Same sex marriage continues to teeter on the cusp of whether Americans regard it as a repugnant transaction, whether it should be legal or illegal. The NY Times story is here.
"The State Senate defeated a bill on Wednesday that would legalize same-sex marriage, after an emotional debate that touched on civil rights, family and history. The vote means that the bill, pushed by Gov. David A. Paterson, is effectively dead for the year and dashes the optimism of gay rights advocates, who have had setbacks recently in several key states.
The bill was defeated by a decisive margin of 38 to 24. The Democrats, who have a bare, one-seat majority, did not have enough votes to pass the bill without some Republican support, but not a single Republican senator voted for the measure. "
...
"Had the legislation passed, New York would have become the sixth state where marriage between same-sex couples is legal or will soon be permitted.
"...Last month Maine became the 31st state to block same-sex marriage through a referendum. The Maine State Legislature had voted to legalize same-sex unions earlier this year, but opponents of gay rights gathered enough signatures to put the measure on the ballot. Last year, California voters repealed same-sex marriage after the State Supreme Court said that gay couples had the right to marry."
Another story follows up the political calculations and miscalculations behind this latest vote: Amid Small Wins, Advocates Lose Marquee Battles
"Just a few months ago, gay marriage looked as if it was on an inexorable path to approval in the liberal redoubt of the Northeast.
Legislatures in Maine, New Hampshire and Vermont had voted to legalize same-sex marriage. Bills to do the same in New York and New Jersey had popular support and champions in the governors’ offices. And advocates of gay marriage were arguing that victories in these states would pressure others to “finish the job.”
But the bill to legalize same-sex marriage in New York failed by a surprisingly wide margin on Wednesday. In New Jersey, Democrats have declined to schedule the bill for a vote, believing that the support is no longer there. Voters in Maine last month repealed a state law allowing same-sex marriage despite advocates’ advantage in money and volunteers.
And on the other reliably liberal coast, California advocates of gay marriage announced this week that they would not try in the next elections to reverse the ban on gay marriage that voters approved in 2008; they did not believe they could succeed.
The losses obscure smaller victories: The District of Columbia Council, for example, voted on Tuesday to allow gay marriage. But in the marquee battles, advocates are losing.
Even supporters of gay marriage say that all the optimism got ahead of the reality."
Here are my previous posts on same sex marriage.
Sunday, December 6, 2009
Saturday, December 5, 2009
Market for kidnapping
The Hostage Business
"Few sectors have endured the economic downturn of recent years better than kidnapping. Confidence in big banks and stock markets might be shaky, but the crudest form of trade — abducting and bartering people — seems alive and well. Gregory Bangs, the kidnap-and-ransom manager for Chubb Group, an American insurance company, said that patterns of kidnapping around the world are “almost inverse” to that of the global economy. “In a recessionary environment, the kidnapping rate goes up,” he told me. More companies are requesting kidnapping and ransom insurance — Bangs reported a 15 to 20 percent jump at Chubb over the past three years — than ever before. But why? What makes kidnapping and ransom, or K.& R., such a growth industry?
In April, speaking at a security conference in the Nigerian capital Abuja, Mike Okiro, then the inspector general of the national police, shared a revealing fact. He estimated that the total amount of ransoms paid in Nigeria between 2006 and 2008 exceeded $100 million."...
"But as long as families and governments and companies continue to pay ransoms, Okiro told me, “there will be no end to it.”
The U.S. government concurs. Discussing the Somali pirates in April, Secretary of Defense Robert Gates said companies that paid ransoms to the pirates were “part of the problem.” “Clearly, if they didn’t pay the ransoms, we’d be in a stronger position,” Gates added. (When a terrorist organization is involved, paying a ransom can actually put individuals and companies in violation of U.S. laws, including the Patriot Act.) As Erik Rye, an adviser for hostage affairs at the State Department, puts it, “If you’re out there feeding the bears, the bears are going to keep coming into the camp.”
...
