for the Status of Women in the Economics Profession and sponsored by the National Science Foundation and the American Economics Association. To our knowledge, this is the first randomized trial of a mentoring program in academia. We evaluate the performance of three cohorts of participants and randomly-assigned controls from 2004, 2006, and 2008. This paper presents an interim assessment of the program’s effects. Our results suggest that mentoring works. After five years the 2004 treatment group averaged .4 more NSF or NIH grants and 3 additional publications, and were 25 percentage points more likely to have a top-tier publication. There are significant but smaller effects at three years post-treatment for the 2004 and 2006 cohorts combined. While it is too early to assess the ultimate effects of mentoring on the academic careers of program participants, the results suggest that this type of mentoring may be one way to help women advance in the Economics profession and, by extension, in other male-dominated academic fields. "

On a less serious note, I've always wondered whether "mentor" was the right word for an advisor for female professors, particularly if the advisor is also female. The reason is that Mentor is a male character in Homer's Odyssey who only appears to give advice in the beginning of the story. In fact, the goddess Athena is giving the advice, disguised as Mentor (presumably because advice from someone with a grey beard was given more weight in those days than from someone advising while female, however divine). So maybe, nowadays, female professors should be athena-ed?

The fertility biz: too many hazardous twins?

The NY Times reports on the complicated incentives in the fertility business that often lead to the birth of twins, despite the increased hazard that attend low birthweight babies: The Gift of Life, and Its Price .

"...leaders of the fertility industry and government health officials say that twins are a risk that should be avoided in fertility treatments. But they also acknowledge that they have had difficulty curtailing the trend.
Many fertility doctors routinely ignore their industry’s own guidelines, which encourage the use of single embryos during the in-vitro fertilization procedure, according to interviews and industry data. Some doctors say that powerful financial incentives hold sway in a competitive marketplace. Placing extra embryos in a woman’s womb increases the chances that one will take. The resulting babies and word of mouth can be the best way of luring new business." (emphasis added)
"Doctors are also often under pressure from patients eager for children, who have incentives to gamble as well. Frequently, they have come to IVF as a last resort after years of other treatments, are paying out of pocket, and are anxious to be successful on the first try. And many do not fully understand the risks. "

A subsequent report, Grievous Choice on Risky Path to Parenthood, indicates that more multiple births result from intrauterine insemination than from in vitro fertilization, but that

"While less effective than IVF, intrauterine insemination is used at least twice as frequently because it is less invasive, cheaper and more likely to be covered by insurance, interviews and data show."

The story goes on to suggest that IU may not in fact even be cheaper, when subsequent care for compromised low-birthweight babies is taken into account.

Earlier, the Times invited several commentators to discuss the issue: Eight Is Enough
"A woman in Southern California has given birth to eight babies, the world’s second live-born set of octuplets. With advances in fertility treatment, multiple births are becoming more common, but how many are too many? What are the costs of delivering and caring for premature babies? And what about the emotional costs? We asked several experts to give us their thoughts.
Jeffrey Ecker, perinatologist
Felice J. Freyer, medical writer at The Providence Journal
Mark I. Evans, a doctor who specializes in reproductive genetic services
Ellie Tesher, the author of “The Dionnes” "

A famous experiment in game theory

In an earlier post I wrote about Nagel's guessing/beauty contest game: a famous experiment in game theory .

Who knew how famous. Here's the cartoon version.

One way to think about the game is as a model of a certain kind of unraveling.

Law clerks at the Supreme Court

Some guest Volokh Conspirators have an interesting post on the history of law clerks at the Supreme Court: Disenclerking the Supreme Court.

"During this period [1940's], some Justices seem to have forged closer bonds with their clerks than with their colleagues on the Court. A Frankfurter comment is noteworthy in this regard: “They are, as it were, my junior partners—junior only in years. In the realm of the mind there is no hierarchy. I take them fully into my confidence so that the relation is free and easy.” Law clerks made perfect colleagues, it seems, or at least better colleagues than the other Justices.
In the 1960s, Associate Justices still had only two clerks each, but a rising flood of petitions and appeals soon led most Justices to hire a third. In 1972, Justice Powell requested an additional clerk, pleading his own lack of background in criminal and constitutional law. Soon, they were all entitled to have four clerks.
The importance of the clerks over the past few decades is highlighted by J. Harvie Wilkinson’s comment that “Justice Powell often said that the selection of his clerks was among the most important decisions he made during a term.” It is nowadays taken for granted that clerks play a large role in the opinion-writing process. One Justice reportedly told a clerk who asked for elaborate guidance in drafting an opinion, “If I had wanted someone to write down my thoughts, I would have hired a scrivener.”


They cite their sources: "...we rely heavily on Todd C. Peppers, Courtiers of the Marble Palace: The Rise and Influence of the Supreme Court Clerks (2006), and Artemus Ward & David Weiden, Sorcerers’ Apprentices: 100 Years of Law Clerks at the Unite States Supreme Court (2006)."


Here are some papers on the market for law clerks, which is one of the best places to observe exploding offers.

In this recession year, there are unusually many applicants for appellate clerkships, and the ABA Journal reports Deluged with Clerkship Apps, Some Federal Judges Don’t Look at All of Them
" Although the Online System for Clerkship Application and Review allows judges to sort applications by characteristics such as law school and law journal experience, a number of judges prefer to look only at applications from individuals who come recommended by others they know or review mailed applications only..."
"Slightly more than 400,000 applications were made for 1,244 clerkships, according to the Administrative Office of the U.S. Courts. However, many applicants submitted dozens of applications."

Kant on compensation for organ donors

The Jerusalem Post has a column making the case for compensation of organ donors: Recompense for organ donors.

It begins with the following interesting paragraph:
"No one can be sure exactly how long there have been organ transplants, or their ethical ramifications, but they were already mentioned in Kant’s Lectures on Ethics two centuries ago. He gave the specific example of selling teeth. Kant was against them; he felt they violated his “practical imperative” to treat others as an end and not merely as a means to an end. An organ, in Kant’s view, was part of a human being, and so selling one (and, presumably, giving one) to someone else would turn a person into a means only.
Kant may have been against them, but today we are for them. Organ donations today save people’s lives, not only their bites, and massive efforts are invested to encourage people to make donations."

To my surprise when I looked at Kant's lectures, he was actually thinking of live donation, since he considers the case "if someone were to sell his sound teeth as a replacement for the decayed dentition of somebody else." This is followed immediately by his judgements on the improperness of suicide, or selling oneself into slavery. So, I'm left uncertain about how Kant would feel regarding the contemporary debate about compensation for live kidney donation.

Finance as portrayed in Victorian novels

I think of my work on repugnance, and on protected transactions, as part of a broader project of understanding how the workings of the economy are viewed by non-economists, in ways that may have economic consequences. Some popular views are very longlasting, while some, as politicians know, are subject to change, particularly when the economy goes from boom to bust.

One way to gain some intuition about this might be to study how various kinds of markets and transactions are portrayed in literature. The 2009 book Guilty Money: The City of London in Victorian and Edwardian Culture, 1815-1914 by the financial historian Ranald Michie takes a timely look back at how financial markets were imagined in an earlier century.

He looks at how finance is portrayed in novels, writing "Given the steady production of novels over this period, they also provide a means of continually monitoring changing cultural values. In contrast, other evidence of contemporary culture lacks either the continuity or depth necessary to observe trends over time. Cartoons do provide useful snapshots, such as during the Railway Mania, while there was a brief flurry of paintings with a City theme in the late 1870s, but finance only rarely lends itself to visual display..."

