Tim Bresnahan, Ariel Pakes and Rob Porter win BBVA Award, for their pioneering work in industrial organization, and Bill Nordhaus wins for his work in climate change

Breaking news:
The BBVA Foundation recognizes Bresnahan, Pakes and Porter for opening up the field of empirical industrial organization

"The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category goes, in this tenth edition, to Timothy Bresnahan, Ariel Pakes and Robert Porter for founding and shaping the field of empirical industrial organization, a branch of economics that has developed fundamental techniques to measure market power (understood as the ability of a firm to control prices in a given industry). “Motivated by important and policy-relevant questions in applied economics,” remarks the jury in its citation, “they developed methodologies that had a significant and long-lasting impact on subsequent work in industrial organization as well as other applied fields.”
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William Nordhaus, the father of climate change economics, wins the BBVA Foundation Frontiers of Knowledge Award

"The BBVA Foundation Frontiers of Knowledge Award in the Climate Change category goes, in this tenth edition, to economist William Nordhaus, of Yale University (USA) for founding the field of climate change economics, by “pioneering a framework that integrates climate science, technology and economics to address the critical question: What should the world do to limit climate change?”:

Israel celebrates Sergiu Hart

The Israel Prize goes to Sergiu Hart! Here's a picture of him I once took in Jerusalem:

Sergiu Hart

Here's the story from the Jerusalem Post:
PROF. SERGIU HART TO RECEIVE ISRAEL PRIZE IN ECONOMIC RESEARCH, STATISTICS

"Prof. Sergiu Hart of the Hebrew University will be awarded the Israel Prize for economic research and statistics, the Education Ministry announced on Thursday.
...
"In its decision, the prize committee called Prof. Hart – a former president of the World Association of Game Theory and member of the Academy of Sciences of Israel, Europe and the United States – one of the world’s leading economists.

“Prof. Hart specializes in the field of game theory and its comprehensive implications in various economic fields. Among other things, it has an important contribution to the understanding of the convergence to market equilibrium, the value of a player in the game, how cartels are created in the markets and the development of objective risk indices,” the committee wrote.

"In recent years, it added, Hart’s research has focused on “designing mechanisms such as tenders, which are important in online trade.”

"Hart was born in Bucharest, Romania, and immigrated to Israel at the age of 14 along with his family. After serving in the IDF, he received undergraduate and graduate degrees from Tel Aviv University in mathematics with honors before completing his post-Doctoral studies at Stanford University in California.

"In 1991, Hart founded the Center for the Study of Rationality at the Hebrew University, whose academic committee he now chairs.
“Under his leadership the center became a unique leader in the world in the study of game theory with its implications in a wide range of fields such as economics, statistics, psychology, law, biology, philosophy and more,” the prize committee wrote in its decision.

"The Israel Prize is largely regarded as the state’s highest honor. It is presented annually on Independence Day in a state ceremony in Jerusalem attended by the president, the prime minister, the Knesset speaker and the Supreme Court president."

Making algorithms fair

Fairness is elusive, even in algorithms. "Color blindness" doesn't do the trick, since minority populations may differ in other ways from majority populations.
My attention was drawn to this news story  about ongoing work by U. Penn computer scientists: Combatting ‘Fairness Gerrymandering’ with Socially Conscious Algorithms

And here's the article on which the story is based:

Preventing Fairness Gerrymandering: Auditing and Learning for Subgroup Fairness

Michael Kearns, Seth Neel, Aaron Roth, Zhiwei Steven Wu

(Submitted on 14 Nov 2017 (v1), last revised 8 Jan 2018 (this version, v3))

The most prevalent notions of fairness in machine learning are statistical definitions: they fix a small collection of pre-defined groups, and then ask for parity of some statistic of the classifier across these groups. Constraints of this form are susceptible to intentional or inadvertent "fairness gerrymandering", in which a classifier appears to be fair on each individual group, but badly violates the fairness constraint on one or more structured subgroups defined over the protected attributes. We propose instead to demand statistical notions of fairness across exponentially (or infinitely) many subgroups, defined by a structured class of functions over the protected attributes. This interpolates between statistical definitions of fairness and recently proposed individual notions of fairness, but raises several computational challenges. It is no longer clear how to audit a fixed classifier to see if it satisfies such a strong definition of fairness. We prove that the computational problem of auditing subgroup fairness for both equality of false positive rates and statistical parity is equivalent to the problem of weak agnostic learning, which means it is computationally hard in the worst case, even for simple structured subclasses.
We then derive two algorithms that provably converge to the best fair classifier, given access to oracles which can solve the agnostic learning problem. The algorithms are based on a formulation of subgroup fairness as a two-player zero-sum game between a Learner and an Auditor. Our first algorithm provably converges in a polynomial number of steps. Our second algorithm enjoys only provably asymptotic convergence, but has the merit of simplicity and faster per-step computation. We implement the simpler algorithm using linear regression as a heuristic oracle, and show that we can effectively both audit and learn fair classifiers on real datasets.

Harm reduction (for opioids) in Canada

Here's a story from the Washington Post:
At the heart of Canada’s fentanyl crisis, extreme efforts that U.S. cities may follow

"the Overdose Prevention Society, took over a vacant building next door, giving users a clean indoor place to inject drugs. There are 29 similar sites in British Columbia, the epicenter of Canada’s drug crisis, and more across the country.

