Budish, Cramton and Shim paper on high frequency trading wins AQR prize

The Budish et al. proposal for replacing continuous double auctions with very frequent call markets has gotten some (more) well deserved recognition. Here's the announcement: 3 win AQR Insight Awards for high-frequency trading paper

 "Three academics were named co-winners of the $100,000 prize in AQR Capital Management's Insight Awards, for their paper on market dynamics and structure in an era of high-frequency trading, outdoing four other finalist papers, including one co-authored by a Nobel laureate.

 

Eric Budish, Peter Cramton and John J. Shim were recognized for what AQR called their “path-breaking” paper, “The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response.” Their research uses “millisecond-level direct-feed data from exchanges.” The authors propose an alternative to the “arms races” employed to exploit trading opportunities.

The three — Mr. Budish, associate professor of economics,University of Chicago Booth School of Business; Mr. Cramton, professor of economics, University of Maryland, College Park; and Mr. Shim, Chicago Booth School Ph.D. candidate in finance — will share the prize equally.

In their paper, the authors contrast important costs and benefits of continuous trading when traders transact virtually instantly in ever smaller increments of time and trading in discrete intervals of time, say, every 100 milliseconds, and conclude discrete interval trading better serves market participants.

In total, 248 papers, all unpublished as required by the competition, from 26 countries were submitted in AQR's third annual competition.

AQR plans to post the papers on May 28.

The winning paper was among five finalist papers. Authors from each finalist paper presented and discussed their research April 24 before a gathering, including the 19-member AQR award selection committee and some AQR clients.

The authors of the other finalist papers were recognized with honorable mention awards, which carry no cash prize. They are:

• Robert F. Engle III, winner of the 2003 Nobel prize in economics and the Michael Armellino professor of finance, Stern School of Business, New York University, and Emil N. Siriwardane, Stern School Ph.D. candidate in finance, co-authors of “Structural GARCH: The Volatility-Leverage Connection”;
• Dong Lou, assistant professor in finance, and Christopher Polk, professor of finance, both of the London School of Economics, co-authors of “Comomentum: Inferring Arbitrage Activity From Return Correlations”;
• Torben G. Andersen, the Nathan S. and Mary P. Sharp professor of finance, Kellogg School of Management, Northwestern University; Nicola Fusari, assistant professor, Carey Business School, Johns Hopkins University; and Viktor Todorov, associate professor of finance, Kellogg School, co-authors of “The Risk Premia Embedded in Index Options”; and
• Samuel M. Hartzmark, Ph.D. candidate in finance and business economics, Marshall School of Business, University of Southern California, author of “The Worst, the Best, Ignoring All the Rest: The Rank Effect and Trading Behavior.”

The award, sponsored by AQR, seeks to encourage innovation in academic research that can be applied in investment management, said David Kabiller, AQR founding principal and a member of the committee, in an interview.

AQR set a large cash prize to draw attention to the competition and encourage top submissions because “we believe the market responds to incentives,” Mr. Kabiller said.

Submissions for papers for the fourth annual AQR Insight Award competition are due Jan. 15."

Previous posts on Budish et al. are here and here.

Opt out system for organ donors? Scotland opts to wait for evidence

The Scotsman has the story: Warning over opt-out organ system in Scotland

"MOVING to an opt-out system of organ donation in Scotland would “not necessarily” lead to more transplant operations taking place, the public health minister has said.

Michael Matheson insisted the Scottish Government was still “unconvinced” about making such a change.

He spoke out as Holyrood debated a petition backed by more than 20,000 people calling on ministers to introduce an opt-out system for organ donation.

Wales is introducing an new system of deemed consent at the end of next year, where organs can be taken for transplant unless people have made it clear they do not wish this to happen after their death.

Mr Matheson told MSPs the Scottish Government would monitor the situation in Wales to see what impact the change had.

But he stated: “It would be fair to say we remain unconvinced that we should make any move to introduce an opt-out system right now.

“I want to make sure that we keep this issue under review and learn from what happens in Wales, but we are making great progress here in Scotland with the programme of activity we have under way.”

The minister added: “People believe opt-out will mean more organs will become available but our own experts tell us this is not necessarily the case.

“Opt-out means increasing the proportion of the population on the organ donor register but you don’t need to be on the organ donor register to be a donor. Over the last five years, 62% of all donors in Scotland are not on the donor register.

“The real issue that limits the number of donors is the number of people who die in circumstances where donation is possible.

“Unfortunately, to become an organ donor you really have to die in intensive care, and only about 1% of deaths in Scotland occur in these circumstances. Sadly that’s something opt-out in itself can not change.”

Mr Matheson said the US had a higher organ donation rate than Scotland but did not have an opt-out system while Sweden has an opt-out system, but has a lower donation rate than Scotland.

“There is no single thing that will bring about the revolution in donation rates,” Mr Matheson said.

He stressed the Scottish Government was “committed to increasing organ donations in Scotland”, adding: “I don’t believe any other country in the UK can say it has done more on this agenda in the last five years than what has happened here in Scotland.”

He told how Scotland had almost doubled the number of organ donors in the last six years, adding there had been a 62% rise in transplants being carried out - the highest increase in the UK.