In the Winter 2009 issue of the Business History Review, Andrew Popp writes of the book
"The portrayals are rarely flattering: the City is a place of speculation, gambling, fraud, and deceit; financiers are not to be trusted and are often Jewish, foreign, or both; morals are currupted; true religion is impossible; old England is another, better world; the aristocracy are degraded fools; and all widowers, spinsters, and retired clergymen are innocent dupes."
...
"At the end, the mystery remains of how global financial success could coexist so happily with a fiercely antifinancial culture."

All this seems very timely. Yesterday the Times of London reported from Davos on French President Sarkozy's speech about bankers under the headline Davos: Fear and loathing in the Alps
"Sarkozy railed against the evils of unbridled capitalism and reserved special opprobrium for bankers. “To earn such enormous sums and not to bear responsibility is immoral,” he said. There was a stony silence, broken by a clutch of people who had the courage to clap.
“I thank those two members of the audience for their support,” Sarkozy said with a grin, getting a big laugh. "

A LEAP forward at Harvard

Here is an email announcement I received today from my colleague Raj Chetty:

I am writing to introduce the Lab for Economic Applications and Policy
(LEAP) at Harvard. The mission of LEAP is facilitate policy-relevant applied research, with the ultimate aim of injecting scientific evidence into policy debates.

LEAP has three components. First, we fund faculty and student research, such as pilot field experiments or empirical studies that could not be easily or quickly funded through the NSF or other grant agencies. The LEAP executive committee (Larry Katz, Guido Imbens, Brigitte Madrian, and myself) will review applications on a rolling basis and authorize funding within 4-6 weeks. The application form is available at our temporary website:
http://economics.harvard.edu/leap. Please spread the word about these new funding opportunities among your graduate students.

Second, we run a visitor program that brings in two leading researchers every semester to visit the department and teach short topics courses related to their research. This year’s visitors are Jon Skinner, Stephen Coate, Doug Staiger, and Richard Blundell.

Finally, we have a cluster of offices on the 2nd floor of Littauer that includes a lounge to facilitate interaction among faculty and students.
This space includes visitor offices as well as a rotating office used by junior faculty at HKS and HBS. We plan to hold a small inaugural reception in the lounge at 3:15 on Wed Feb. 10 before the labor/pf seminar, and invite you to join us then to learn more about LEAP.

We look forward to working with you at LEAP!

Raj Chetty
Guido Imbens
Larry Katz
Brigitte Madrian

Where repugnant transactions motivate 'honor crimes'

No More Honor Killings writes Melik Kaylan in Forbes (1/29/10), in a column suggesting the practice may date to pre-Islamic Arab culture.

Jordan Times: No legal exemption for 'honour crimes': "Currently, some defendants who murder their female relatives in the name of family honour could get a minimum of six months in prison if the court decides to invoke Article 98 of the Penal Code, which stipulates a minimum of three months and a maximum of two years in prison for a murder that is committed in a fit of fury caused by an unlawful act on the part of the victim."...
"According to Momen Hadidi, head of the National Institute of Forensic Medicine, most female victims of honour crimes are found to be virgins during the autopsy. He noted that the "killers based their judgements of the victims on mere suspicions that they had improper relationships"." (In Jordan, see also a film: Crimes of Honour. )

Rights groups decry Gaza 'honor killing' "Honor killings usually target female victims of rape, women suspected of engaging in premarital sex, and women accused of adultery. They are murdered by relatives because the violation of a woman's chastity is viewed as an affront to the family's honor -- on the woman's part. In a statement, Al Mezan said honor killings were murder and "cannot be lawfully justified... the leniency with which the authority treats the perpetrators of such crimes, who usually allege that they were acting to preserve the honor of the family, has contributed to the noticeable increase in honor killings." " (see also Commodifying Honor in Female Sexuality: Honor Killings in Palestine

Al Jazeera reports on Social exclusion in southern Yemen in a video interview of girls and women living under protection.

Chechnya: “Honor killings” defended by President Kadyrov

In England (December 2009): Honour crime up by 40% due to rising fundamentalism

'Honor killings' in USA raise concerns (Nov. 2009)"Muslim immigrant men have been accused of six "honor killings" in the United States in the past two years, prompting concerns that the Muslim community and police need to do more to stop such crimes.
"There is broad support and acceptance of this idea in Islam, and we're going to see it more and more in the United States," says Robert Spencer, who has trained FBI and military authorities on Islam and founded Jihad Watch, which monitors radical Islam.
Honor killings are generally defined as murders of women by relatives who claim the victim brought shame to the family. Thousands of such killings have occurred in Muslim countries such as Egypt, Jordan, Pakistan and Palestinian territories, according to the World Health Organization.
Some clerics and even lawmakers in these countries have said families have the right to commit honor killings as a way of maintaining values, according to an analysis by Yotam Feldner in the journal Middle East Quarterly."

Update: this widely reported story came out the week following the above post: Turkish girl, 16, buried alive for talking to boys: Death reopens debate over 'honour' killings in Turkey, which account for half of all the country's murders

Corporate funding of research

Joshua Gans writes (following a John Tierny column) about a new category of transaction in danger of being regarded as repugnant, corporate funding of academic research: Disclosure versus prohibition

College football and the BCS as a political football

The WSJ reports today: U.S. May Examine College Footbal Bowl System
"Sen. Orrin Hatch (R.-Utah) said he received a letter from the Justice Department, in which it "outlined the inequities" of the BCS system and said that it is considering whether to investigate the BCS under the antitrust laws. The letter also said that the administration is exploring other options to address college football's postseason, including encouraging the NCAA to take control and asking the Federal Trade Commission to examine the BCS's legality under consumer-proteciton laws.
Shortly after he was elected in November 2008, Barack Obama said he would "throw my weight around a little bit" regarding college football's lack of playoff system. Currently, the BCS stages a national title game between the two teams that finish atop a compilation of polls, while other arguably deserving teams often get excluded. Mr. Hatch, whose home-state Utah Utes were left out following the 2008 season despite a perfect record, has been advocating for changes, too, writing a letter to the president in October asking for an antitrust investigation."

The article goes on to quote the BCS director as saying we've seen this before: ""There is much less to this letter than meets the eye," Mr. Hancock said. "The White House knows that with all the serious issues facing the country, the last thing they should do is increase the deficit by spending money to investigate how the college football playoffs are played. With all due respect to Sen. Hatch, he is overstating the importance of the letter he received from the Office of Legislative Affairs." "

Here are my previous posts on the BCS and the serious business of college football.

iPhone app for finding broken parking meters

Application identifies broken meters so that drivers can park at them without paying.

The app, called NYC Broken Meters, "allows users to locate the closest broken parking meter along with detailed directions on how to get to it. This is no trivial issue. According to city ordinances, it is legal to park next to a broken meter for one hour without paying, making this application a vital one in city where parking prices can reach $500 or more a month. "

misc kidney exchange news stories, videos

VIDEO: Woman Part Of Kidney Exchange Benefiting 10 People - Video ...Twenty people in four states will have surgeries, giving 10 people a chance at a better life.

Washington, D.C News - feedmap.netChris Conte, 49, a single dad who lives near Frederick, and his cousin, Pam Hull, have always been close Last week, that relationship got even closer when they took part in a large-scale kidney exchange at Georgetown University Hospital

Health Watch: DC Kidney Exchange - TopixA record-setting kidney exchange took place at Georgetown University Hospital. The exchange got many people off dialysis.

Four Days, Two Hospitals, 14 Surgeries, story in Georgetown University Hospital newsletter.
Here's a video of part of the Georgetown news conference with the patients.

Kidney exchange program helps save two lives in Kentucky - WAVE 3 ...Dec 17, 2009 ... WAVE 3 TV Louisville, KY

Three-Way Kidney Exchange Worked NBC San DiegoDec 17, 2009 ... Three lives were saved in a medical first for San Diego County.

YouTube - Rare Kidney Exchange, interview with donors and patients in a short non-directed donor chain.