“To save lives, you need a table, chairs and some volunteers,” said Sarah Blyth, the manager here.
...
"As fentanyl rampages across North America, several U.S. cities have announced that they will open the first supervised drug-consumption sites like those in Canada. Their plans illustrate the gulf between the two nations: While Justin Trudeau’s government is doubling down on its “harm reduction” approach, any U.S. organization that tries to follow suit would be violating federal law and risking a confrontation with the Justice Department.
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See also this academic paper
Addressing the Nation’s Opioid Epidemic: Lessons from an Unsanctioned Supervised Injection Site in the U.S.
Alex H. Kral and Peter J. Davidson
American Journal of Preventive Medicine, 53, 6, 2017, 919 - 922

and this January 2017 news story
Awash in overdoses, Seattle creates safe sites for addicts to inject illegal drugs

School choice and privilege in Washington D.C. [updated]

A benefit (or a cost) of having clearly defined rules is that you can see when exceptions are made. (What could look like flexibility in a private sector environment can look like corruption in a public school system.) The Washington Post has the story:

D.C. deputy mayor resigns after allowing chancellor to bypass school lottery

"A D.C. deputy mayor resigned Friday after helping the public schools chancellor bypass the city’s notoriously competitive lottery system and secure a coveted slot for his teenage daughter at a top high school.

"The resignation of Deputy Mayor for Education Jennifer C. Niles is immediate, Mayor Muriel E. Bowser said Friday. The mayor said in an interview that she has ordered Schools Chancellor Antwan Wilson to issue a public apology and has referred the matter to the Board of Ethics and Government Accountability and to the inspector general to examine whether the head of the city’s traditional public school system violated the code of conduct.

“My decision was wrong and I take full responsibility for my mistake,” Wilson said in a statement. “While I understand that many of you will be angered and disappointed by my actions, I’m here today to apologize and ask for your forgiveness.”

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From the Mayor's twitter stream:

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Update: the Chancellor has resigned as well.
Here's the Washington Post story, which includes a video distributed by the school system describing the school choice process:
D.C. Public Schools leader to resign after skirting school assignment rules

"Parents and council members quickly rallied behind the mayor’s decision, saying the chancellor cheated a system that D.C. families struggle to navigate."

Sex work, Craigslist, and the law; podcast with Scott Cunningham

Here's a link to an interview with Scott Cunningham, whose work on sex work I've blogged about before. There's a surprising amount of discussion about causal inference and differences in differences. (I always suspected that econometrics was sexy, but this is the first time I’ve heard a podcast about that.)

PODCAST

SEX WORK, CRAIGSLIST, AND DECRIMINALIZATION WITH SCOTT CUNNINGHAM

JANUARY 26, 2018 GARRETT M. PETERSEN   

"My guest for this episode is Scott Cunningham of Baylor University. We discuss his work on the decriminalization of indoor sex work and on the impact of Craigslist’s erotic services page on violence against women.

"The working paper on Craigslist generated a lot of media attention, with articles at Huffington Postand ThinkProgress. The most quoted statistic is that “Craigslist erotic services reduced the female homicide rate by 17.4 percent.” We discuss this statistic, its possible causes, and whether or not it is implausibly large.

---

Lynn Arditi’s article on the accidental decriminalization of prostitution in Rhode Island."

Bermuda steps backward on same sex marriage

The NY Times has the story:
Bermuda Outlaws Gay Marriage, Less Than a Year After It Became Legal

"Bermuda has forbidden same-sex marriage, only nine months after legalizing it, in what advocates for gay and lesbian rights called a disappointing setback.

"Same-sex marriage became legal in Bermuda, a British overseas territory, in May as a result of a ruling by the island’s Supreme Court.

"But the unions are unpopular with some voters.

"In 2016, Bermudians voted against same-sex marriage in a referendum, and after the court ruling in May, the territory’s legislature drafted a bill banning same-sex marriage but giving all couples legal recognition as domestic partners. Parliament adopted the Domestic Partnership Act in December, and on Wednesday the territory’s governor, John Rankin, signed it into law.

"The British prime minister, Theresa May, said Britain was “seriously disappointed,” but the Foreign Office said on Thursday it would be inappropriate to block the measure.

"Same-sex marriage became legal in England, Wales and Scotland in 2014, but it is not permitted in Northern Ireland. The issue has been divisive in Britain’s overseas territories, which control their own internal affairs but rely on Britain for defense and for representation in the international community."

Algorithms for Valentines Day, in the WSJ (update: and elsewhere)

The "Numbers" column in the Wall Street Journal salutes Valentines Day by discussing the deferred acceptance algorithm, and mentioning some of its applications.
You May Now Kiss the Algorithm
A mathematical solution ensures no one is paired with an unacceptable mate
by Jo Craven McGinty

It opens with this encouraging line about stable matching:
"Sorry, love birds. Sometimes, you have to take what you can get."

If you can't read the rest at the above link, try the link at Ms. McGinty's twitter account (or maybe it will even work from here:  #TheNumbers https://www.wsj.com/articles/you-may-now-kiss-the-algorithm-1518184800 … via @WSJ).