Meanwhile, there has been a 25% reduction in the transplant waiting list since 2006-07, Mr Matheson said.

He told MSPs: “We’re making the best progress in the UK. We’re seeing more donors and we’re delivering more transplants and we’re saving more lives as a result.

“We will keep on review how the opt-out process progresses in Wales, but while we are making the sort of progress we have delivering here in Scotland over recent years, I believe it is prudent and appropriate that we should wait to see what happens in Wales before we start to introduce significant legislative change here in Scotland.”

Loan sharks and kidney markets

From the Israeli press:
Head of Israel's debt collection agency: Debtors selling organs to make payments
In letter to deputy attorney general, David Madioni says black market moneylenders using threats, extortion to force debtors to sell organs abroad.

"Israelis who owe money to loan sharks are being forced to sell organs abroad in order to pay back their debts, the head of Israel's Enforcement and Collection Authority has warned the deputy attorney general, in a letter obtained by Ynet.

"The letter by David Madioni to Avi Licht paints a dark picture of black market moneylending in Israel. Known debtors are requesting permission to leave the country, he claims, with the express intention of selling organs.

"Madioni notes in the letter that a number of debtors have recently visited his office in Tel Aviv, seeking to abolish restrictions on them leaving the country. These people, Madioni writes, told him their trips are expressly in order to sell organs to clear their debts.

""I clarified that each is in debt to loan sharks in addition to existing debts (dealt with by the state)," reads the letter to Licht. "Black market elements 'recommended' that they sell their kidneys abroad so as to repay their debts, while threatening their lives if they do not comply."
...
"These cases point to a frightening phenomenon, which are offenses under the law on organ transplants," Madioni wrote. "Beyond this, there appear to be far more serious offenses of extortion through threats, exploitation and physical harm for payment of debts."

International trade and customs unions, in Baku

To make a long story short, I'll be speaking at  the conference of the International Network of Customs Universities (INCU),  “Trade Facilitation Post-Bali: Putting Policy into Practice," in Baku.

The Inaugural INCU Global Conference 2014 "Trade Facilitation Post-Bali: Putting Policy into Practice" will take place from 21 to 23 May 2014 in Baku, Republic of Azerbaijan and will be hosted by the State Customs Committee of the Republic of Azerbaijan.

Here's a draft of the program. It will be a chance for me to meet Chris Pissarides, and to reconnect with Tom Sargent. 

Credentials and degrees (and, I'm now almost a high school grad)

I visited my old high school this past weekend, Martin Van Buren High School in Queens, in New York City. It was fun on a number of different levels. But it reminded me that credentials are complicated. The powers that be inquired into the possibility of giving me a high school diploma, but found, not surprisingly, that I'm still not qualified.  But I got to add an honorary high school diploma to my growing collection of unusual honorary degrees. And I found out that I had been included in the 1969 Yearbook with the rest of my class, although I didn't graduate with them.

FCC Adopts Rules for Incentive Auction

Here's the news from the FCC:

"The Federal Communications Commission today adopted rules to implement the Broadcast Television Incentive Auction. The two-sided auction will use market forces to recover spectrum from television broadcasters who voluntarily choose to give up some or all of their spectrum usage rights in exchange for incentive payments, in order to auction new spectrum licenses to wireless providers."

May 15, 2014 - News Release

FCC Adopts Rules for First Ever Incentive Auction

- Related Upcoming Proceedings

- Staff R&O Summary

- Wheeler Statement

- Clyburn Statement

- Rosenworcel Statement

- Pai Statement

- O'Rielly Statement

and here's a news story: The 4G incentive auction rules are set, and a lot of people aren’t happy with them.

Here's my previous post on the incentive auction... 

Martin Van Buren High School, in New York City

My old high school--which was a giant city school when I attended, with well over 1,000 students graduating each year--hasn't been thriving, and a group of alumni are hosting a Celebration to help revive it.

It turns out that I am the second, not the first Nobel laureate to have attended.
Here are the details.

Saturday, May 17, 2014   •   1:30pm – 12:00 Midnight

A Day of Celebrating Martin Van Buren High School’s
Past, Present and Future!

at Martin Van Buren High School, Queens Village, NY


BASKETBALL CLINIC:  1:30pm – 3:30pm

MVB Alum, and Head Coach of Fordham University’s Basketball Team, Tom Pecora, and his team will conduct a clinic for 6th-8th grade youth from community schools.

 MVB OPEN HOUSE:  3:00pm – 5:00pm

Learn about MVB’s new and exciting programs,
Visit with former teachers, Tour the school, Meet today’s students

Everyone is welcome. There is no charge for this event.

MVB SHOWCASE:  5:00pm – 6:00pm

The Best Of MVB,
Showcasing our band, chorus, and dance troupe.
Everyone is welcome. There is no charge for this event.

HALL OF FAME:  6:00pm – 8:00pm

Honoring Distinguished MVB Alumni

Alvin Roth, Nobel Prize Economics

Frank Wilczek, Nobel Prize Physics

MVB’s 1958 Championship Baseball Team

Ray Kurzweil, Inventor and Futurist

 Donny Deutsch, Media Personality


Attendance is free for this event, but space is limited. Please sign up in advance by email at mvbhsalumns@gmail.com


All-CLASS REUNION: 8:00pm – 12:00 midnight

Join the 55 graduating classes for the first ever all-class reunion at MVB!