YouTube - Alliance for Paired Donation: A chain of altruism, a video presentation about Rees' now famous first non-simultaneous chain (not a gripping video, just magazine pictures, but it gives an idea of the span in time and space...).

Moving towards kidney exchange on a national scale in the U.S.

There are lots of good reasons to move towards kidney exchange on a national scale (the main ones being the benefits of a thick market). One approach is to try to organize kidney exchange nationally, and I continue to have some hope for that, although organizing a national program involves the difficulty of creating a top-down logistical structure, as well as a Byzantine political struggle.

Another approach is to have the existing regional exchanges merge and grow until they have national reach. This approach presents logistical problems of its own. The two big regional exchanges with which I've been most intimately involved, the New England Program for Kidney Exchange (NEPKE) and the Alliance for Paired Donation haven't yet managed to work well together, although each has expanded its reach and worked well with hospitals outside of their original regions.


One vision of how things might develop in the intermediate term can be gleaned from the Paired Exchange Program at the University of Minnesota Medical Center, led by the eminent Dr. Arthur Matas. A recent post on their blog discusses the three exchange networks in which they take part:


"At the University of Minnesota Transplant Center we are participating in three exchange lists:
North Central Donor Exchange Cooperative which is based in the upper midwest. There are 9 transplant centers in this consortium. The website is http://www.ncdec.org/.
Alliance for Paired Donation (APD) is based at University of Toledo, Ohio. It started in 2007. Currently there are 69 transplant centers from across the country that are registering pairs for matching in this database. This exchange has been using non-directed donors to optimize the number of transplant possibilities. A non-directed donor is someone who wants to donate a kidney to anyone who needs it. A non-directed donor's involvement can allow a long chain of transplants to occur, spread out over a period of months. For example, a non-directed donor gives a kidney to a recipient in the database. That recipient's "mismatched" donor then agrees to give a kidney to someone else, as soon as a match becomes available. In this way, several donations can take place in a chain over time. There has been a successful chain of as many as 10 transplants. You can learn more about paired exchange at http://www.paireddonation.org/.
National Kidney Registry is based in New York. There are 30 transplant centers from across the U.S that are registered with this network. They have done 61 transplants to date. Their website is http://www.kidneyregistry.org/. "


Of course, one of the logistical problems that participation in multiple networks poses is that, unless the timing of their operations is coordinated, networks may essentially compete for particular patient-donor pairs, with more than one network planning surgeries involving a particular pair.

Dogs and cats becoming repugnant as food in China?

The Guardian reports Chinese legal experts call for ban on eating cats and dogs.

"Chinese legal experts are proposing a ban on eating dogs and cats in a contentious move to end a culinary tradition dating back thousands of years."
...
"In ancient times, dog meat was considered a medicinal tonic. Today, it is commonly available throughout the country, but particularly in the north where dog stew is popular for its supposed warming qualities.
In recent years, however, such traditions are increasingly criticised by an affluent, pet-loving, urban middle class. Online petitions against dog and cat consumption have attracted tens of thousands of signatures. "

..."Online critics said it was hypocritical to protect only dogs and cats, and that the government should focus on human welfare before protecting animals.
"This is absurd. Why only dogs and cats? How about pigs, cows and sheep," wrote a poster going by the name Mummy on the Xhinua news agency website."

HT: Dean Jens

Surrogacy

The NY Times has a forum on The Baby Market:

"The Times recently published an article on the ethical and legal issues surrounding the use of surrogates in reproduction, which become even more complicated when the parents are essentially contractors who find egg donors, sperm donors and pregnancy surrogates to carry the baby.
As surrogacy becomes more common, should contracts for babies be subject to the strict vetting applied to adoption? Is there a public interest in regulating the process and deciding who can obtain a baby through surrogacy? Or is this a reproductive right that should be left to the private realm?
Diane B. Kunz, Center for Adoption Policy
Arthur Caplan, bioethicist, University of Pennsylvania
Charles P. Kindregan Jr., professor of family law
Rebecca Dresser, law professor, Washington University "

The Australian paired Kidney eXchange (AKX) goes live

"The Australian paired Kidney eXchange Program (AKX) is a nationwide live kidney donor exchange program which will become operational in January 2010 and operate under the auspices of the Australian Organ and Tissue Authority"

School choice in SF moves forward

Yesterday Muriel Niederle and Clayton Featherstone were among the presenters to the San Francisco Board of Education, speaking about possible designs for a new school choice system there. It seems that they are well on the way to a good outcome.

One of the Board members, Rachel Norton, has a blog on which she posted before and after accounts of the meeting:
Tonight’s student assignment meeting should be interesting!
Recap: Closing in on a student assignment policy

Here is a video of the whole meeting (but you can navigate a bit so you don't have to watch the full 3 hours: Muriel's testimony, from her slide presentation through answering of questions from the board is from 1:09 to 2:09 on the video).

For the technically inclined, papers about our prior work on school choice systems in NYC and Boston are here.

It has been mentioned in the SF discussions that our team of market designers has worked on a number of problems aside from school choice, so here are background links on some of them for SF readers who are interested:
National Resident Matching Program and related medical labor markets
Gastroenterologists, Orthopaedic surgeons
Kidney Exchange
AEA market for new economists

Closing NY City High Schools

The NY Times has a story by Sharon Otterman on closing "persistently lowest performing" high schools. These are often the large, unscreened schools that serve, or try to serve, the hardest to educate students.

"Since 2002, the city has closed or is in the process of closing 91 schools, replacing them with smaller schools and charter schools, often several in the same building, with new leadership and teachers. This year, the city has proposed phasing out 20 schools, the most in any year. It is also the first year in which the city is required to hold public hearings at each school proposed for closing, as a result of a change in the mayoral control law that resulted from complaints about an insufficient role for parents. "

"The city’s Education Department says that on the whole, the closings have been a success. The small high schools created in the shells of old large high schools have average graduation rates of 75 percent, 15 percent higher than in the city as a whole and far greater than those of the schools they replaced."

"A study last year by the Center for New York City Affairs at the New School backed the chancellor’s argument that students at the smaller schools — which are organized around themes like science or community service — fare better. But the study also found evidence of a domino effect at the large high schools.
Because the new schools, at first, accepted relatively few special education and non-English-speaking students, those students began enrolling in greater numbers in the remaining large high schools. Overall enrollment increased at many large high schools, and attendance fell. “While a few schools were successful in absorbing such students, most were not,” the report said. "

"The Columbus student body is in constant flux. Because the school has unscreened admissions, it takes children expelled from charter schools, released from juvenile detention, and others on a near-daily basis: last year, 359 of its 1,400 students arrived between October and June. Even after the city proposed the school’s closing in December, it received 27 more students. ...
"The city does not dispute that Columbus has been dealt a tough hand, but it argues that other high schools with a similar population — 26 percent are classified as special education and 18 percent are not fluent in English — have had better results. Columbus was also included on New York State’s list of “persistently lowest performing” schools last week, which requires the city to produce a plan either for closing or for staff changes and reorganization of the school."

Update: January 27. City Panel Approves Closing of 19 Schools

Spring 2010 courses in Market Design in Boston/Cambridge

Susan Athey at Harvard and Tayfun Sonmez at Boston College will both be teaching market design courses this semester, and Peter Coles and Benjamin Edelman will be teaching an MBA class at HBS called Managing Networked Businesses, that has a substantial focus on entrepreneurial market design.

Susan Athey: Economics 2056b. Topics in Market Design Catalog Number: 0402 Half course (spring term). Tu., Th., 1–2:30. EXAM GROUP: 15, 16Studies topics in market design, focusing on auctions, auction-based marketplaces and platform markets. Covers methods and results from theory, empirical work, econometrics and experiments, highlighting practical issues in real-world design.