"The contemporary kidnapping-and-ransom industry emerged in the late 1970s in response to rampant kidnappings in Colombia and throughout Latin America. Globally, for the next 25 years, most cases occurred in Latin America. But political and economic developments have begun redrawing the map of kidnapping hot spots. Chase still considers Colombia “the most mature market” for kidnapping because Colombian perpetrators have been at it the longest — although incidents decreased after President Alvaro Uribe began to take on the country’s guerrilla movements in 2002. There were 465 reported cases in Colombia last year (down from almost 3,000 in 2002). Mexico now has the most kidnappings, with an estimated 7,000 in 2008, though this number has stayed steady in recent years. In fact, Latin America’s share of total reported kidnappings fell to 42 percent in 2008 from 65 percent in 2004.
Gregory Bangs, the K.& R. manager at Chubb, doesn’t foresee the global market flattening out anytime soon. He said new markets were flourishing outside Latin America. Two emerging markets are in Africa and the Middle East; together their share of reported cases nearly quadrupled between 2004 and 2008. During that time, Somali pirates seized dozens of ships off the Horn of Africa. The ships were usually insured, and the pirates made off with increasingly large sums. In postwar Iraq, criminals relied on kidnapping to raise money, and Al Qaeda used kidnappings and beheadings to spread terror. The Taliban have also turned to kidnapping to raise money. And in Nigeria, what began with MEND quickly expanded. Foreigners are still kidnapped in Nigeria, but because many international companies have pulled their employees out of the country, the majority of cases now involve Nigerian victims. The range of victims seems to keep expanding. Kidnappers have grabbed children on the way to school. This summer, two politicians from central Nigeria were abducted; when their relatives couldn’t pay the ransom, the captors freed the two men to go and find the money — but only after they left their wives as collateral. "
...
"Chase said the proof-of-life question — and the way it is handled — often defines the case. “It’s always comforting when they talk about the P.O.L.,” Chase said. “They’ve done this before. They know the form. They know how the game is played.”
"Few sectors have endured the economic downturn of recent years better than kidnapping. Confidence in big banks and stock markets might be shaky, but the crudest form of trade — abducting and bartering people — seems alive and well. Gregory Bangs, the kidnap-and-ransom manager for Chubb Group, an American insurance company, said that patterns of kidnapping around the world are “almost inverse” to that of the global economy. “In a recessionary environment, the kidnapping rate goes up,” he told me. More companies are requesting kidnapping and ransom insurance — Bangs reported a 15 to 20 percent jump at Chubb over the past three years — than ever before. But why? What makes kidnapping and ransom, or K.& R., such a growth industry?
In April, speaking at a security conference in the Nigerian capital Abuja, Mike Okiro, then the inspector general of the national police, shared a revealing fact. He estimated that the total amount of ransoms paid in Nigeria between 2006 and 2008 exceeded $100 million."...
"But as long as families and governments and companies continue to pay ransoms, Okiro told me, “there will be no end to it.”
The U.S. government concurs. Discussing the Somali pirates in April, Secretary of Defense Robert Gates said companies that paid ransoms to the pirates were “part of the problem.” “Clearly, if they didn’t pay the ransoms, we’d be in a stronger position,” Gates added. (When a terrorist organization is involved, paying a ransom can actually put individuals and companies in violation of U.S. laws, including the Patriot Act.) As Erik Rye, an adviser for hostage affairs at the State Department, puts it, “If you’re out there feeding the bears, the bears are going to keep coming into the camp.”
...
"The contemporary kidnapping-and-ransom industry emerged in the late 1970s in response to rampant kidnappings in Colombia and throughout Latin America. Globally, for the next 25 years, most cases occurred in Latin America. But political and economic developments have begun redrawing the map of kidnapping hot spots. Chase still considers Colombia “the most mature market” for kidnapping because Colombian perpetrators have been at it the longest — although incidents decreased after President Alvaro Uribe began to take on the country’s guerrilla movements in 2002. There were 465 reported cases in Colombia last year (down from almost 3,000 in 2002). Mexico now has the most kidnappings, with an estimated 7,000 in 2008, though this number has stayed steady in recent years. In fact, Latin America’s share of total reported kidnappings fell to 42 percent in 2008 from 65 percent in 2004.