Here's some news coverage of the run-up to the event, which includes this:

"After the city lifted zoning restrictions more than 10 years ago, students left Van Buren en masse for schools like Francis Lewis, Bayside and Cardozo high schools. Van Buren received a “D” on its most recent city progress report and received a below-average rating on last year’s school survey.

But under the leadership of new Principal Sam Sochet, the school is poised for a turnaround, Wilson said, and part of the celebration day’s schedule includes an open house promoting a handful of new programs."

Future Directions in Paired Exchange

I'm in NYC for
The 2nd  Annual  Future Directions in Paired Exchange, Friday May 16th 2014
New York Academy of Medicine

Health insurance for kidney donors?

Writing in The Atlantic, transplant surgeon Joshua Mezrich proposes compensating living kidney donors with health insurance, which he points out would not be expensive since those who qualify as donors are unusually healthy: Why we need more kidney donors, and how to get them

Cook and Krawiec on compensating organ donors

How best to encourage organ donation: Research brief -

 Where could more kidneys come from?

In considering where to look for more kidneys, we begin with basic demographics. The criteria used to identify suitable deceased donors have the effect of ruling out donations from all but a fraction of the 2.5 million people who die each year in the United States. Our research provides some detail on this “winnowing” process for the year 2010:

• Almost 2/3 of all deaths happen to people over age 70, almost all of whom are deemed medically unacceptable donors.
• Most remaining deaths happen outside of hospitals in uncontrolled settings like auto accidents, or occur inside the hospital from causes like cancer, diabetes, and renal disease that ordinarily rule out kidney donations.
• The bottom line is that, in 2010, only about 9,000 deaths happened to “eligible” donors — in the sense that the deceased person had healthy organs and was declared dead due to cessation of electrical activity in the brain after the hospital had arranged to preserve blood circulation in the patient. In 70% of those cases the kidneys were in fact donated. An additional 928 donations happened after cardiac deaths (only rarely possible because successful preservation of kidneys under that circumstance is difficult).

Why monetary compensation should be considered

Basic arithmetic shows that even if everyone in the United States had signed an advance consent form allowing donation of organs, and every family honored that agreement at the time of death, only an additional 2,751 donors — yielding roughly 5,500 kidneys — would have been available in 2010. In short, the kidney shortage cannot be eliminated simply by measures aimed at increasing rates of donation from the deceased. Additional kidneys from people who die would be welcome, but will not be nearly enough to satisfy current need, let alone reduce the backlog of sick patients awaiting a life-saving kidney donation. Barring a major breakthrough in recovering organs from deceased patients currently deemed unsuitable, the only plausible solution is to increase donations from the living.

There are other advantages to using more living donors. More transplantable kidneys from live donors would improve health outcomes for those with end stage renal disease and reduce the annual cost per patient. Donating a kidney is no walk in the park, but the medical risks are very low. People can do just fine with a single kidney.

Currently, most people who donate one of their kidneys do so to help someone they know, usually a family member. Education and public outreach might increase the number of altruistic donors willing to make an organ gift to a stranger. But in 2012, only 182 people made such “nondirected” donations — and the trend is downward, not up.

The high and increasingly unmet need for transplantable kidneys prompts many observers — including us — to believe that the time is ripe to reconsider financial incentives. An unregulated market in kidneys would be open to abuses and corruption. A better alternative would be a public agency with sole authority to provide financial incentives for organ donation, after would-be donors are screened not just for good physical health but to ensure that they are making an informed decision after careful reflection. Even with safeguards, some say that putting a price on body parts is bound to be dehumanizing. But markets already exist for blood plasma, eggs, sperm and hair. At the end of the day, objections to compensation for kidney donors must be weighed against the growing loss of health and life caused by our current inadequate system.

Related research: An in-depth paper by Cook and Krawiec, “A Primer on Kidney Transplantation: Anatomy of the Shortage,” is forthcoming in Law and Contemporary Problems, Vol. 77, No. 3. A working version of the paper is available on the Social Science Research Network. 

Podcast on kidney exchange at the PNAS

Science journalist Paul Gabrielsen interviews me about kidney exchange, and produced this (6 minute) podcast from our discussion.

Exchanging kidneys

Alvin Roth discusses how principles of economics can benefit people who need kidney transplants. Image ©iStockphoto/Eugene Kuklev.May 5, 2014 | Running Time: 6:10

00:00

00:00

• Transcript
• Listen to MP3

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For those of you who prefer reading to listening, or who want to read along, here's the transcript (I always find it a little sobering to see the way I talk transcribed...):

Podcast Interview: Alvin Roth
PNAS: I’m your host, Paul Gabrielsen, and welcome to Science Sessions. Imagine that someone you love is one of the 99,000 people in the U.S. who need a potentially life-saving kidney transplant. You might gladly give them one of your kidneys to save their life, but if your kidney is incompatible with your loved one, the transplant cannot proceed. Will your loved one then have to wait for a deceased donor kidney to become available, and risk becoming one of more than
3,000 people every year who die while waiting for a transplant? Or is there another option? Alvin Roth, an economist at Stanford University, realized that many such pairs of incompatible patients and donors may exist, and that they may be able to help each other. I spoke with Roth, a member of the National Academy of Sciences, by phone to discuss how principles of economics can save the lives of people who need kidney transplants.