Tayfun Sonmez: EC 802 Advanced Microeconomic Theory (Spring: 3)In recent years, auction theory and matching theory have found applications in many interesting real-life problems from a market/mechanism design perspective. Topics of this course include the theory of matching markets, multi-object auctions, school choice and kidney exchange.

Pay to play at Russian universities

The Chronicle of Higher Education reports on an anti-corruption campaign at Kazan State University: A Russian University Gets Creative Against Corruption (gated, unfortunately, but the excerpts below give you the idea).

"Too many students and professors have a "pay to play" mentality, reformers say, in which grades and test scores are bought and sold.
Anticorruption videos are shown daily. Students participate in classroom discussions about the problem. Kazan State's rector, Myakzyum Salakhov, has installed video cameras in every hallway and classroom, so that the security department can watch students and professors in every corner of the university to catch any bribes as they are made."
...
"Across Russia, bribery and influence-peddling are rife within academe. Critics cite a combination of factors: Poor salaries lead some professors to pocket bribes in order to make ends meet. Students and their families feel they must pay administrators to get into good universities, if only because everyone else seems to be doing it. And local government officials turn a blind eye, sometimes because they, too, are corrupt."
...
"Students and administrators alike say that bribery is rampant on the campus, and that it includes everyone from students to department chairs.
"Corruption is just a routine we have to deal with," says Alsu Bariyeva, a student activist and journalism major who joined the campaign after a professor in the physical-culture department suggested that she pay him to get credit for her work that semester. She paid.
Several students said they once saw a list of prices posted in the hallway of the law department. The cost of a good grade on various exams ranged from $50 to $200. Students from other departments report similar scenarios.
Many people on the campus identify the arrest last March of the head of the general-mathematics department as a turning point. Police, tipped off by students and parents, charged in and arrested Maryan Matveichuk, 61, as he was pocketing thousands of rubles from a student for a good mark on a summer exam.
The police investigation concluded that in at least six instances Mr. Matveichuk, a respected professor, had accepted bribes of 4,000 to 6,000 rubbles, or about $135 to $200, from students in other departments for good grades on their math exams and courses.
Last September a court in Kazan found the math professor guilty of accepting a total of 29,500 rubles, or $1,000, in bribes, issued a suspended sentence of three years in prison, and stripped him of his teaching credential.
Mr. Matveichuk's arrest inspired Mr. Salakhov, the rector, to form an anticorruption committee, including administrators and students."

Sex for the disabled and healthcare

The London Times asks: Is sex for the disabled the last taboo?
"The sexual feelings of disabled people have long been ignored. Now the medical profession is debating the issue"

The issue is not sex, so much as sex workers as a part of health care, and the role that the health care system should play, particularly for the most severely disabled patients who may need logistical support from health care workers .

The report is in connection with a conference called " “Disability: sex, relationships and pleasure”, which is being hosted by the Royal Society of Medicine in Central London. It aims to educate carers about the sexual needs of patients and to introduce disabled people to available support networks. It is backed by the Sexual Health and Disability Alliance (SHADA) and the Tender Loving Care Trust (TLC), which help to put disabled people in touch with appropriate sexual and therapeutic services, and offer confidential support and advice on sexual matters.
Tuppy Owens, the founder of the TLC, campaigns for the sexual needs of disabled people to be recognised by care workers. “Sex is right at the bottom of the list when it comes to their care requirements,” she says. “But they have a right to enjoy all elements of life just like everyone else. It is also important that they have access to sex workers because they don’t have the same opportunities as the average person to explore their bodies."
...
"The Sexual Offences Act allows care workers to help disabled patients to book sex workers over the telephone, provided they do not become involved in the negotiation of fees. But there have been many reported cases of authorities stepping in to stop the practice.
“The problem is that many health professionals think it is illegal,” says Owens. “The TLC has had calls from carers who say that they have even considered giving in their notice out of frustration that they are unable to help patients seeking a sexual service that could make them happier.”
Many high-profile names have backed the TLC’s cause, including Lord Faulkner of Worcester, Baroness Miller of Chilthorne Domer and the philosopher and author A. C. Grayling, but no one has gone so far as to suggest that sex workers should be paid for by the NHS. "

Commodification of the body, in Economic Sociology

The November 2009 issue of Economic Sociology, The European Electronic Newsletter, is largely devoted to discussion of "commodification of the body." Here are the articles, which concern cadavers, organs for transplantation, blood, and eggs and sperm.

A Market for Human Cadavers in All but Name by Michel Anteby

The Tyranny and the Terror of the Gift by Nancy Scheper-Hughes

Honestly Embracing Markets in Human Organs for Transplantation by Mark J. Cherry

Between Gift and Commodity: Blood Products in France by Sophie Chauveau

Debt and Gratitude by Lea Karpel

Jon Baron has a new blog

Jonathan Baron's new blog, Judgment misguided, starts with a great post on Troubles understanding health-insurance reform. Read it, and you're likely to want to add it to your bookmarks, as I did.

He gives a quick quiz on the relevant economics to a web sample of Americans, and finds that indirect effects (let alone equilibrium adjustments of prices and behavior) are hard to understand.

Prostitution and the internet

Scott Cunningham and Todd Kendall have two papers on prostitution, which discuss among other things how sex is sold on the internet:

“Prostitution, Technology and the Law: New Data and Directions” in Handbook on Family Law and Economics, Edward Elgar, Forthcoming 2010.

“Sex for Sale: Online Commerce in the World’s Oldest Profession in Crime Online: Correlates, Causes and Controls, ed. Tom Holt, Carolina Academic Press, Forthcoming 2010.

Along with sites that offer sex for sale, there's been a growth in sites that offer customer reviews. E.g. PunterNet, a site that reviews British prostitutes (but is on a California computer) became briefly famous when a British politician announced that she would ask California's governator to shut it down: Terminate degrading site - Harman "Harriet Harman says she has asked California governor Arnold Schwarzenegger to shut down a website containing reviews of prostitutes."

Here's a paper on wages as a function of age for a similar website for US 'escort' services: The Wages of Sin by Lena Edlund, Joseph Engelberg and Christopher A. Parsons

Texas regulation watch: horse floaters and eyebrow threaders

The WSJ brings us the story: Texas Horse Dentists Feel the Bite Of State Regulatory Oversight

"For a quarter-century, Mr. Mitz has practiced the obscure art of horse-teeth floating. Using instruments roughened with diamond grit, he has filed down hundreds of thousands of equine teeth so that they don't grow into sharp points that can cut the horses' cheeks or throw off their chewing rhythms."...

"Veterinary oversight boards in Texas and several other states have moved aggressively in recent years to rein in unlicensed floaters, ordering them to stop practicing or to work only under supervision of a licensed vet."


The horse floaters have a legal champion helping them defend themselves.

""We want to vindicate our clients' constitutional right to float horse teeth without arbitrary and unfair interference," says Clark Neily, a senior attorney with the Institute for Justice, a nonprofit libertarian law firm on a mission to block state governments from overregulating.
In Texas alone, the institute is fighting on behalf of eyebrow threaders (who use cotton thread to remove unwanted facial hair), wig servicers (who fit and style fake locks), equine massage therapists, interior designers, locksmiths and karate instructors. The institute's clients argue that the state has imposed costly and unnecessary requirements for training or licensing.
Fifty years ago, just 3% of American workers were regulated or licensed by government agencies, according to the Institute for Justice. Today, it's 35%."


Here's a previous post concerning regulation and licensing in Texas (and elsewhere).

Progress towards a sensibly organized national kidney exchange

An important story has played out one more quite positive step in the dry prose of medical bureaucracy, in the form of a report of the Policy Oversight Committee of the Organ Procurement and Transplantation Network (OPTN) of the Health Resources and Services Administration (HRSA). (All of the reports are found here.)