One thing not emphasized in the column is that the man-optimal stable matching and the woman-optimal stable matching are very often the same or nearly so.
**************

Update: even the Nobel foundation can't resist the Valentine's Day connection. Here's their facebook post

Nobel Prize

18 hrs · 

#ValentinesDay. Would you let an economist set you up on a date?  which links to

How a matchmaking algorithm saved lives

Long before dating sites, a pair of economists delved into the question of matchmaking, and hit upon a formula with applications far beyond romance.

Market design and artificial intelligence (AI) by Milgrom and Tadelis

Two veteran market designers reflect on how AI is entering market design, building on their recent work on the incentive spectrum auction, and on identifying problematic online sellers from text analysis of post-transaction messaging:

How Artificial Intelligence and Machine Learning Can Impact Market Design

Paul R. Milgrom, Steven Tadelis

NBER Working Paper No. 24282
Issued in February 2018
NBER Program(s):Industrial Organization, Productivity, Innovation, and Entrepreneurship 

In complex environments, it is challenging to learn enough about the underlying characteristics of transactions so as to design the best institutions to efficiently generate gains from trade. In recent years, Artificial Intelligence has emerged as an important tool that allows market designers to uncover important market fundamentals, and to better predict fluctuations that can cause friction in markets. This paper offers some recent examples of how Artificial Intelligence helps market designers improve the operations of markets, and outlines directions in which it will continue to shape and influence market design.

Here's an ungated version:
How Artificial Intelligence and Machine Learning Can Impact Market Design
by Paul R. Milgrom  and Steve Tadelis

Congratulations to Paul Milgrom: 2017 CME Group-MSRI Prize

The award ceremony is today:  2017 CME Group-MSRI Prize

The 12th annual CME Group-MSRI Prize in Innovative Quantitative Applications will be awarded to PAUL MILGROM, Shirley and Leonard Ely professor of Humanities and Sciences in the Department of Economics and professor, by courtesy, at both the Department of Management Science and Engineering and the Graduate School of Business at Stanford University, at a luncheon in Chicago on February 12, 2018.

The CME Group-MSRI Prize is awarded to an individual or a group to recognize originality and innovation in the use of mathematical, statistical or computational methods for the study of the behavior of markets, and more broadly of economics.

About Paul Milgrom

Paul Milgrom's primary research is directed to designing auctions for multiple unique but related items. Along with Robert Wilson, he introduced the initial design for sales of radio spectrum licenses in the United States. He has designed new auctions for Internet advertising and for procuring complex services. Research on incentives and complexity are combined to create auctions that are simple and straightforward for bidders, yet which dramatically improve resource allocation compared to traditional auction designs.

After earning his PhD at the GSB, Milgrom taught at Northwestern University and Yale before returning to Stanford. He has made well-known contributions to many areas of economics, including auctions, incentive theory, industrial economics, economic history, economics of manufacturing, economics of organizations, and game theory. His book coauthored with John Roberts, Economics, Organization and Management, opened a new area to economic research.

He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and winner of the 2008 Nemmers Prize in Economics and the 2012 BBVA Frontiers of Knowledge award.

About the event

Prior to the lunch and award presentation, a panel discussion on Frontiers of Research in Market Design will be held with the following panelists:

• Mohammad Akbarpour, Assistant Professor of Economics, Graduate School of Business, Stanford University
• Piotr Dworczak, Assistant Professor, Department of Economics, University of Chicago
• Shengwu Li, Junior Fellow of the Society of Fellows, Department of Economics, Harvard University
• Ellen Muir, Research Fellow, School of Mathematics & Statistics, The University of Melbourne

Luncheon remarks, an appreciation of the life and work of Paul Milgrom:

• Roger Myerson, Glen A. Lloyd Distinguished Service Professor of Economics at the University of Chicago

Paul Milgrom will present at talk on A Market Process to Reallocate Radio Spectrum.

2017 CME Group-MSRI Prize Selection Committee: David Eisenbud (chair), Director, Mathematical Sciences Research Institute Lars Peter Hansen, Homer J. Livingston Distinguished Service Professor in the Departments of Economics and Statistics at the University of Chicago. 2008 CME-MSRI Prize. 2013 Nobel Prize Winner Bengt Holmström, the Paul A. Samuelson Professor of Economics at the Massachusetts Institute of Technology and 2013 recipient of the CME-MSRI Prize. 2016 Nobel Prize Winner. R. Preston McAfee, Chief Economist & Corp VP, Microsoft Leo Melamed, Chairman Emeritus, CME Group Roger Myerson, Glen A. Lloyd Distinguished Service Professor of Economics, University of Chicago. 2007 Nobel Prize Winner Maureen O'Hara, Robert W. Purcell Professorship of Management; and Professor of Finance, SC Johnson College of Business, Cornell University Myron Scholes, Frank E. Buck Professor of Finance, Emeritus, Stanford Graduate School of Business Hugo Sonnenschein, Charles L. Hutchinson Distinguished Service Professor Emeritus, University of Chicago Jean Tirole, Scientific Director of Industrial Economics Institute (IDEI) and Member of the Toulouse School of Economics and 2010 recipient of the CME-MSRI Prize

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Here's an earlier announcement, of this prize and some others. Paul is deservedly a prize magnet, and this year he won three notable prizes.
Paul wins CME-MSRI Prize

Update:  and here's today's story from the CME
WHY PAUL MILGROM IS AN ECONOMIST YOU SHOULD KNOW

Opioids and pharma sales

Prescription pain medicines have played a significant role in the opioid epidemic.  Recently, the makers of OxyContin have decided to stop direct marketing it to doctors. Stat has the story:
End of an era: Purdue to stop marketing opioids to doctors

"Purdue Pharmaceuticals, the maker of the opioid painkiller OxyContin, said it would no longer actively market opioid products — a major about-face for a company increasingly viewed as a principal culprit in the country’s addiction and overdose crisis.