PNAS: So, what is the outlook like for someone who needs a kidney transplant?

Roth: Good question. So, the outlook is not so good. People live around 5 years on dialysis, I mean, there’s a lot of variance. Dialysis is no fun, and it’s not a great treatment. Over time it gets worse. So people on dialysis need transplants, and there aren’t enough organs. If you have a live donor that’s compatible with you, they might give you a kidney right away and you would be spared dialysis. So, if you didn’t have a living donor, you would just wait on the regional list for
deceased donor organs, which can be many years in length. And that’s where kidney exchange comes in. You could be in that situation, you love someone enough to give them a kidney, but they can’t take your kidney, and I’m in the same situation. But now, you could give a kidney to my patient and I can give a kidney to your patient, we’d have exchanged kidneys and arranged it so that each kidney patient could get a kidney that they were compatible with.

PNAS: And to that end, you helped found one of the first kidney exchange programs, the New England Program for Kidney Exchange, in 2004. So let's say I have a kidney that I'd like to donate and I sign up into one of these exchanges. Can you walk me through the process?

Roth: Okay, so that depends. One critical difference – when you say you have a kidney you’d like to donate, is whether or not you have an intended recipient.

PNAS: Let’s say I do.

Roth: Okay, so someone you love needs a kidney, you’re happy to give her a kidney, and you sign up together. So you guys now are an incompatible patient-donor pair, and you are entered into a database. And what the algorithm would look for, it would look for a combination of cycles and chains. So a simple cycle would just involve two pairs. But sometimes you can’t find simple pairs like that, and you might find yourself in a three-way exchange. So, you can give a kidney to someone in pair 2, the donor in pair 2 can give a kidney to someone in pair 3, and the donor in pair 3 can give a kidney to your intended recipient. That’s a three-way exchange. Now, we do those exchanges simultaneously, because you can’t write a contract on a kidney. So to do them simultaneously means that a three-way exchange requires six operating rooms and six surgical teams because there are three nephrectomies, operations to take the kidney out, and three transplants. Tha’s about as big as it’s practical to do an exchange. But there’s another way, and that’s because there are some donors who don’t have intended recipients, that’s why I asked you when you said you wanted to sign up. And they can start chains, because the exchange doesn’t have to come back to them, so they can give a kidney to someone, to some pair, and the donor in that pair can give a kidney to another pair, the donor in that pair can give a kidney to another pair. When we have one of these non-directed donor chains, we can do the exchanges non-simultaneously, and that allows the chains to become very long. So, the first non-directed donor chain had 20 people in it, because there were 10 nephrectomies and 10 transplants. Not
every chain is long. The important thing is the chains can be non-simultaneous.

PNAS: So, you’ve actually attended one of these nephrectomies in Cincinnati. Can you tell me what that experience was like and why you decided to go?

Roth: Well, so, I had gone there to give a seminar on kidney exchange, and as it happened, the day of my seminar, they were doing one of our exchanges. A surgeon named Steve Woodle said to me, why don’t you just come and watch, and I thought, what a great idea! And I was a little – I had some trepidation, I worried that I would feel ill or something, but it turns out it’s just so interesting to watch and to listen to them talk about what they’re doing that I didn’t have to worry about that. And the nephrectomy I saw is what’s called a hand-assisted laparoscopic
nephrectomy, and what that means is the surgeon is working through pretty small incisions, he’s working with a camera and a video screen, so you can watch, in detail, what he’s doing with his equipment, and he’s assisted by a surgeon who inserts his hand through a slightly larger incision, and the two of them work as a team, the surgeon doing the cutting asks the assistant to put tension on different tissues, and you see all this on a video screen. And finally, it’s like a magic trick, the kidney comes out in the surgeon’s hand.

PNAS: So, what is the future of kidney exchange?

Roth: For kidney exchange, we’re still doing lots of things on how to make the exchanges work better, and some of those have to do with how surgeries are organized, some of them have to do with how payments are organized. Eventually, I hope that in a hundred years, my grandchildren and yours will think of transplantation as an outdated barbarity, they’ll say to you, “So tell me again grandpa, you used to cut an organ out of one person and sew it into a sick person and that was modern medicine?” I hope that advances in medicine will eventually give a better solution. That doesn’t mean that we can ’t keep moving ahead now, because for the time being there are lots of people waiting on the waiting list, and many of them die while waiting.

PNAS: Thanks for listening. You can find more podcasts at pnas.org.
***************

This is from the collection of podcasts at the Proceeding of the National Academy of Sciences Science Sessions Podcasts

Welcome to Science Sessions, the PNAS podcast program. Listen to brief conversations with cutting-edge researchers, Academy members, and policy makers as they discuss topics relevant to today's scientific community. Learn the behind-the-scenes story of work published in PNAS, plus a broad range of scientific news about discoveries that affect the world around us. 