The report in question is this one, OPTN/UNOS Policy Oversight Committee, Report to the Board of Directors, November 16-17, 2009, and the item in question has to do with how a pilot national kidney exchange might be organized, if it overcomes some hurdles presently standing in its way. In particular, the cumbersome review process is catching up with the progress being made in regional kidney exchanges, in which chains have become important, expecially since the introduction of Non-simultaneous kidney exchange chains .

"The Committee supports the Kidney Transplantation Committee’s proposal to include living donors and donor chains in the Kidney Paired Donation Pilot Program. (Item 3, Page 6)."

Here it is:

"3. Proposal to include non-directed living donors and donor chains in the Kidney Paired Donation Pilot Program.

Currently, the Kidney Paired Donation (KPD) Pilot Program only allows living donors with incompatible potential recipients to participate. Non-directed (or altruistic) living donors (those who are not linked to an incompatible potential recipient) have no way to enter the program. Also, candidate / donor pairs can only be matched in groups of two or three, and all donor nephrectomies in the group must occur simultaneously. This proposal would allow non-directed living donors to participate in the KPD Pilot Program and add donor chains as an option in the system. A donor chain occurs when a non-directed living donor gives a kidney to a recipient whose living donor in turn gives a kidney to another recipient and continues the chain. This proposal would allow two types of donor chains: open and closed. Closed chains start with a non-directed living donor and end with a donation to a recipient on the deceased donor waiting list. Open chains start with a non-directed living donor and end with a bridge donor who will start another segment in the open chain. In open chains, the
bridge donor nephrectomy does not occur at the same time as the other living donor nephrectomies. Donor chains have the potential to increase the number of transplants in a KPD system.
The Committee used the scorecard to assess this policy, and the proposal received an overall score of 23.5. The proposal received average score of greater than 2.3 in every category except patient safety and oversight, geographical equity, and operational effectiveness.
The Committee unanimously supported this proposal by a vote of 9 in favor, 0 opposed, and 0 abstentions."

Two new matching papers from Cal Tech

Federico Echenique, emailing from the left coast, sends along links for two new papers:

1) "Aggregate Matchings," joint with SangMok Lee and Matt Shum.

An aggregate matching market is a matching market (M,W,>) in the usual sense, but where we imagine that the elements of M and W are "types" of men and women, and that there may be more than one agent of each type. You can then study "aggregate matchings." For example with 3 types of men and women, these are matrices like

2 3 0
0 1 3
0 0 2

where there are 5 men of type m_1; 2 are married to women of type w_1 and 3 are married to women of type w_2; and so on.

Aggregate matchings are interesting because matching data often comes in this form, and many empirical papers use aggregate matchings.

The focus of the paper is on the empirical implications of stability for aggregate matchings. We ask when there are preferences that make an aggregate matching stable. It turns out that one has to look at a graph defined by the matrix; it's a graph you can draw on the matrix where the vertexes are all the non-zero entries, and there is an edge between v and v' iff they lie on the same row or column. Then the matrix is rationalizable iff the graph does not have two connected cycles. We also look a the model with transfers, and find that rationalizability with transfers is equivalent to the absence of cycles.

In the paper we develop econometric techniques for estimating preference parameters from imposing stability. The techniques are based on a moment inequality we obtain from stability. We have an illustration with US marriage data.
A PDF is in:
http://www.hss.caltech.edu/~fede/wp/aggregate_matchings.pdf

2) "Clearinghouses For Two-Sided Matching: An Experimental Study," joint with Alistair Wilson and Leeat Yariv.

This is an experimental paper. We wanted to test the Gale-Shapley mechanism in the lab. We were worried about the effects of direct revelation on experimenter demand: if you give subjects a preference, and then you ask them to report their preference, then they may start thinking about the motives behind the study. So we have a design where subjects go through the steps of the algorithm, making offers and holding on to proposals. We also think this design makes it easier to map actions into outcomes, compared to the direct revealaion alternative.

The findings are: First, 48% of the observed match outcomes are fully stable.
Among those markets ending at a stable outcome, a large majority culminates in the best stable matching for the receiving-side. Second, contrary to the theory, participants on the receiving-side of the algorithm rarely truncate their true preferences. In fact, it is the proposers who do not make offers in order of their preference, frequently skipping potential partners. Third, market char- acteristics affect behavior and outcomes: both the cardinal representation and the span of the core influence whether outcomes are stable or close to stable, as well as the number of turns it takes markets to converge to the final outcome.
A PDF is in:
http://www.hss.caltech.edu/~fede/wp/ech_wilson_yariv.pdf

Mathoverflow.net

Mathoverflow.net is an internet site on which people can ask and answer math questions. It elicits a good deal of effort for free, in an Open Science, reputation-mediated way.

It has a reputation system, based on the votes "up" your questions and answers get. Other users can also reduce your reputation by 2 points, at a cost of 1 point to themselves, if they don't like your posts.

There's also a set of distinctions that users can earn, called badges.

HT: Aaron Roth

Peer review and markets for ideas, in law and science

Most scientific journals involve "peer review," where the peers in question are supposed to be experts on the subject of a particular submitted article. Because reviewers' time is scarce, the presumption is that a paper submitted to a peer reviewed journal is not currently being submitted anywhere else. The author submits the paper, and waits for a review (either a rejection, a revise-and-resubmit, or an acceptance). Depending on the field and the journal this can happen quickly, or (for economics journals) slowly.

Law Reviews are different. Authors submit to multiple journals simultaneously, and the papers are reviewed not by peers but by the third year law students who edit that year's edition of their law school's Review. And well-received authors don't get "acceptances" they get "offers" to publish, which typically have a short deadline, e.g. 24 hours. In that time they can contact one of the other law reviews to whom they have submitted the paper and try to get it accepted there.

For example, the submissions page of the University of Chicago Law Review has the following invitation to ask for an Expedited Review: "If you have received a formal offer of publication from another journal and would like to receive an expedited review by the University of Chicago Law Review, please contact us at lrarticles[at]law.uchicago.edu. When requesting an expedited review, please put "Expedite" as the subject of your email and include in the text:
1) The author name and title of your manuscript; 2) The name of the journal that has extended an offer to you; 3) The date that the offer expires; 4) The phone number or email address of a contact person at that journal;5) An electronic attachment of your article (plus C.V. or cover letter) to facilitate and accelerate the process. The University of Chicago Law Review will attempt to honor all requests for expedited review for which the above information is provided. ..."

But there is an experiment afoot to change the way law review articles are reviewed, and to try to have peer review while still allowing authors to submit to multiple journals simultaneously: Mainstream law review tries peer review

The idea is to have the reviews done first in a clearinghouse called the Peer Reviewed Scholarship Marketplace "The Peer Reviewed Scholarship Marketplace (“PRSM”), a consortium of student-edited legal journals, exists to provide student-editors with peer evaluations of legal-scholarship manuscripts and to assure the publication of quality articles. PRSM connects authors and journals with subject matter experts, who through their reviews provide editors with the information they need to make informed decisions regarding article selection. With PRSM, the future of legal-scholarship publishing has arrived."

