Final remarks in our market design class

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Incentives for buying health insurance when healthy

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


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


HT: Mankiw

Restaurant reservations

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

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



And from the Introduction:

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

Misc. repugnant transactions

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

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

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

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

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

Harvard housing

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

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

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

Non-simultaneous kidney exchange chains

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

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

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

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

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

Gaming the Liver Transplant Market (by Jason Snyder)

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

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

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

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

Louis Menand on the market for PhDs in English

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

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

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

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

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

Humanities job market: priming the pump

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


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


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


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

Market for lesson plans

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nothing human need be foreign to economics

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

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

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

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

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

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

A grave problem of supply and demand

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


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

School choice, and separation of church and state

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

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

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

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

Incentives in Chicago school choice

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

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

HT Parag Pathak

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

Morality of buying kidneys (and brokering them)

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

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

It goes on to make some arguments related to repugnance.

School choice and school capacity

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

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


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

More Milgrom

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

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


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

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

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

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

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

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

And here is my previously posted unofficial conference photo.

College admissions: the costs of having too many acceptances

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

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


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