My autobiographical essay is up on the Nobel site

Shortly after the Nobel prizes are awarded each year, it becomes the task of the staff of the Nobel Foundation to get the prizewinners to write various things, including an essay of intellectual autobiography.  Mine was completed fairly promptly, and may have been available for some time now, but I just noticed that it is here (with some pictures:).

Kidney transplantation in Nigeria (not much)

In Nigeria there is little treatment for kidney disease; neither dialysis nor transplantation.  Between 2000 and 2010 there were only 143 kidney transplants...

 Kidney transplantation in a low-resource setting: Nigeria experience
Kidney International Supplements (2013) 3, 241–245; doi:10.1038/kisup.2013.23 

Fatiu Abiola Arogundade¹

¹Renal Unit, Department of Medicine, Obafemi Awolowo University/Teaching Hospitals Complex, PMB, Ile-Ife, Nigeria

ABSTRACT

The incidence and prevalence of chronic kidney disease and end-stage renal disease (ESRD) have continued to increase exponentially all over the world in both developed and developing countries. While the majority of patients in developed countries benefit from various modalities of renal replacement therapies, those from developing economies suffer untimely deaths from uremia and cardiovascular disease. Kidney transplantation (KT) leads to improvement in both the quantity and quality of life. Unfortunately, it is not exploited to its full potential in most countries and this is particularly the case in developing economies. Only a very small fraction of the ESRD population in emerging countries ever gets transplanted because of the many constraints. This review focuses on KT in Nigeria between 2000 and 2010 and assessed particular challenges that need be addressed for KT potential to be fully harnessed in such resource-constrained settings. A total of 143 KTs were performed in 5 transplant centers, some of which have only recently opened. One-year graft and patient survival was 83.2% and 90.2%, respectively, while the 5-year graft and patient survival was 58.7% and 73.4%, respectively. Mortality was reported in 38 (27%) of recipients. The complications recorded included acute rejection episodes in 15–30%, chronic allograft nephropathy in 21(14.7%) and malignancies, particularly Kaposi Sarcoma, which was reported in 8 (5.6%) recipients. It was concluded that KT has led to an improved survival but is bedevilled with unaffordability, inaccessibility, a shortage of donor organs and poor legislative support. Enactment of relevant organ transplant legislation, subsidization of renal care, and further development of local capacities would improve KT utilization and thus lead to better outcomes.

HT: Mohammad Akbarpour

The young Francesco Guala on experimental economics

Francesco Guala is a philosopher of science at U. of Milan, whose work deals with economics, and who has written about experimental economics (e.g. in his 2005 book The Methodology of Experimental Economics). Some of his early thoughts on the subject can be found in his 1999 Ph.D. thesis at LSE, which I recently ran across on the web: Economics and the Laboratory--Some Philosophical and Methodological Problems Facing Experimental Economics

The college admissions scramble

The National Association for College Admissions Counseling (NACAC) has posted its annual bulletin board of the more than 250 colleges that still have available positions.

NACAC College Openings Update: Space, Financial Aid and Housing Still Available For Fall 2014

​May 6, 2013 (Arlington, VA)  – More than 250 colleges and universities still have openings, aid and housing available to qualified freshman and/or transfer students for the Fall 2014 semester, according to the  National Association for College Admission Counseling’s (NACAC’s) annual College Openings Update (formerly the “Space Availability Survey”).

Now in its 27th year, the Update is a tool for counselors, parents and teachers as they assist students who have not yet completed the college application and admission process after the May 1 response deadline observed by many colleges.  In cases where well-qualified students may not have applied to a range of institutions, or may have been turned down by all schools to which they applied, the Update provides an opportunity to be identified and possibly accepted by competitive institutions, and to obtain financial aid and housing.

“This announcement is a ‘win-win’ for all parties, if students need to rethink their admission options,” said Joyce E. Smith, NACAC CEO.

“Part of demystifying college admission is understanding that, for many institutions, the application process is a year-round endeavor,” said Smith. “Some colleges accept applications throughout the year, while others may continue to have openings available even after the May 1 national response deadline. We hope students and families will benefit from knowing that these options are available to them each year.”

Both public and private colleges and universities are listed on the Update.

The Update can be viewed at:

http://www.nacacnet.org/research/research-data/College-Openings/Pages/College-Openings-Results.aspx

It will remain on NACAC’s Web site through June 30, and colleges have been asked to modify their listings as the number of openings at their institutions changes.

Media note: College Openings Update is not a survey, but instead, a bulletin board that allows students and colleges to find potential matches during the Spring prior to Fall enrollment. Some colleges accept applications well after May 1 as a matter of policy, while others have openings available due to fluctuations that occur each year in the college application process.

About NACAC: NACAC is an Arlington, VA-based education association of more than 14,000 secondary school counselors, independent counselors, college admission and financial aid officers, enrollment managers, and organizations that work with students as they make the transition from high school to postsecondary education. The association, founded in 1937, is committed to maintaining high standards that foster ethical and social responsibility among those involved in the transition process, as outlined in the NACAC Statement of Principles of Good Practice. More information about NACAC is available at www.nacacnet.org.