Gregory Bangs, the K.& R. manager at Chubb, doesn’t foresee the global market flattening out anytime soon. He said new markets were flourishing outside Latin America. Two emerging markets are in Africa and the Middle East; together their share of reported cases nearly quadrupled between 2004 and 2008. During that time, Somali pirates seized dozens of ships off the Horn of Africa. The ships were usually insured, and the pirates made off with increasingly large sums. In postwar Iraq, criminals relied on kidnapping to raise money, and Al Qaeda used kidnappings and beheadings to spread terror. The Taliban have also turned to kidnapping to raise money. And in Nigeria, what began with MEND quickly expanded. Foreigners are still kidnapped in Nigeria, but because many international companies have pulled their employees out of the country, the majority of cases now involve Nigerian victims. The range of victims seems to keep expanding. Kidnappers have grabbed children on the way to school. This summer, two politicians from central Nigeria were abducted; when their relatives couldn’t pay the ransom, the captors freed the two men to go and find the money — but only after they left their wives as collateral. "
...
"Chase said the proof-of-life question — and the way it is handled — often defines the case. “It’s always comforting when they talk about the P.O.L.,” Chase said. “They’ve done this before. They know the form. They know how the game is played.”
Deferred acceptance in Ghanian school choice
Kehinde Ajayi, a Ph.D. Candidate in the Department of Economics at the University of California, Berkeley, is studying school choice in Ghana. She recently sent me a 2005 document from Ghana's (then) Ministry of Education and Sport "that the government produced when the Computerised School Selection and Placement System (CSSPS) was initially introduced."
It describes a version of a deferred acceptance algorithm (a clearinghouse algorithm that has been discovered a number of times and places, but that game theorists associate with Gale and Shapley 1962), and describes an essential feature, which is that if student A would have displaced student B at school S had he ranked school S first, he will also displace student B at school S even if he ranks school S second (or lower). This is what makes it safe to list schools in your true order of preferences.
"4.2 Displacement
a. Selection on Merit
The computer places all qualified candidates into their first choice schools using the ranking order. The aggregate score of six subjects of each candidate is used to do the ranking.
b. Displacement of 1st choice candidates by 2nd choice candidates as a matter of merit or better performance
The ranking may displace 1st choice candidates with 2nd choice candidates; this will be on merit and not choice. The following table is an illustration:
"Kwasi and Kofi make the following choices of schools and programmes.
...[Table showing that Kwasi, with an aggregate 'score' of 400 ranks Anglican as his second choice, while Kofi, with a score of only 350 ranks Anglican as his first choice...]
"Suppose the cut-off for Science Programme for Opoku Ware is 420 and that for Anglican School is 350, Kwasi is sent to Anglican to compete with first choice candidates for science Programme because his aggregate score is just below the cut-off for Science Programme for Opoku Ware School. Kwasi is then sent to Anglican to compete with the first choice science candidates. Since Kwasi’s aggregate score is higher than that of Kofi’s, Kwasi will then displace Kofi."
It describes a version of a deferred acceptance algorithm (a clearinghouse algorithm that has been discovered a number of times and places, but that game theorists associate with Gale and Shapley 1962), and describes an essential feature, which is that if student A would have displaced student B at school S had he ranked school S first, he will also displace student B at school S even if he ranks school S second (or lower). This is what makes it safe to list schools in your true order of preferences.
"4.2 Displacement
a. Selection on Merit
The computer places all qualified candidates into their first choice schools using the ranking order. The aggregate score of six subjects of each candidate is used to do the ranking.
b. Displacement of 1st choice candidates by 2nd choice candidates as a matter of merit or better performance
The ranking may displace 1st choice candidates with 2nd choice candidates; this will be on merit and not choice. The following table is an illustration:
"Kwasi and Kofi make the following choices of schools and programmes.
...[Table showing that Kwasi, with an aggregate 'score' of 400 ranks Anglican as his second choice, while Kofi, with a score of only 350 ranks Anglican as his first choice...]
"Suppose the cut-off for Science Programme for Opoku Ware is 420 and that for Anglican School is 350, Kwasi is sent to Anglican to compete with first choice candidates for science Programme because his aggregate score is just below the cut-off for Science Programme for Opoku Ware School. Kwasi is then sent to Anglican to compete with the first choice science candidates. Since Kwasi’s aggregate score is higher than that of Kofi’s, Kwasi will then displace Kofi."