"The Peer Reviewed Scholarship Marketplace (“PRSM”) began with the South Carolina Law Review’s Peer Review Pilot Program... Numerous authors submitted manuscripts to the South Carolina Law Review, and many other legal scholars and practitioners volunteered to serve as peer reviewers. Relying on the reviewers’ evaluations, the South Carolina Law Review chose three articles for publication in a special Peer Review Issue (Volume 60, Book 4). This special issue also featured a favorable foreword by Judge Richard A. Posner as well as an essay describing the South Carolina Law Review’s experience with peer review.
The Pilot Program’s success encouraged the creation of PRSM, a consortium of student-edited legal journals that believe that peer review can enhance the quality of the articles that journals select and ultimately publish. PRSM works much like the familiar manuscript submission vehicle ExpressO but with a peer review component. Authors submit their work exclusively to PRSM, whose administrators then arrange for double-blind peer review of each manuscript. After six weeks, PRSM members will receive a copy of the article with the reviews, which will assist the student-editors in publication decisions. As with ExpressO, members will make their own independent offers to authors, who are free to accept or decline. If an author is unsatisfied with all offers—or receives none after a designated date—he or she is free to resubmit his or her reviewed manuscript through ExpressO or another preferred vehicle.
PRSM thus benefits all parties: authors, reviewers, journals, and the legal community that relies on scholarship published in student-edited journals. All authors receive valuable feedback from their peers, and successfully placed authors further benefit from the “peer reviewed” certification of their published manuscripts. Reviewers are offered an opportunity to comment on new scholarship pertinent to their areas of expertise and thereby participate in the “gate-keeping” article selection process. Student-edited journals are given an additional tool to spot and select the most novel and valuable research for publication. Finally, PRSM’s peer review process produces higher quality scholarship for the legal community that reads and relies on the profession’s journals.
For more information about South Carolina Law Review’s experience with the Peer Review Pilot Program and creation of PRSM, go here."

Apparently law journals in the UK are more like economics journals than like American law reviews, in that authors can only submit to one journal at a time, and submissions are peer reviewed (see Comparative journal submission experiences by John Ip).

In the meantime, a peer-review holdout in the sciences is moving to peer review. The Proceedings of the National Academy of Science, the journal published by the honorific society from which it takes its name, had a tradition of allowing NAS members to "communicate" papers without a refereeing process. For some time now that has coexisted with a peer review process; some papers are reviewed, others simply communicated. Next year that will come to an end, and all papers will be reviewed: PNAS will eliminate Communicated submissions in July 2010.

The problem is that communicated papers were apparently of very uneven quality. (Some biologists I know claim that PNAS stands for "post-Science and Nature," as papers are only sent there after being rejected by those two other journals.) And while there is a very sensible scientific tradition of simply ignoring bad papers, some of the ones that appeared were apparently embarassing: Peer Review Failure?

Peer review is undoubtedly a part of the answer to the larger question about why journals persist at all given the growth of the internet: Why Hasn’t Scientific Publishing Been Disrupted Already?

Random allocation, preferences, and welfare: a fish story

Flying from Madrid to Boston on an Airbus with two aisles not long ago, two stewardesses proceeded in parallel down the aisles offering food. I asked for the fish, but the stewardess in my aisle was already out of fish. Speaking to her colleague in the other aisle, she ascertained that her colleague still had some fish. Rather than pass the fish across the (empty) seat between them, “my” stewardess told me that, if her colleague still had fish when she completed her aisle, then I could have it. (I chose the vegetable dish…)

We see similar issues when changes are discussed in how to allocate deceased-donor organs for transplants, or some other policy where there has been a previous decision on an order of allocation to randomly arriving agents. To have passed the fish across to me would have disadvantaged some passenger who, but for the demand for fish on my side of the plane, would have been able to eat fish…

Of course, assuming that on which side of the plane passengers are seated is random, the policy of allowing fish to be passed from side to side and not just from front to back would have the same ex-ante welfare properties. But, once the passengers are seated, any change in policy would likely help some passenger only by hurting another.

This kind of discussion comes up from time to time in the allocation of school places, as well as transplant organs.

Onur Kesten on discrete allocation

Onur Kesten of CMU has two recent papers that offer new views of old problems.


Kesten, Onur , Why do popular mechanisms lack efficiency in random environments?
Journal of Economic Theory, Volume: 144 Issue: 5 Pages: 2209-2226 SEP 2009

"We consider the problem of randomly assigning n indivisible objects to n agents. Recent research introduced a promising mechanism, the probabilistic serial that has superior efficiency properties than the most common real-life mechanism random priority. On the other hand, mechanisms based on Gale's celebrated top trading cycles method have long dominated the indivisible goods literature (with the exception of the present context) thanks to their outstanding efficiency features. We present an equivalence result between the three kinds of mechanisms, that may help better understand why efficiency differences among popular mechanisms might arise in random environments. This result also suggests that the probabilistic serial and the random priority mechanisms can be viewed as two top trading cycles based mechanisms that essentially differ in the initial conditions of the market before trading starts."


Kesten, Onur, "SCHOOL CHOICE WITH CONSENT, Quarterly Journal of Economics, forthcoming.

"An increasingly popular practice for student assignment to public schools in the U.S. is the use of school choice systems. The celebrated Gale-Shapley student-optimal stable mechanism (SOSM) has recently replaced two de.cient student assignment mechanisms that were in use in New York City and Boston. We provide theoretical evidence that the SOSM outcome may produce large welfare losses. Then we propose an e¢ ciency adjusted deferred acceptance mechanism (EADAM) that allows a student to consent to waive a certain priority that has no e¤ect on his assignment. Under EADAM a consenting student causes himself no harm, but may help many others bene.t as a consequence. We show that EADAM can recover any welfare losses due to SOSM while also preserving immunity against strategic behavior in a particular way. It is also possible to use EADAM to eliminate welfare losses due to randomly breaking ties in student priorities."

Allocation of deceased donor livers

Ex-chief of transplant program indicted in cover-up of patient switch

"On Wednesday, a federal grand jury indicted the former director of the liver transplant program at St. Vincent Medical Center in Los Angeles, California, for allegedly lying about a liver accepted for one patient but transplanted instead into another patient who was lower on the waiting list."

blue guitar

Market design lyrics:

"They said, 'You have a blue guitar,
You do not play things as they are.'

The man replied, 'Things as they are
Are changed upon the blue guitar.'"


Wallace Stevens, "The Man with the Blue Guitar"

Indian names for college sports teams

Some people find repugnant the once common use of Native American names for college sports teams, and the practice is in steep decline: Native American mascot controversy. Here's a 'man bites dog' story, however.

In Twist, Tribe Fights for College Nickname
"Sometime soon, the Fighting Sioux of the University of North Dakota were to be no more, another collegiate nickname dropped after being deemed hostile and abusive to American Indians.
Except that some members of the Spirit Lake Tribe, one of two groups of Sioux in the state, say they consider the nickname an honor and worry that abandoning it would send them one step closer to obscurity.
“When you hear them announce the name at the start of a hockey game, it gives you goose bumps,” said Frank Black Cloud, a tribal member. “They are putting us up on a pinnacle.”
And so, in a legal standoff that has turned some preconceptions upside down, North Dakota’s top state lawyers will be in court on Wednesday to oppose members of the Spirit Lake Tribe who have sued to preserve the Fighting Sioux name and logo, an image of an Indian in profile, feathers draping down."

It looks like the tide will be hard to turn however: Judge Throws Out Lawsuit Seeking to Preserve Fighting Sioux Mascot

Ken Rogoff on grandmasters and growth

My colleague Ken Rogoff writes about two subjects he knows as well as anyone: Grandmasters and Global Growth.

Drawing analogies from the great progress in chess playing computer programs, he conjectures that artificial intelligence will power a lot of economic growth in the coming decade. I'm a bit skeptical, if only because AI has been the coming thing for at least a few decades now (remember expert systems?).

Of course, this may be a quibble about the "I" in AI. Herb Simon used to complain that the goal posts were constantly being moved; whenever computers became good at something that used to be thought to require intelligence, then "intelligence" would just be redefined. In this regard, I've been impressed at the big strides that have recently been taken in cheap, fast computerized translation: it's still a long way from passing the Turing test, but you can now tell at least what a web page is about in a lot of languages.

We're already seeing a lot of growth of computer assisted markets of all sorts, including many clearinghouses of the kind I often write about when I write about market design generally, including some of the developments in this past year. So maybe Ken is right, and after we enjoy the economic growth, we can quibble about whether these computerized markets and products are really smart...