The company said it is reducing its sales staff by more than half, and that its remaining salespeople will no longer visit doctor’s offices to push their product. Instead, the company said it will direct prescribers to materials published by the Centers for Disease Control and Prevention and the office of the U.S. surgeon general.

...

"The health insurer Cigna also announced in October it would no longer cover OxyContin through employer-based plans, shortly after the pharmaceutical industry lobby group PhRMA broadly endorsed policies that limit opioid prescriptions to seven days."

Where man's best friend also tastes good: the market for dog meat in Korea

The winter Olympics in Korea is bringing out stories about the restaurants there that have dog meat on the menu, and about how foreigners might not be charmed:

The Daily Mail headlines it this way (with lots of pictures):
The trade in dog meat South Korea doesn't want Olympics tourists to see is exposed at market where they are slaughtered, chopped up and served in bubbling red broth for just $8 a bowl
Here are their sub-headlines

• "Dogs and even puppies are sold openly for food in Moran market, Seongnam, outside of Seoul, South Korea, Dailymail.com reveals - showing claims it would be closed last May are false 
• The dogs are kept in freezing, dark cages until they are slaughtered, their fur burned off and their carcasses are put on display
• Up to 80,000 dogs are sold and slaughtered at the market a each year to be made into an $8 soup, which folklore claims boosts eaters' sex drive 
• But ahead of the Olympic Winter Games coming to PyeongChang on Friday, officials issued guidelines for when it comes to eating dog meat, urging citizens not to consume the animals during the Olympics 
• Two-month-old puppies fare little better, being sold for just $9.20 or £6.50 out of metal crates and cardboard boxes, with some saying they can be eaten too "

USA Today puts it this way:
Winter Olympics shines spotlight on dog meat trade in South Korea

"Eating dog meat is common and legal in Korea, as well as many parts of Asia, and is mainly eaten by older people. Dotted around the country are thousands of restaurants serving “gaegogi” dishes that, according to folklore, have strengthening and medicinal properties."

Altruistic kidney donation in Israel: Matnat Chaim (gift of life)

Matnat Chaim (gift of life) is an Israeli organization, led by a rabbi, that promotes living kidney donation.  It's been quite successful, but has also been the source of some controversy and suspicion.

Here's an academic article about them:

Altruism and Religion: A New Paradigm for Organ Donation
by Aviad RabinowichEmail authorAlan Jotkowitz, Journal of Religion and Health, February 2018, Volume 57, Issue 1, pp 360–365

Abstract: "Activity of NGO’s supporting living donor kidney donations can affect the shortage of kidneys. Matnat Chaim is a Jewish orthodox organization active in Israel since 2009. This is a voluntary organization with aims to shorten and eliminate the waiting list for kidneys. Since the beginning of its activity, it has said to play a key role in 379 kidney transplantations. In 2015, out of 174 live donor kidney transplantations that took place in Israel, Matnat Chaim had a key role in 88 of them (50.6%). We found some ethical issues concerning the organization's activity. The donor can restrict his or her donation to specific characteristics of recipient which can result in organs transplanted in a homogeneous group of the population. Another issue is the question of whether nudging people to kidney donation takes place and whether it is valid to do so. We found that Matnat Chaim does a great deal for promotion and intermediation of kidney donations in Israel. This form of promotion can be implemented by other organizations and countries."

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They earlier were the subject of some investigations, but I haven't heard that anything further has come of this. Here's an article from The Times of Israel in September 2017
Head of transplant organization arrested over ‘organs for donations’ scheme
Charity suspected of bumping potential recipients to top of waiting list in exchange for funding, paying illegal compensation to donors

"Police on Monday arrested the head of a charity that facilitates voluntary organ donations in Israel, and three of its employees, on suspicion that it illegally traded organs for donations.
"The suspicions include managing the waiting list so as to bump potential recipients to the top in exchange for donations to the organization, and paying compensation to potential organ donors, police said.
...
"A police spokesperson explained that the investigation was “particularly complex and sensitive” and officers have made an effort not to interrupt the continuing work of the organization “in order to allow its life saving services to continue regardless of the ongoing probe.”"

Laura Doval on kidney exchange in Argentina

Laura Doval, a market designer who teaches at Cal Tech and who hails from Argentina, has an article in FOCO ECONÓMICO about some of the market design issues facing kidney exchange in Argentina, including some issues addressed in her own research:

Trasplante cruzado: Argentina le abre las puertas al diseño de mercados
(Google translate: Cross transplant: Argentina opens the doors to market design)

"The new legal framework creates a system where patients with their non-compatible living donors can register and is responsible for finding compatible pairs. In our example, Ana and Barbara may not know each other (even live in different provinces) and even then the exchange could take place. In addition, the law removes the requirement to go through a judge and establishes the rules under which the exchange occurs.