Friday, December 4, 2009
School choice in San Francisco, Chicago, and Cambridge MA
Changes in school assignment procedures are being discussed in San Francisco, Chicago, and even Cambridge, MA.
In San Francisco, the redesign is well under way, and the school board has a link to the redesign process: What Have We Done So Far.
An impresssive parent-organized blog outlines the San Francisco Student Assignment system, and the current process intended to reform it, initiated by the San Francisco Unified School District. One of the early posts assembles some of the relevant materials, including the SFUSD page about the Student Assignment Redesign (including some history and legal context), and the
SFUSD technical description of the current Student Assignment Process (which can now be found here).
Chicago has begun to rethink its school choice system; see New Proposed Admission Policy Information
In Cambridge, Parag Pathak proposed that a strategy-proof mechanism replace the old Boston-style mechanism (no longer used in Boston); see School Assigning Process Criticized--MIT professor presents a possible solution to the problem
In San Francisco, the redesign is well under way, and the school board has a link to the redesign process: What Have We Done So Far.
An impresssive parent-organized blog outlines the San Francisco Student Assignment system, and the current process intended to reform it, initiated by the San Francisco Unified School District. One of the early posts assembles some of the relevant materials, including the SFUSD page about the Student Assignment Redesign (including some history and legal context), and the
SFUSD technical description of the current Student Assignment Process (which can now be found here).
Chicago has begun to rethink its school choice system; see New Proposed Admission Policy Information
In Cambridge, Parag Pathak proposed that a strategy-proof mechanism replace the old Boston-style mechanism (no longer used in Boston); see School Assigning Process Criticized--MIT professor presents a possible solution to the problem
Thursday, December 3, 2009
New York City High School choices are due Dec 4
These days I follow the NYC high schools from a distance, but it's gratifying to see some of the long lasting changes that Atila Abdulkadiroglu and Parag Pathak and I got to help put in place (described here, and for those really interested in technical detail, here).
Here's some advice on ranking schools, from a contemporary observer at InsideSchools.org: HS applications due Dec. 4: How to rank the schools
"Your favorite should come first. You don’t need to play guessing games or set up an elaborate strategy. You have nothing to lose and everything to gain by ranking your top choice number one on your list because schools won’t see how you ranked them.
However if you are applying to a school for which you do not qualify — say you want to apply to a school that accepts only Manhattan residents and you live in Queens — you are wasting a spot on your list if you put it down. Likewise, if a school looks for students with an 85 average or above and your GPA is 70, your chances of getting accepted are slim to none.
What about the schools that tell you, you must put them first, or they won’t consider you? According to the Department of Education, that policy was done away with several years ago. Schools no longer see who lists them first, and they have to come up with their own ranking of students from first to last."
Here's some advice on ranking schools, from a contemporary observer at InsideSchools.org: HS applications due Dec. 4: How to rank the schools
"Your favorite should come first. You don’t need to play guessing games or set up an elaborate strategy. You have nothing to lose and everything to gain by ranking your top choice number one on your list because schools won’t see how you ranked them.
However if you are applying to a school for which you do not qualify — say you want to apply to a school that accepts only Manhattan residents and you live in Queens — you are wasting a spot on your list if you put it down. Likewise, if a school looks for students with an 85 average or above and your GPA is 70, your chances of getting accepted are slim to none.
What about the schools that tell you, you must put them first, or they won’t consider you? According to the Department of Education, that policy was done away with several years ago. Schools no longer see who lists them first, and they have to come up with their own ranking of students from first to last."
Tuesday, December 1, 2009
Kidney exchange in People Magazine
In the Nov 30 issue, with Johnny Depp on the cover.
"The chain's home base is the University of Toledo Medical Center, where transplant surgeon Mike Rees performs operations and coordinates the program through his nonprofit, the Alliance for Paired Donation. People enter the chain because they need a kidney and have a friend or family member who is willing to donate, but who isn't a match. Once they enter the chain, Rees's staff inputs their names, blood types and other information into a database of other patient-and-donor pairs; the computer then matches would-be donors and recipients."
The article is referring to a recent reunion of the 20 people involved in Rees' first pioneering non-simultaneous extended altruistic donor (NEAD) chain.