These secondary markets, sometimes called scrambles, have a big role to play in matching markets in which participants can only consider a relatively short list of the many participants on the other side of the market. (Fuhito Kojima and Parag Pathak and I showed in passing here that it is to be expected that such markets will have empty positions and unmatched applicants at the end of the initial matching phase...this observation is actually within a proof, see p12 of the online appendix)

Should there be a centralized clearinghouse for college admissions?

College admissions seems quite different than the markets for medical residents and fellows, because colleges have much more flexibility over precisely the number of new students they admit, compared to the rigid requirements of accredited residencies that lead to board certification.

But there are  similarities between some of the coordination failures that go on in college admissions, and the troubles that led to the resident and fellows matches.  Now, here is a blog from Fortune Magazine proposing a medical style match for colleges...(it makes a nice break from the blog post by a medical student wishing there was no match, but instead an ideal world with no market failures...see here, and yesterday's post on more sober evaluations from other medical students):

How to fix the crazy competitive world of college admissions: It has become increasingly tough to get into America's top colleges, so why not employ the same system medical schools use to match residents?

"FORTUNE -- Two recent articles in the New York Times are getting many parents pretty frazzled: This year, only 5% of those who applied to Stanford University were admitted -- the worst acceptance rate among top colleges. As colleges send acceptance letters out, reported acceptance rates elsewhere aren't much better: Harvard and Yale are at 6%; Columbia and Princeton at about 7%; and Massachusetts Institute of Technology and the University of Chicago at about 8%.

Those are some pretty daunting numbers. The Times' David Leonhardt dug a little deeper to find that foreign students now take up double the number of slots compared with 20 years ago, constituting some 10% of admissions. Slots for Americans at Harvard have dropped 27% since 1994; 24% for Yale and Dartmouth.

Meanwhile, there is another story about a high school-er from Long Island, ranked 11th in his class, who applied to all eight Ivy League schools and was accepted to all of them.

As a parent, and a graduate of one of the top elite schools, and a volunteer admissions interviewer for my alma mater, I have been led to one conclusion: There has got to be a better, fairer, less stressful system for college admissions. It certainly is the "the opposite of a virtuous cycle at work" as Bruce Poch, a former admissions dean at Pomona College in Claremont, Calif., is quoted in the Times. "Kids see that the admit rates are brutal and dropping, and it looks more like a crapshoot," he said. "So they send more apps, which forces the colleges to lower their admit rates, which spurs the kids next year to send even more apps."

...

"Setting those issues aside, there remains the riddle of the admissions process and how to improve what appears to be its somewhat random nature. How can one student get into all eight Ivys whereas another gets rejected from Stanford but admitted to Yale?

"How about a matching system for the elite schools, just as the University of California now uses where students rank which campus they prefer? Or better yet, what about using the same system as medical schools use to match residents? It is administered by an outside non-profit entity -- the National Resident Matching Program -- that has been matching residents and hospitals for over 60 years using a mathematical algorithm to pair the preferences of applicants with the best fit for the programs that need staff.

"Last year, the Match filled 99.4% of available residency positions, using an algorithm developed by Alvin Roth that helped garner him the Nobel Prize in Economics in 2012. The Match process begins much like the college applications process with an online application. It then culminates with medical students ranking programs they want to get into, as well as residencies independently ranking which students they want in their program through a match algorithm that errs on the side of benefiting the applicants. There is even a match process for couples who want to stay in the same geographic location.

"Having this type of a match program would reduce the stress of students (and parents). It would also reduce the number of applications to each school, and it would obviously increase the yield rate for every university. It might put the U.S. News & World Report rankings out of business, or it would force some changes in the inputs of those rankings to the better.

I"t's time to try to reduce the "crapshoot" nature of the college admissions process."

Maybe I didn't ruin the medical labor market after all

In a recent post I remarked on a Forbes blog post by a medical student at the University of Texas Southwestern Medical School who proposed that it would be better if the medical Match, the NRMP, didn't exist, because then medical students would be able to freely choose the job they wanted. That's how free markets work, as she understands them.

Now, in the same blog, three of her classmates point out that things might not work that way...Why The Residency Matching System For Newly Minted M.D.'s Still Works

And (still in the same Forbes blog) another medical student, Jack DePaolo responds similarly: Sorry, Medical Students, But You're Not Entitled To Your Dream Job

All in all, this subsequent discussion is good news, it means that we economists aren't doing quite as bad a job explaining to the general public (and to medical students) how markets work and what they do, as it might have appeared from that first contribution.

Repugnant transactions in Nigeria: education, kidnapping and slavery

The news out of Nigeria has too many repugnant transactions to shake a stick at. The Islamic organization Boko Haram, whose name apparently means something like "education is forbidden" and which has kidnapped school girls, is threatening to sell them...

DAKAR, Senegal — In a video message apparently made by the leader of the Nigerian Islamist group Boko Haram, Abubakar Shekau claimed responsibility for the kidnapping of hundreds of schoolgirls nearly three weeks ago, called them slaves and threatened to “sell them in the market, by Allah.”