" Although Argentina is the first country in Latin America to approve kidney transplants as a transplant modality, this modality has a long time in the world: South Korea performed the first cross transplant in 1990; in 1999, Switzerland led the first in Europe; in 2000, it began in the United States, where it is estimated that 13% of kidney transplants occur according to this modality. In the United States, it was doctors and economists who promoted the creation of cross-transplant centers. In fact, the New England cross transplant center was founded by Dr. Delmonico and the economist Al Roth. The latter received the Nobel Prize in Economics in 2012, in part because of the practical implications of his work for the design of these systems.
...
"Given the incipient state of the project in Argentina, it is a good time to reflect on what we can learn from existing projects, both to imitate them and to innovate about them:

"Who can be donors? In Argentina, the law continues insisting that the recipient-donor pairs (in our example, Ana-Bernardo and Bárbara-Alejandro) have a family link to be able to enroll in the "Cross-Renal Donation Program". Although most of the times the recipient-donor couples have a family bond, this restriction limits the possibilities of finding a successful exchange. Among other things, this restriction does not foresee the possibility of altruistic donors: people who enroll in the system to be living donors but do not accompany a recipient. In practice, the presence of altruistic donors has allowed to implement, in addition to crossed transplants, also chains. In a chain, the altruistic donor gives his kidney to the recipient of an incompatible couple, whose donor then gives his kidney to another non-compatible partner, etc. The difference between the chains and the cross transplant is that it is not necessary to close the cycle. There are two types of chains.
"In the Domino Chain , the donor of the last couple donates their kidney to someone on the waiting list.

"In Never Ending Altruistic Donation , the donor of the last couple is recorded in the system. If it is necessary for the chain to continue (because someone who requires a living donor is listed) you will be required to donate your kidney.
 The reason for requiring the last recipient to have a potential donor is to avoid situations where someone is benefited without returning to the system.

"Compatible pairs : [3]The law provides that only donor-recipient couples that are incompatible can participate in the program. This does not take into account the benefit of including partners that are compatible. On the one hand, it would allow for more exchanges. As an example, think of Ana, a patient of blood type A, and Osvaldo, her donor, of blood type 0. Let's suppose that there is another patient, Oscar, of blood type 0, with his donor, Alejandra, of blood type A. In this case, Alejandra can not donate her kidney to Oscar (blood group A can not donate to blood group 0), while Ana and Osvaldo can not participate because they are compatible. Therefore, we could only carry out the transplant between Ana and Osvaldo. If Ana and Osvaldo could participate in the system, we could make two donations: Alejandra to Ana and Osvaldo to Oscar. Further, This could be beneficial for Ana: if Alejandra has better compatibility in age and weight with Ana than she has with Osvaldo, Ana's life expectancy is now better. To the extent that we design a system that does not harm patients in compatible pairs (for example, offering the patient to participate in exchanges with donors of better quality than theirs), the system can generate a greater number of donations and of better quality.

"Connection to the waiting list : In Argentina, the law allows couples enrolled in the cross-donation program to have their recipient also enrolled on the waiting list for a cadaveric transplant while waiting for another couple to be assigned to them. Suppose that a receiver enrolled in both systems receives a cadaveric transplant offer. As a living donor transplant is very superior in quality to a cadaverous one, it is possible that the recipient wants to decline this offer and keep their options open. On the one hand, we want to give you that freedom so you can get the best possible result and potentially use your donor for another operation; On the other hand, if there is no penalty for rejecting the offer, the waiting time of the patients in both lists increases.

"At the time of writing this article, the new law does not mention what happens in the event that a patient enrolled in both systems decline a cadaveric transplant offer. The rules we implement will determine the recipients' incentives to accept or decline these offers; these incentives then determine what kind of organ allocations we can implement. In fact, understanding this interaction between the rules that determine the allocation of offers on the waiting list after declining an offer and the assignments that we can implement both in the list and in the cross-donation program was the focus of the first chapter of my doctoral thesis. While there I study ways in which to design these rules, the main message is as follows:[4] This puts us before the following dilemma. One option is to rethink the transplant system, both cadaverous and crossed, jointly rather than as two independent systems. The second option is to think about how to determine the priority within the waiting list of cadaveric transplants of patients who are in both systems. Since these patients have more options than those only on the waiting list, treating them in the same way implicitly harms those with fewer options. When there are multiple lists to assign similar objects, economists know very little about how to design the priorities of the participants annotated in multiple lists in order to guarantee the efficiency in the allocation. This is one of the topics that my current research occupies."
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See my earlier post

Wednesday, November 8, 2017

Kidney exchange authorized in Argentina

Uneven playing fields in school choice: the consequences of manipulability

 Here's a study of a school choice system using the manipulable (not strategy proof) immediate acceptance ("Boston") algorithm for school choice, in the Wake County Public School System in North Carolina, the 15th largest in the U.S. (The authors are all market design economists at North Carolina State University.)