Another organization that has been successfully pursuing NEAD chains among other options is the National Kidney Registry founded by Garet Hil. Here's an article about a recent exchange of theirs: Two couples from Bronx, Jersey exchange kidneys through computer organ donation program.
See here for some more technical material on kidney exchange.
"The chain's home base is the University of Toledo Medical Center, where transplant surgeon Mike Rees performs operations and coordinates the program through his nonprofit, the Alliance for Paired Donation. People enter the chain because they need a kidney and have a friend or family member who is willing to donate, but who isn't a match. Once they enter the chain, Rees's staff inputs their names, blood types and other information into a database of other patient-and-donor pairs; the computer then matches would-be donors and recipients."
The article is referring to a recent reunion of the 20 people involved in Rees' first pioneering non-simultaneous extended altruistic donor (NEAD) chain.
Another organization that has been successfully pursuing NEAD chains among other options is the National Kidney Registry founded by Garet Hil. Here's an article about a recent exchange of theirs: Two couples from Bronx, Jersey exchange kidneys through computer organ donation program.
See here for some more technical material on kidney exchange.
The signaling deadline for the economics job market is midnight tonight
A quarter of new Ph.D.s who failed to signal last year reported that it was because they missed the deadline. The deadline is midnight tonight.
You can register and select your signals here. If you're on the job market, send your signals now.
(You probably don't want to send them to a department ranked higher than the one you are graduating from, and you might want to send them to departments that you don't think will get too many signals. See the Coles et al. paper for the data.)
good luck to all.
You can register and select your signals here. If you're on the job market, send your signals now.
(You probably don't want to send them to a department ranked higher than the one you are graduating from, and you might want to send them to departments that you don't think will get too many signals. See the Coles et al. paper for the data.)
good luck to all.
Monday, November 30, 2009
The signaling deadline for the econ job market is tomorrow, Tuesday, at midnight
If you are an economist on the jobmarket, planning to be interviewed at the ASSA meetings in January, and if you haven't submitted your two signals yet, now is the time. You can register and select your signals here.
(For everyone else, here is a description of signaling, it's a process by which job candidates can have the American Economic Association send an indication of particular interest to two potential employers out of the many they have sent applications to. The idea is that a limit to two special signals helps employers sort through the many applications they receive when it is time to decide who to interview at the national meetings in January.)
The deadline is tomorrow, Tuesday, at midnight (2400 EST).
The December JOE is out, so there won't be any new job listings before tomorrow.
Now is the time to chat with your advisor, and send your two signals. (It can't hurt and might help, see the paper linked to in yesterday's post.)
(For everyone else, here is a description of signaling, it's a process by which job candidates can have the American Economic Association send an indication of particular interest to two potential employers out of the many they have sent applications to. The idea is that a limit to two special signals helps employers sort through the many applications they receive when it is time to decide who to interview at the national meetings in January.)
The deadline is tomorrow, Tuesday, at midnight (2400 EST).
The December JOE is out, so there won't be any new job listings before tomorrow.
Now is the time to chat with your advisor, and send your two signals. (It can't hurt and might help, see the paper linked to in yesterday's post.)
Saturday, November 28, 2009
The job market for new economists: preliminary report
I chair the AEA ad hoc committee on the job market, and a preliminary version of a report we're writing may be of interest to those on the job market this year (and in particular to those who should be signaling by the end of the day Tuesday). The bottom line for the moment? Don't forget to signal.
The paper is
Peter Coles, John Cawley, Phillip B. Levine, Muriel Niederle, Alvin E. Roth, and John J. Siegfried , " The Job Market for New Economists: A Market Design Perspective," preliminary draft, Nov. 25 2009.
A link to it (which will be updated as the paper proceeds towards completion) is on my market design page here.
The paper is
Peter Coles, John Cawley, Phillip B. Levine, Muriel Niederle, Alvin E. Roth, and John J. Siegfried , " The Job Market for New Economists: A Market Design Perspective," preliminary draft, Nov. 25 2009.
A link to it (which will be updated as the paper proceeds towards completion) is on my market design page here.