Update: the February 11, 2010 New York Review of Books has an article by Gary Kasparov, The Chess Master and the Computer that includes a discussion of human-computer teams, i.e. of computer-assisted chess.

Ethics of test preparations--for kindergarten

Sharon Otterman in the NY Times reports: Tips for the Admissions Test ... to Kindergarten
"Test preparation has long been a big business catering to students taking SATs and admissions exams for law, medical and other graduate schools. But the new clientele is quite a bit younger: 3- and 4-year-olds whose parents hope that a little assistance — costing upward of $1,000 for several sessions — will help them win coveted spots in the city’s gifted and talented public kindergarten classes. "
...
Private schools warn that they will look negatively on children they suspect of being prepped for the tests they use to select students, like the Educational Records Bureau exam, or E.R.B., even though parents and admissions officers say it quietly takes place. (Bright Kids, for example, also offers E.R.B. tutoring.)
“It’s unethical,” said Dr. Elisabeth Krents, director of admissions at the Dalton School on the Upper East Side. “It completely negates the reason for giving the test, which is to provide a snapshot of their aptitudes, and it doesn’t correlate with their future success in school.”
No similar message, however, has come from the public schools. In fact, the city distributes 16 Olsat practice questions to “level the playing field,” said Anna Commitante, the head of gifted and talented programs for the city’s Department of Education."

Languages as marketplaces

Linguistics and Economics have something big in common, they both study things that human beings have built collectively. Like markets, languages mostly emerge out of lots of collective action, only rarely is there much scope for conscious design. A big exception (or a small one, depending on your point of view) is Esperanto, the hopeful artificial language that was intended to be independent of nations and nationalism.

The New Republic has an informative article about Esperanto's designer, L.L. Zamenhof , and the formative early years of the language: The amazing story of how Esperanto came to be.

Languages and their catchment areas seem like a fruitful area for more study by economists. Just as it is hard for new marketplaces to compete with large existing ones when there are network effects, it is hard for new languages to gain a foothold in the marketplaces that languages provide for their speakers, since the benefits of speaking a language depend so much on how many other people already speak it.

Medical marijuana laws

Laws about marijuana give a different window on repugnant transactions.

Jan 12: N.J. approves medical marijuana bill "The Legislature approved a bill yesterday that would make New Jersey the 14th state to allow chronically ill patients access to marijuana for medical reasons."...

"Chris Christie, a former federal prosecutor who is the incoming governor and a Republican, said he supported the concept of the bill but remained concerned that a loophole could lead to abuses.
A compromise bill was worked out after some lawmakers expressed similar concerns. For example, a provision allowing patients to grow marijuana was removed.
Driving while high would continue to be against the law.
The other states that permit medical use of marijuana are Alaska, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Washington."
...
"Gusciora said the legislation, titled the Compassionate Use Medical Marijuana Act, would be the nation’s strictest such law."

"Strict" isn't an adjective you often hear paired with "compassionate."

Same sex marriage; recent developments

Same sex marriage continues to provide a window on repugnant transactions, i.e. transactions some people think other people shouldn't engage in.

January 5: New Jersey makes last-minute bid for gay marriage "New Jersey's state Senate will vote on legalizing same-sex marriage this week, officials announced on Tuesday, in a race against the clock before a new governor who opposes the measure takes office."
January 9: Gay marriage in New Jersey, once a sure thing, became tracked for defeat "Thursday’s state Senate defeat of the controversial bill, considered a "slam dunk" to pass just a few months ago, also was a simple case of what happens in the bare-knuckle world of New Jersey politics."

January 8: Same-sex marriage law backed in Portugal's parliament "Portugal's parliament has passed a law to legalise same-sex marriage, but rejected proposals to allow homosexual couples to adopt.
The bill was approved with the support of the governing Socialist Party and other parties further to the left.
...The law has been fiercely opposed by conservatives in the Catholic country."

January 11: Pope says gay marriage threat to creation "Pope Benedict on Tuesday linked the Church's opposition to gay marriage to concern about the environment, suggesting that laws undermining "the differences between the sexes" were threats to creation."

January 12: Historic court battle decides legality of 'gay marriage' in America "Americans could be forced to accept the legality of “gay marriage” in all 50 states of the union, depending on the outcome of an historic federal court battle that began in California yesterday.
The hearing in San Francisco — which was supposed to have been shown on YouTube before a decision by the Supreme Court to block the video feed — comes after 52 per cent of Californians voted to ban same-sex unions in 2008 with a ballot named Proposition 8. "

Mortgages, "strategic default," and repugnance

Steve Leider writes:
I’ve noticed lately that a lot of people (both public intellectuals like Megan McCardle and Rod Dreher as well as [other people I know]) seem to be really affronted at stories of people who walk away from mortgages that they can afford the payments on for houses that are under water (“strategic defaults”). Everybody seems to feel that even though this option is legal under the mortgage contract that this is somehow dishonorable or immoral. It’s a bit different from repugnance because while both parties voluntarily agreed to the contractual rules that allow this at the start, the bank probably isn’t happy about it now – but it has something of the same flavor of deep emotional disapproval of the economic activities of others.

http://meganmcardle.theatlantic.com/archives/2009/12/the_new_breed_of_deadbeats.php
http://blog.beliefnet.com/roddreher/2010/01/mortaging-ones-personal-honor.html

But see also Roger Lowenstein in the NY Times: Walk Away From Your Mortgage!
Update: see also Dick Thaler: Underwater, but Will They Leave the Pool?

Money laundering

Illegal markets, like those for narcotics, can't so easily make use of all the financial services provided by banks and other intermediaries, without leaving a trail for police investigators. So we have the phenomenon of "money laundering," designed to move the proceeds from illegal markets into the financial system so that they can be redeployed and enjoyed.

In some cases, money laundering may involve cash-intensive businesses that can simply report more sales than they actually make, and so transfer illegal currency into taxable revenue and bank accounts. In some cases it may involve the purchase and resale of portable assets. The police work associated with tracing this kind of crime involves the tracing of assets by forensic accountants, and agreements among banking authorities.

But apparently, for the part of the drug trade that moves drugs into the U.S. from Mexico, the most cost efficient way to launder the cash receipts is to physically smuggle currency in bulk back into Mexico: Along U.S.-Mexico Border, a Torrent of Illicit Cash. "Although United States authorities seized $138 million last year, that amount pales in comparison to the $18 billion to $39 billion a year the Drug Enforcement Agency estimates is being smuggled to Mexico every year."

Once in Mexico, it is apparently easy to turn dirty money into clean money, e.g. simply by exchanging it for pesos at a foreign exchange dealer. "A good portion of that is pooled by foreign exchange businesses and then shipped back to United States banks in armored trucks, experts on money laundering said."

And new financial instruments show up faster than laws to deal with them: "In a new trend, some organized crime groups have taken to smuggling prepaid money cards rather than cash, law enforcement officials say. United States treasury officials are working to require prepaid cards loaded with more than $10,000 to fall under the same reporting requirements as cash. Right now, anybody can walk or drive across the border with the cards filled with more than $10,000, without breaking any laws. "

Apparently the same hidden compartments in cross border vehicles that move the drugs in one direction can move the currency in the other, and so finding drug cash is a lot like finding drugs, and uses the same drug-sniffing dogs.
"The dogs and their handlers also find money, since most of it has traces of narcotics embedded in its paper. Drugs and cash are often stored or transported in the same compartments. "

The drugs and dogs game has quite a bit of a cat and mouse flavor to it: "There is an entire cottage industry devoted to building secret compartments in vehicles. Often the compartments will not open unless the driver takes a series of actions like pumping the brakes and turning on the dome light and the radio simultaneously. "

It's enough to make you appreciate bank accounts, checks, and credit cards, despite all the difficulty and fees in getting money wired to or from American banks as compared to European ones.