Identifying the Harm of Manipulable School-Choice Mechanisms
By Umut Dur, Robert G. Hammond, and Thayer Morrill
American Economic Journal: Economic Policy , February 2018, 10(1): 187–213
https://doi.org/10.1257/pol.20160132

Abstract: An important but under-explored issue in student assignment procedures is heterogeneity in the level of strategic sophistication among students. Our work provides the first direct measure of which students rank schools following their true preference order (sincere students) and which rank schools by manipulating their true preferences (sophisticated students). We present evidence that our proxy for sophistication captures systematic differences among students. Our results demonstrate that sophisticated students are 9.6 percentage points more likely to be assigned to one of their preferred schools. Further, we show that this large difference in assignment probability occurs because sophisticated students systematically avoid over-demanded schools.

Here's the operational definition of a sophisticated student:
" In their application procedure, students have a two-week window during which they must log into a website and submit their preferences. A student is free to change her ranking as many times as she wishes. Moreover, upon each visit, a student learns how many students have ranked each school first. Therefore, a sophisticated student benefits from logging into the website multiple times or logging in closer to the deadline. On the other hand, a student submitting her true preferences needs only to log into the website once.
"Following this logic, our classification of sincere and sophisticated students is drawn from the number of logins to the application website. Specifically, we classify students who log in once as sincere and those who log in more than once as sophisticated. We then show a series of results to demonstrate that our login proxy for sophistication is capturing important, systematic differences across students. For instance, some students who visit the application website multiple times change their rankings near the end of the selection period by removing popular (i.e., over-demanded) schools from the top of their rankings. More generally, we demonstrate that sophisticated students avoid over-demanded schools by not ranking them as their first choice. As a result, sophisticated students are more likely to receive an assignment but, conditional on receiving an assignment, are less likely to be assigned to a highly over-demanded school."

A landmark market design paper, on school choice in NYC, by Abdulkadiroglu, Agarwal, and Pathak

When market design was young, it was a game played by game theorists.  As it matured, and we wanted market designs be adopted, implemented, and maintained, it became a kind of economic engineering. But for market design to become a fully mature part of economics, not only must designs move into practice, and be monitored and maintained, they must also be evaluated.*

So I find myself thinking again about this paper from the December AER that I already blogged about:

Abdulkadiroglu, Atila, Nikhil Agarwal, and Parag A. Pathak, “The WelfareEffects of Coordinated Assignment: Evidence from the New York City High SchoolMatch,”American Economic Review, 107(12), December 2017, 3635–3689.

I think of it as the third of three papers: the first two were about the engineering aspects of the NYC high school match, the first school choice design of its kind:

Abdulkadiroglu, Atila , Parag A. Pathak, and Alvin E. Roth, "The New York City High School Match," American Economic Review, Papers and Proceedings, 95,2, May, 2005, 364-367.

and

Abdulkadiroglu, Atila , Parag A. Pathak, and Alvin E. Roth, "Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match,'' American Economic Review, 99, 5, Dec. 2009, pp1954-1978. 

Now, in this third paper, two of the original designers (Abdulkadiroglu and Pathak) together with one of the new generation of market design investigators  (Agarwal) evaluate the impact on students of the current centralized school choice system (it uses a deferred acceptance algorithm) in comparison to the decentralized ("uncoordinated") system it replaced.  

The new system produces a stable matching, which good evidence suggests is helpful in keeping the system healthy in the long term in a school system like NYC, in which the school principals are also strategic players.  But aside from being long lasting, how good is the system for students?

Using the (ordinal) rank order lists submitted by students in the new system, the paper measures welfare by estimating a cardinal random  utility model, with (cardinal) tradeoffs among school attributes being measured in terms of the additional distance a student is willing to travel to be at a more preferred school.

The uncoordinated system suffered from congestion, with many students having to be placed administratively in a school for which they had expressed no preference.  They find that these schools were by and large significantly less desirable.

They find that the new system improves welfare over the old by 80% of the gains that could be achieved by a utility-maximizing allocation made independent of other constraints. They further find that changes in the algorithm (e.g. choosing a different stable matching, among the multiple that arise from random tie-breaking) would have very little effect on welfare.

The biggest difference is that under the old system, only about half the students were placed in the "main round" (now occupied by the deferred acceptance algorithm), whereas in the new system this number immediately climbed to over 80% (with some additional subsequent gains). So students who used to be administratively assigned are now largely assigned instead to a school over which they have expressed a preference. That turns out to be very good for them.

Market design is coming of age...
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* Of course, not all steps in the market design process have to be accomplished by the same individuals, but in this case that's an extra plus.  And of course other  school choice markets have been investigated by these and other investigators, but in most cases those markets were not designed by economists, so that's another extra bonus here too, especially since features of the design (which encourage truthful reporting of preferences) add to the ability to estimate welfare gains. 

Cadavers and the slave trade

The NY Times has an article on the intersection of the slave trade in the United States with the market for cadavers for anatomy classes in medical schools:

Beyond the Slave Trade, the Cadaver Trade, By Daina Ramey Berry

"One shocking fact that’s recently come to light: Major medical schools used slave corpses, acquired through an underground market in dead bodies, for education and research.