Internet resources for the homeless
Being homeless does not necessarily mean being cut off from the internet. The Boston Globe reports Online sites offer a fertile venue for some in need
"On Homelessforums.org, thousands of people post questions and comments about everything from how to stay safe on the streets to where to camp for free. There are pleas for money on CyberBeg.com, which compares itself to a lottery, and Begslist.blogspot.com, which describes itself as a “source for free . . . e-panhandling, online donations, debt help, finding financial resources, and a great place to ask for financial help from the kindness of others.’’
"On Homelessforums.org, thousands of people post questions and comments about everything from how to stay safe on the streets to where to camp for free. There are pleas for money on CyberBeg.com, which compares itself to a lottery, and Begslist.blogspot.com, which describes itself as a “source for free . . . e-panhandling, online donations, debt help, finding financial resources, and a great place to ask for financial help from the kindness of others.’’
Friday, November 27, 2009
Rules of the road for cars and bikes
In many places where cars and bikes share a road, they customarily (if not legally) follow different rules. In England, a trial program will allow bikes to travel the wrong way down some one-way streets: Cyclists will be given green light to ignore one-way signs.
"Cyclists will be permitted to ride the wrong way along one-way streets under a change intended to encourage more people to give up their cars or use them less.
The Government will announce today that cyclists will be permitted to ignore no-entry signs: a practice already followed by many, including David Cameron, the Conservative leader.
The Department for Transport is authorising a trial in the Royal Borough of Kensington & Chelsea, Mr Cameron’s home authority in West London, in which a small plate saying “Except cyclists” will be attached to poles carrying no-entry signs.
If the trial is successful, the department intends to extend the policy to the rest of Britain and permit thousands of one-way streets to become two-way for bikes. It believes that long diversions around one-way systems are a significant deterrent to new cyclists, who might be less confident about breaking the rules."
On this side of the pond, Brookline MA is trying something similar, although not on the roads that I ride to work: Right way or wrong way? Brookline tries out new bike lanes
"Cyclists will be permitted to ride the wrong way along one-way streets under a change intended to encourage more people to give up their cars or use them less.
The Government will announce today that cyclists will be permitted to ignore no-entry signs: a practice already followed by many, including David Cameron, the Conservative leader.
The Department for Transport is authorising a trial in the Royal Borough of Kensington & Chelsea, Mr Cameron’s home authority in West London, in which a small plate saying “Except cyclists” will be attached to poles carrying no-entry signs.
If the trial is successful, the department intends to extend the policy to the rest of Britain and permit thousands of one-way streets to become two-way for bikes. It believes that long diversions around one-way systems are a significant deterrent to new cyclists, who might be less confident about breaking the rules."
On this side of the pond, Brookline MA is trying something similar, although not on the roads that I ride to work: Right way or wrong way? Brookline tries out new bike lanes
Lynne Kiesling at KP has a nice post on whether cars and bikes should obey the same rules of the road: Roads and paths as common-pool resources, and the problem of governing them
The rules of the road are a relatively recent invention: 2009 marks the 100th anniversary of Boston’s first traffic regulations, as issued by the Board of Street Commissioners. Peter DeMarco of the Boston Globe reports A century ago, driving laws tamed Boston’s wild streets.
"Back then there were no street signs, no stop signs, no traffic lights, no double center lines, no traveling lanes, and no yield signs. Automobiles had to battle horse-drawn carriages and wagons, bicyclists, trolleys, and pedestrians for space on the road. And while we joke today about how infrequently we obey traffic laws in Massachusetts, a century ago, there were scarcely any laws to obey."
Of the new laws adopted in 1909 he says:"A number of the laws are still very much in use today. Boston got its first one-way streets, adopted a new rule requiring drivers to “signal if about to turn,’’ and began requiring drivers to pass on the left - all in 1909. Parking within 10 feet of a curb was prohibited, double parking was outlawed (well, at least on paper), and police, fire, and other emergency vehicles (including postal carriers and doctors) were given the right of way.
But the rules also show how little our state’s first motorists actually knew about driving, and how Boston streets were really a free-for-all. Drivers had to be told not to stop in the middle of the street, not to park on sidewalks, and not to drive in reverse. The regulations include basic diagrams, reprinted in newspapers for all to study, explaining how to properly make a right turn, a left turn, and a U-turn - revolutionary stuff in 1909, when license exams consisted of a paltry 12 questions."
...