Here's a Department of Justice page on money laundering that makes clear the difference between contraband interdiction of the kind done by the Drug Enforcement Agency and asset tracking of the kind done by the IRS and other agencies, by showing big piles of seized cash.

European job market for economists: the RES meetings are coming up

The ASSA meetings in Atlanta were held the first weekend of January, and while that was the main venue for preliminary interviews by North American employers, others also participated, from all over the world.

There are also some European meetings with job market components.

The XXXIV Simposio de la Asociación Española de Economía (SAEe), was held in Valencia, Spain, on 10-12 December 2009. Here is their jobmarket page.

The Royal Economic Society (RES) PhD Presentation Meeting & Job Market, City University, London, is coming up, January 16th and 17th 2010.

Both of these marketplaces draw many fewer employers and applicants than the ASSA meetings.

A kidney exchange in Minnesota

Josephine Marcotty at the Minneapolis St. Paul Star Tribune continues to do a great job of reporting on kidney exchange. Here's her latest report: Doubling up on kidney donations.

"The two-way kidney swap between HCMC and the University of Maryland Medical Center this week was a dramatic example of the next best idea in transplant medicine: A highly choreographed computer exchange that matches living donors with people in kidney failure across the country. It promises to save millions of dollars in medical costs and end the ordeal facing many of the 80,000 kidney patients on the nation's transplant list, who face a wait of five years or more to get an organ from a deceased donor."

This exchange involved a highly sensitized patient:
"Very few people in the general population would have been a match for his patient, he said.
Only a large, computerized data base of potential donors could find her that "needle in a haystack," "
...
"These sophisticated national organ exchanges are still in their infancy, and Minnesota hospitals are only now beginning to participate. In November the Mayo Clinic did a four-way swap among three kidney patients at the Rochester clinic and one at its Arizona clinic. In the last two years, transplant centers in other states have done several hundred such paired exchanges. Late last year, the organization that manages the national transplant system for the federal government launched a pilot program that could eventually create a nationwide matching system.
Growing waiting list
With the rapid spread of kidney disease in the past two decades and an ever-longer waiting list for organs from deceased donors, "the wait times are becoming unpalatable," said Dr. Mark Odland, Johnson's transplant surgeon at HCMC. "You have to start looking for alternatives." "

Incentives for organ donors at MR and the WSJ

Alex Tabarrok writes at MR about Innovative Solutions to the Shortage of Transplant Organs, and at the WSJ: The Meat Market.

He discusses recent developments in transplantation policy in Israel and Singapore, among other things.

Critiques of higher education

Kevin Carey writes that colleges don't expose themselves to sufficient public scrutiny: That Old College Lie


Noam Scheiber worries (together with my HBS colleage Rakesh Khurana) that business schools are training managers in finance rather than production: Upper Mismanagement--Why can't Americans make things? Two words: business school.

Unraveling of primary elections

Further unraveling, that is.

NH Seeks to Stay No. 1 in Presidential Primaries
"New Hampshire lawmakers hope to erase any doubt that the state intends to continue holding the nation's first presidential primary election by making a small but important change to state law.
The House is set to vote Wednesday to give the secretary of state wider latitude in setting the primary's date to protect the state's tradition of being first. The Senate votes on the measure next if it passes the House, and it is widely expected to become law."
...
"State law currently requires the primary to be held seven days or more before any similar contest. The bill would attach the secretary of state's rights to that law and notes that its purpose is to protect the tradition of New Hampshire being first....The bill would give the secretary of state the flexibility ''to interpret other elections such as caucuses or conventions the way he determines is necessary to protect our primary status,'' Splaine said."
...
"The first contests in Iowa and New Hampshire bring those states enormous attention from presidential candidates and the media. New Hampshire steadfastly guards its role, pointing to its engaged electorate as evidence that its voters do a good job at winnowing the field.
Candidates know that winning New Hampshire's primary can propel their campaigns. Sen. John McCain and then-Sen. Hillary Rodham Clinton reignited their campaigns after winning the New Hampshire primary in 2008.
Jealous of all the attention, other states contend they better represent the nation than Iowa and New Hampshire, which have fewer people and less racial or ethnic diversity. They even challenged New Hampshire's tradition in the 2008 presidential primaries.
That led to the Iowa caucus being held on Jan. 3, 2008, and the New Hampshire primary five days later, on Jan. 8.
Secretary of State William Gardner waited until Nov. 21, 2007, to set the Jan. 8 primary date to make sure it would come before nominating contests in Nevada and South Carolina. Those states and six others broke national party rules by scheduling their contests before Feb. 5.
Democrats penalized Florida and Michigan delegates to the national party convention by counting only half their votes, while Republicans stripped votes from those states and three others, including New Hampshire.
The national Democratic calendar had called for the primary to be held Jan. 22 that year. After the New Hampshire secretary of state set the Jan. 8 date, state party leaders sought and got a waiver from the national party to have its delegates seated at the national convention.
Even if New Hampshire is stripped of delegates next time around, by holding the first primary it will retain its influence in selecting the next president, Splaine said."

Market for childbirth, when it comes with a passport

Quite a few places give citizenship to babies of (even) non-resident parents if they happen to be born there. The U.S. is one, and Hong Kong is another. There's another advantage to being born in Hong Kong to a mainland Chinese mother; the baby doesn't count against the "one child" quota. All this makes for a powerful incentive to deliver the baby in Hong Kong: Mainland Chinese mothers deluge maternity wards of Hong Kong hospitals
"Children born here to mainland Chinese women automatically receive permanent residency status, entitling them to benefits including free education, free medical care and a Hong Kong passport with visa-free access to more than 100 countries.
The Hong Kong government reported that, for the first six months of the year, 44 of every 100 babies born in the former British colony had mainland Chinese mothers. The figure was about 18 of 100 in 2002, after which border controls were eased. "

Martha Nussbaum on same sex marriage

Martha Nussbaum expresses the view that opposition to same sex marriage is related to physical disgust, when interviewed in the Sunday NY Times Magazine, about her forthcoming book “From Disgust to Humanity: Sexual Orientation and Constitutional Law,”: Gross National Politics .

I'm skeptical. Steve Leider and I, in a forthcoming article in the American Journal of Transplantation, report on a representative-sample survey on the repugnance of buying and selling kidneys for transplant. We start off this way:

"The demand for transplantable kidneys exceeds the supply. If kidneys were a purchased commodity, the gap between supply and demand would mean the price was too low. But in most countries, a market for organs is regarded as repugnant, and such markets are widely illegal. We use “repugnant” in its economic sense – in a repugnant transaction the participants are willing to transact, but third parties disapprove and wish to prevent the transaction (rather than in its psychological sense of eliciting disgust among potential participants). Hence repugnant transactions are often illegal (Roth, 2007)."

There's no evidence at all that kidney transplantation arouses either repugnance or disgust, and so the repugnance of kidney markets almost surely doesn't arise from the kind of automatic disgust that people experience when they encounter feces, for example. I'm skeptical that same sex marriage does either; how else to explain that many people who object to same sex marriage don't object to civil unions for same sex couples? But I haven't done an empirical study of same sex marriage, so I can only speculate on that. (I'll have to read Nussbaum's book when it comes out.)

See my earlier post, MA sues to overturn Defense of Marriage Act , which quotes from an earlier Nussbaum article, on the changing sentiment about interracial marriage.

My concern with confounding (economist style) repugnance with innate disgust is not because I don't think that people who want you to oppose some repugnant transaction don't try to recruit feelings of disgust, in themselves and in others. But I guess real disgust, on an evolutionary preference level, is harder to overcome, e.g. there won't soon be demand for chocolate fudge shaped like feces, for instance. (I say that despite this report from Catalonia, so I could be wrong about this...)