"Yes, there was a robust body-snatching industry in which cadavers — mostly the bodies of black people, many of whom had been enslaved when they were alive — were used at Harvard, the Universities of Maryland, Pennsylvania and Virginia, and other institutions.
...
"Body snatchers like Grandison Harris of Georgia and Chris Baker of Virginia collected specimens for dissection for the benefit of medical colleges. While they received room, board and modest wages for the bodies they collected, they were also enslaved African-American men themselves, listed as “janitors” or “porters” in the medical schools’ records."
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See some of my earlier posts on the cadaver trade:

Monday, July 3, 2017

Cadavers and the teaching of anatomy

Saturday, February 18, 2012

Markets for cadavers

Thursday, June 30, 2011

Medical education in Paris in the 1830's--cheap cadavers

Super bowl thought by Kim Krawiec: football players are paid, why not kidney donors?

While checking up on the super bowl, I'm reminded that Kim Krawiec posted this:
 Super Bowl Week OpEd

"As the Super Bowl approaches, Phil Cook and I have an OpEd running in the Raleigh News & Observer and a few other publications:

Why ban payment to kidney donors but not football players?

BY PHILIP J. COOK AND KIMBERLY D. KRAWIEC 

February 01, 2018 01:06 PM

Super Bowl week rivets national attention on America’s most popular and lucrative sport, professional football. If stories of concussion and permanent injury to players make some fans uneasy, there is always the reassuring fact that the players volunteer for the job and are well compensated – so well compensated that there are untold thousands of young men who would gladly take their place.

Football is so ingrained in our culture that we generally accept this situation without much scrutiny. However, our research got us thinking about the stark contrast with another risky but valuable activity – kidney donation.

About 6,000 people per year donate one of their two kidneys. This selfless act has some risk to the donor, both from the surgery and years later when there is a chance the remaining kidney will fail. In return, kidney donors are rewarded with the knowledge they helped save the life of a loved one. They receive nothing tangible. Indeed, federal law bans compensation for kidney donors, as do the laws of all other countries except Iran (really).

So, why do we pay football players to entertain the public, but are unwilling to pay kidney donors to save lives?

The stakes in both cases are high, but much higher in kidney donation. The total value of NFL teams is about $60 billion. If, in some unlikely future, the risk of serious permanent injury to players led to a ban on professional play, that value would be destroyed.

Meanwhile, the ban on compensation for living kidney donation currently costs thousands of lives and billions of dollars in taxpayer money every year. The waiting list for a kidney now includes 100,000 patients, who for the most part are kept alive by renal dialysis at federal government expense. If they survive long enough, typically more than five years, in this debilitated state, they may hope to rise to the top of the list and receive a kidney from a deceased donor.

Deceased donors are a limited resource: few people die under conditions that permit donation and the United States already procures a large percentage of healthy kidneys from deceased donors. What is needed are many more living donors. Current estimates suggest an offer of $50,000 per living donation would be adequate to recruit sufficient numbers to meet the needs of all transplant-eligible renal patients. This would eliminate the waiting list and prevent thousands of unnecessary deaths and years of unnecessary disability. Given standard value-of-life estimates, the present value of the public benefit of converting to a system of compensated donation would exceed $1 trillion – many times the value of professional football.

It should be noted that the alternative to the current ban on compensation is not a laissez-faire free market. Rather, the current system for regulating the allocation of available kidneys could be readily expanded. A nonprofit or government organization could offer a fixed payment to living donors who were screened to be physically and mentally sound, and then fully informed of the risks. To avoid “impulse” donations, there could be a mandatory waiting period.

And it should be noted that the medical risks to kidney donors are far less than the risks of a football career; most donors lead normal lives, while most NFL veterans are, to some degree, disabled.

Inevitably the chance to sell a kidney for $50,000 would be most attractive to people who are struggling financially. Some ethicists opine that a compensated system would exploit the poor. Yet, more than a few NFL players also come from poor homes and 70 percent are black, causing many to view the concussion crisis as another example of racial inequality. In our view, the risk of exploitation is not a legitimate reason for forbidding compensation to kidney donors, thus denying the poor full use of one of their potential assets.

Millions of Americans, not just NFL players, work in occupations that have a substantial risk ofserious injury. Loggers, fishermen and others accept these risks in exchange for compensation. Extending that list to include kidney donors is just common sense.

PHILIP COOK IS TERRY SANFORD PROFESSOR EMERITUS OF PUBLIC POLICY AND PROFESSOR OF ECONOMICS AND SOCIOLOGY AT DUKE UNIVERSITY’S SANFORD SCHOOL OF PUBLIC POLICY. KIMBERLY KRAWIEC IS THE KATHRINE ROBINSON EVERETT PROFESSOR OF LAW AT DUKE LAW SCHOOL."

Changing of the guard at Management Science (but papers on market design are solicited)

Here's an email announcement from Yan Chen and Axel Ockenfels about the recent change of editors at Management Science:

"We would like to update you on some recent development regarding behavioral economics at Management Science. As you may have heard, the new Editor-in-Chief, David Simchi-Levi, has decided to merge behavioral economics, judgment and decision making, and decision analysis into the newly expanded Decision Analysis Department (DA). The two of us will be the Department Editors handling behavioral economics papers within DA.