"Most cars were rudimentary, lacking not only turn signals, brake lights, and treaded tires, but also speedometers, windshields (thus the need for driving goggles), roofs, shock absorbers, power steering, and heat (necessitating leather driving coats and gloves). Steam-engine cars could explode, while hand-crank starter rods could spin back and break your arm. To apply brakes, you pulled hard on a lever. Seat belts, alas, didn’t exist."
Update: a column in the London Times suggests that bike riders will have to become more law abiding if London is to become more like Amsterdam, with high volume bike traffic: Time’s up, bike bandits
Thursday, November 26, 2009
The market for fresh turkeys
Frozen turkeys can be produced year round, but fresh turkeys for Thanksgiving all need to be brought to maturity at around the same time. This column from last year's Slate puts the picture into focus: The Turkey-Industrial Complex--How do farmers produce so many birds for Thanksgiving?
"Producing fresh turkeys takes more planning. Market leader Butterball, for example—which grows about one fresh bird for every nine frozen ones—has already begun the production cycle for next year's holiday season. Eggs for breeder birds have been purchased from one of the world's two major genetic suppliers, Hybrid and Nicholas. Those eggs will then be hatched and placed in turkey farms so that they can grow and become sexually mature during the winter. (Butterball needs roughly 28,000 laying hens and 1,700 "stud" toms each year to produce the right amount of fresh turkeys.) Come springtime, these birds will produce the eggs that are destined to become the turkeys we actually eat. Hens produce eggs in 25-weeklong cycles: The first five weeks' worth go toward fresh turkey production, the rest toward the frozen turkey market. Breeder hens are normally used for a single cycle before being slaughtered and processed themselves."
"Producing fresh turkeys takes more planning. Market leader Butterball, for example—which grows about one fresh bird for every nine frozen ones—has already begun the production cycle for next year's holiday season. Eggs for breeder birds have been purchased from one of the world's two major genetic suppliers, Hybrid and Nicholas. Those eggs will then be hatched and placed in turkey farms so that they can grow and become sexually mature during the winter. (Butterball needs roughly 28,000 laying hens and 1,700 "stud" toms each year to produce the right amount of fresh turkeys.) Come springtime, these birds will produce the eggs that are destined to become the turkeys we actually eat. Hens produce eggs in 25-weeklong cycles: The first five weeks' worth go toward fresh turkey production, the rest toward the frozen turkey market. Breeder hens are normally used for a single cycle before being slaughtered and processed themselves."
Wednesday, November 25, 2009
Two edited volumes
Two edited volumes recently arrived in the mail:
Better Living through Economics, edited by John Siegfried; and Studies of Labor Market Intermediation, edited by David Autor.
Here's a link to one chapter:
Niederle, Muriel, and Alvin E. Roth,''The Effects of a Central Clearinghouse on Job placement, Wages, and Hiring Practice'', in Labor Market Intermediation, David Autor, Editor, The University of Chicago Press, 2009, 273-306.
Better Living through Economics, edited by John Siegfried; and Studies of Labor Market Intermediation, edited by David Autor.
Here's a link to one chapter:
Niederle, Muriel, and Alvin E. Roth,''The Effects of a Central Clearinghouse on Job placement, Wages, and Hiring Practice'', in Labor Market Intermediation, David Autor, Editor, The University of Chicago Press, 2009, 273-306.
Early and late matching to career choices
A recent NBER paper by Ofer Malamud finds that students (in Scotland) who get to choose their academic specialty later in their educational careers have fewer changes of career than students who must choose earlier (in England). So, it provides some evidence about why unraveled markets are sometimes inefficient, i.e. on how early matching can result in lower match quality.
Discovering One's Talent: Learning from Academic Specialization by Ofer Malamud
Abstract: In addition to providing useful skills, education may also yield valuable information about one's tastes and talents. This paper exploits an exogenous difference in the timing of academic specialization within the British system of higher education to test whether education provides such information. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality to these fields. Distinguishing between educational regimes with early and late specialization, I derive comparative static predictions about the likelihood of switching to an occupation that is unrelated to one's field of study. If higher education serves mainly to provide specific skills, the model predicts more switching in a regime with late specialization because the cost of switching is lower in terms of foregone skills. Using survey and administrative data on university graduates, I find that individuals from Scotland, where specialization occurs relatively late, are less likely to switch to an unrelated occupation compared to their English counterparts who specialize early. This implies that the benefits to increased match quality are sufficiently large to outweigh the greater loss in skills from specializing early, and thus confirms the important role of higher education in helping students discover their own tastes and talents. http://papers.nber.org/papers/W15522
An ungated version is here.