“Western education should end,” Mr. Shekau said in the 57-minute video, speaking in Hausa and Arabic. “Girls, you should go and get married.” The Islamist leader also warned that he would “give their hands in marriage because they are our slaves. We would marry them out at the age of 9. We would marry them out at the age of 12.”

...

The message from the Boko Haram leader once again highlighted the extent to which secular, Western-style schools are a principal target of the group, whose name roughly translates as “Western education is forbidden,” in an amalgam of pidgin English, Arabic and Hausa, one of the most commonly spoken languages in Africa. Mr. Shekau emphasized that the girls were taken because they were attending such a school.

“Western education is sin, it is forbidden, women must go and marry,” he said in the video message. "

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Update: the quote above is from this NY Times story: Nigerian Islamist Leader Threatens to Sell Kidnapped Girls

Kidney Exchange and Operations Research: Edelman award presentation (video)

Here are all the 2014 Edelman Award Presentations, including the one my colleagues and I gave on kidney exchange, on March 31. Ours is the second from the top (the winning entry is first), and to see the video you have to scroll to the bottom of the description or our lecture (reproduced below) and click on "View Presentation." (I couldn't figure out how to embed it here.)

The video of our presentation (35 minutes) is more elaborate than most of the lectures I've done, since it includes some video footage. I joined Josh Morrison of the Alliance for Paired Donation and Itai Ashlagi of MIT in making the presentation.  Mike Rees spoke in some of the videos. Ross Anderson and David Gamarnik joined us to answer questions, and Tayfun Sonmez and Utku Unver joined for the celebratory dinner later in the day. (For our efforts, we are all 2014 Edelman Laureates.)

Alliance for Paired Donation with Boston College, Stanford University and MIT: Kidney Exchange

Presented by: Josh Morrison, Alvin E. Roth, Itai Ashlagi Authors: Alliance for Paired Donation:  Michael A. Rees, Michael.Rees2@utoledo.edu; Josh Morrison,joshcmorrison@gmail.com; Boston College: Tayfun Sönmez,sonmezt@bc.edu; M. Utku Ünver, unver@bc.edu MIT: Itai Ashlagi, iashlagi@mit.edu; Ross Anderson, rma350@gmail.com; David Gamarnik,gamarnik@mit.edu Stanford University:  Alvin E. Roth, alroth@stanford.edu Abstract: Many end-stage renal disease sufferers who require a kidney transplant to prolong their lives have relatives or associates who have volunteered to donate a kidney to them, but whose kidney is incompatible with their intended recipient. This incompatibility can be sometimes overcome by exchanging kidneys with another incompatible donor pair. Such kidney exchanges have emerged as a standard mode of kidney transplantation in the United States. The Alliance for Paired Donation (APD) developed and implemented an innovative operations research based methodology of non-simultaneous extended altruistic donor (NEAD) chains, which, by allowing a previously binding constraint (of simultaneity) to be relaxed, allowed better optimized matching of potential donors to patients, which greatly increases the number of possible transplants. Since 2006, the APD has saved more than 220 lives through its kidney exchange program, with more than 75% of these achieved through long non-simultaneous chains. The technology and methods pioneered by APD have been adopted by other transplant exchanges, resulting in thousands of lives already saved, with the promise of increasing impact in coming years. The percentage of transplants from non-simultaneous chains has already reached more than 6% of the total number of transplants from live donors (including directed living donors) in the last year. We describe the long-term optimization and market design research that supports this innovation. We also describe how the team of physicians and operations researchers worked to overcome the skepticism and resistance of the medical community to the NEAD innovation.

Gary Becker 1930-2014

Speaking of kidneys, the sad news this morning is that Gary Becker has passed away. I heard it by phone, and a quick search turned up Greg Mankiw's announcement.

I had coffee with Gary at the Hoover Institute earlier this year, after his op ed on cash for kidneys appeared in the WSJ, and later saw him at Eddie Lazear's birthday conference.

I'll miss him, although I didn't know him well.

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Update: here's the U. Chicago obituary.

Sally Satel on Why People Don’t Donate Their Kidneys

Sally Satel, in Sunday's NY Times, argues for some forms of compensation for donors, even if short of cash payments: Why People Don’t Donate Their Kidneys.

"We can’t solve the issue merely by getting more people to sign organ donor cards — though everyone should — or even by moving to an opt-out system, under which we would harvest people’s organs at death unless they had earlier indicated they didn’t wish to donate them. These solutions can do only so much, because relatively few people die in ways that leave their organs suitable for transplantation.

"To make a real impact on kidney shortage, we have to find ways to persuade more healthy young and middle-aged people to give a kidney to a stranger.

"Here is a plan to do just that. Donors would not get a lump sum of cash; instead, a governmental entity, or a designated charity, would offer them in-kind rewards, like a contribution to the donor’s retirement fund, an income tax credit or a tuition voucher.

"Meanwhile, imposing a waiting period of at least six months would ensure that donors didn’t act impulsively and that they were giving fully informed consent. Prospective compensated donors would be carefully screened for physical and emotional health, as is done for all donors now.