We have a terrific group of Associate Editors (AEs), including Al Roth and Richard Thaler who serve as our honorary AEs, and Björn Bartling (University of Zurich), Gary Bolton (University of Texas at Dallas), Peter Cramton (University of Cologne), Dan Friedman (University of California at Santa Cruz), Tanjim Hossain (University of Toronto), Scott Kominers (Harvard University), Dorothea Kübler (Berlin Social Science Center WZB), Katherine Milkman (University of Pennsylvania), Tanya Rosenblat (University of Michigan), Dirk Sliwka (University of Cologne), Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn), and Stephanie W. Wang (University of Pittsburgh).

We hope that you will continue to submit your best papers to Management Science. Please

​​

do check the new Editorial Statement for Decision Analysis

​​

, and note the new emphasis on (1) mechanism and market design at DA; and (2) relevance to the science and/or practice of management at the journal level.

In closing, we would like to thank Uri Gneezy and John List for bringing behavioral economics into Management Science. We hope to continue their excellent work and publish the best papers in our field.

Sincerely,

Yan ​​and Axel

--

Yan Chen

http://yanchen.people.si.umich.edu/

Axel Ockenfels
ockenfels.uni-koeln.de/aoc-seb.de

Risks of living kidney donation: a meta-analysis

Better information is accumulating on the risks of living kidney donation. A meta-analysis has just been published January 30 in the Annals of Internal Medicine. It reports what the authors consider to be very moderately increased risk of kidney failure, and of pregnancy complications.

Mid- and Long-Term Health Risks in Living Kidney Donors
A Systematic Review and Meta-analysis
by Linda M. O’Keeffe, PhD*; Anna Ramond, DPharm*; Clare Oliver-Williams, PhD; Peter Willeit, MD; Ellie Paige, PhD;Patrick Trotter, MBChB; Jonathan Evans, MBChB; Jonas Wadstrom, MD; Michael Nicholson, MD; Dave Collett, PhD; and Emanuele Di Angelantonio, MD

From the Abstract:
"Although living kidney donation is associated with higher RRs  [relative risks] for ESRD and preeclampsia, the absolute risk for these outcomes remains low. Compared with nondonor populations, living kidney donors have no increased risk for other major chronic diseases, such as type 2 diabetes, or for adverse psycho-social outcomes."

And from the concluding discussion:
"Findings from this review may have implications for policies and practices related to living kidney donation. For example, donors should be informed that, although nephrectomy is associated with a higher RR for ESRD,the absolute risk is still low for most donors (that is, those not from known high-risk populations [39]). Thus, risk prediction tools for ESRD may better approximate the risks involved for prospective donors (43). Guidelines that do not contain information about pregnancy for living kidney donors should instead include relevant information for women of childbearing age in the informed consent process. Furthermore, this review supports the need for long-term follow-up of donors to monitor their health and mitigate possible increases in disease risks associated with kidney donation (44). In conclusion, compared with nondonor populations, living kidney donors have no increased risk for several major chronic diseases, with the exception of ESRD. However, the absolute risk for this disease remains low. Female donors who become pregnant after nephrectomy also seem to be at increased risk for preeclampsia, but more data are needed to confirm this finding."

San Francisco Will Clear Thousands of Marijuana Convictions

What happens when a formerly repugnant transaction goes from being illegal to being legal?
The NY Times has the story:
San Francisco Will Clear Thousands of Marijuana Convictions

"Thousands of people with misdemeanor convictions for marijuana possession dating back 40 years will have their criminal records cleared, the San Francisco district attorney’s office said Wednesday. San Diego is also forgiving old convictions.

"Recreational marijuana became legal in California this year, and the law allowed those with prior low-level offenses to petition for expungement, a process that can be costly.

"But in San Francisco and San Diego, people need not ask. George Gascón, San Francisco’s district attorney, said his office would automatically erase convictions there, which total about 3,000.

"An additional 4,900 felony marijuana charges will be examined by prosecutors to determine if they should be retroactively reduced to misdemeanors.

"San Diego has identified 4,700 cases, both felonies and misdemeanors, that will be cleared or downgraded."
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See my earlier posts on Turing's Law, named for Britain's 2003 posthumous pardon of Alan Turing who had been convicted of a crime when homosexual acts were illegal.

Colleges that get a lot of applications read each one quickly (WSJ)

How to deal with congestion?  Move fast...  Here's the story from the WSJ:

Some Elite Colleges Review an Application in 8 Minutes (or Less)
With so many applying, fewer schools have one person read a whole application; plowing through 500 files in a day

"As application numbers surge, admissions officers at some elite colleges say they don’t have time to read an entire file.

"Instead, staffers from more schools—including the Georgia Institute of Technology, Rice University and Bucknell University in Pennsylvania—now divvy up individual applications. One person might review transcripts, test scores and counselor recommendations, while the other handles extracurricular activities and essays.

"They read through their portions simultaneously, discuss their impressions about a candidate’s qualifications, flag some for admission or rejection, and move on. While their decision isn’t always final, in many cases theirs are the last eyes to look at the application itself.

"The entire process can take less than eight minutes.
...
"Efficiency is crucial, since more students are using the Common Application, which allows them to submit material to multiple schools. Nearly 902,000 students used it last year. As of Jan. 15 this year, the number was already 898,000 students submitting to an average of 4.8 schools.

"Applications to Georgia Tech jumped by 13% for the coming academic year, to 35,600. The current freshman class has roughly 2,800 students."