"These arrangements would screen out financially desperate individuals who might otherwise rush to donate for a large sum of instant cash and later regret it.

"The donors’ kidneys would be distributed to people on the waiting list, according to the rules now in place. (People who wanted to donate a kidney to a specific person — say, a father to a son — would still be able to, outside this system.) Finally, all rewarded donors would be guaranteed follow-up medical care for any complications, which is not ensured now.

"Plans like this have been in the air for decades, but physicians and policy makers have been wary of creating an ethically fraught organ market.
...
"Indeed, the event that led lawmakers to adopt the felony provision suggests that they had something else in mind. In the fall of 1983, while the bill was being drafted, Al Gore, then a representative from Tennessee and the bill’s lead sponsor, learned that H. Barry Jacobs, a Virginia physician, was planning to recruit people from poor countries, fly them to the United States and pay them for one of their kidneys while collecting a brokerage fee of $2,000 to $5,000 (Medicare accepted) from patients in need.

"Dr. Jacobs’s “business plan” — herding indigent people onto a plane to fly to a foreign operating room for a surgical procedure they barely understood — became the lightning rod for a general outcry against the idea of paying for and brokering organs.

 "Mr. Gore and his fellow sponsors wanted to prevent buyers from paying cash for kidneys, with wealthy purchasers’ taking advantage of poorer patients and enabling profiteering by intermediaries. They also, understandably, wanted to give altruism a chance — the main function of the act, after all, was to create a national network of voluntary organ procurement and distribution and maintain a federally overseen list.

"However, Mr. Gore was thinking ahead. He spoke of moving to “a voucher system or a tax credit to a donor’s estate” if “efforts to improve voluntary donation are unsuccessful.”

"On the 30th anniversary of the National Organ Transplant Act, in the shadow of the relentless waiting list, we must finally acknowledge that altruism isn’t enough. In-kind incentives provided by the government or a charity almost surely offer the best solution to the dire kidney shortfall. Let’s test compensation, rather than wait for another 100,000 people to join the queue."

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Update: here are the letters to the editor that the NY Times published in connection with this column.

Experiments in this life and second life

Here's an experiment done online, back when Second Life looked like it would be big...

Is avatar-to-avatar communication as effective as face-to-face communication? An Ultimatum Game experiment in First and Second Life, Ben Greiner, Mary Caravella, Alvin E. Roth
Journal of Economic Behavior & Organization, Available online 31 January 2014

Abstract: We report results from an Ultimatum Game experiment with and without pre-play communication, conducted both in a real-world experimental laboratory and in the virtual world Second Life. In the laboratory, we replicate previous results that communication increases offers and agreement rates significantly, and more so for face-to-face communication than for text-chat. In Second Life we detect a level shift to more cooperation when there is no communication, either driven by selection on unobservables or environmental effects. The higher cooperativeness in the virtual world lowers the need for additional communication between avatars in order to achieve efficient outcomes. Consistent with this we are not able to detect an effect of allowing avatar-to-avatar communication

Disgraced basketball team owners and kidney transplants--an unexpected connection

Virginia Postrel draws the connection: Latest Sterling Outrage Victim? Kidneys

"Earlier this month, Los Angeles Clippers owner Donald Sterling’s foundation pledged $3 million for kidney research at UCLA and made an initial payment of $425,000.
...
"Now, not surprisingly, UCLA has decided to return the money. “Mr. Sterling’s divisive and hurtful comments demonstrate that he does not share UCLA’s core values as a public university that fosters diversity, inclusion, and respect,” the university said in a press release.
...
"But it means that Sterling’s racist comments have now cost researchers precious funding in the fight against a racially biased disease. Blacks are more than three times as likely as whites to develop kidney disease and account for a third of U.S. kidney patients. Outrage won’t help their cause.

"The NBA could. The league is in a unique position to raise money for and awareness of kidney disease, which suffers from a low public profile and lack of celebrity representatives. It could start by donating Sterling’s $2.5 million fine to the UCLA nephrology program to replace the lost funds.
...
"This summer presents the perfect opportunity for the NBA to embrace kidney disease as a cause. On August 8, Alonzo Mourning will be inducted into the Naismith Memorial Basketball Hall of Fame. NBA fans know him as a defensive great and long-time center for the Miami Heat. He is also one of the country’s most famous kidney transplant recipients. His cousin Jason Cooper, who gave him the kidney, will be with him for the honors. "

School choice: fewer kids getting first choice may be a sign of success

Here's a report from Denver: Fewer top choice placements in Denver’s school selection process

Denver’s SchoolChoice process is a three-year old initiative billed as “one form, one timeline, all schools,” which aimed to make school enrollment fairer. Parents submit up to five choices for potential schools. Those who do not participate or do not get one of their five choices are automatically enrolled in their neighborhood school. This year is the first since the system’s launch in 2011 in which the number of participants who received a top choice declined.

"District officials are trying to figure out what caused that drop. One theory is that more people applied to the district’s most competitive programs.


“Even though there are fewer participants, more people may be pursuing high quality programs,” said Brian Eschbacher, who heads the district’s planning and choice department. That, he said, is the goal of the process: for parents to be able to choose the best program for their children."