Discovering One's Talent: Learning from Academic Specialization by Ofer Malamud
Abstract: In addition to providing useful skills, education may also yield valuable information about one's tastes and talents. This paper exploits an exogenous difference in the timing of academic specialization within the British system of higher education to test whether education provides such information. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality to these fields. Distinguishing between educational regimes with early and late specialization, I derive comparative static predictions about the likelihood of switching to an occupation that is unrelated to one's field of study. If higher education serves mainly to provide specific skills, the model predicts more switching in a regime with late specialization because the cost of switching is lower in terms of foregone skills. Using survey and administrative data on university graduates, I find that individuals from Scotland, where specialization occurs relatively late, are less likely to switch to an unrelated occupation compared to their English counterparts who specialize early. This implies that the benefits to increased match quality are sufficiently large to outweigh the greater loss in skills from specializing early, and thus confirms the important role of higher education in helping students discover their own tastes and talents. http://papers.nber.org/papers/W15522
An ungated version is here.
Tuesday, November 24, 2009
Designing a course grading system
Noam Nisan at Algorithmic Game Theory tells a funny story about grades for a game theory class. (Don't try this for other subjects...)
Monday, November 23, 2009
Worldwide university rankings, compared to GNP
Rankings have lots of problems, but here is an ambitious attempt to look at universities all around the world.
"The Academic Ranking of World Universities (ARWU) was first published in June 2003 by the Center for World-Class Universities and the Institute of Higher Education of Shanghai Jiao Tong University, China, and then updated on an annual basis. ARWU uses six objective indicators to rank world universities, including the number of alumni and staff winning Nobel Prizes and Fields Medals, number of highly cited researchers selected by Thomson Scientific, number of articles published in journals of Nature and Science, number of articles indexed in Science Citation Index - Expanded and Social Sciences Citation Index, and per capita performance with respect to the size of an institution. More than 1000 universities are actually ranked by ARWU every year and the best 500 are published on the web. "
Here are the 2009 rankings.
Two of the top ten are from England (#4 Cambridge and #10 Oxford), the rest are in the U.S. The difference in the "overall score" between #2 and #10 is smaller than the difference between #1 and #2, but this may just have to do with how the scales are normalized. The highest ranked university from a country other than the U.S. or England is University of Tokyo, at #20.
Here is a table of Percentage Distribution of Top Universities by Country with Their Share of Global Population and GDP
Only 15 countries have universities ranked in the top 100, and an additional 24 countries have at least one university ranked in the top 500. The top producers of universities are producing them disproportionately to their share of world GDP or population, for example the U.S. has 55.0% of the top 100 universities, and 30.3% of the top 500, but only 23.6% of GDP and 4.5% of population. (Israel is a big outlier, with 1.0% of the top 100 and 1.4% (i.e. 7 universities ) of the top 500, from an economy with 0.3% of world GDP and 0.1% of population.
I have taught at the universities ranked #1, 25, and 50, and studied at #2 and 7. Based on this limited and skewed sample, and on other universities I know well, I can see that both wealth and the quality of the students are big components of university quality, not always perfectly correlated. (What makes the #1 university so extraordinary is the extent to which it succeeds in assembling so much of both in the same place, and what makes the Israeli universities so remarkable is certainly not their wealth.)
Based on the quality of students from various countries who we see in the U.S., I would guess that, if student quality were the main thing being measured, both Turkey and Iran (each with one university in the #400-500 range) are not getting the credit they deserve. (Many of our students from those places had their undergraduate education at home, and apparently got it at pretty good places; even those who come to the U.S. for their undergraduate education are obviously being drawn from pools of students for whom education is a priority.)
Similarly, there may also be countries where wealth rather than student quality is doing most of the work in putting one of their universities into the top 500, and talented and committed students there might be better advised to study overseas if they can. I'm thinking of Saudia Arabia, with one university in the 400-500 range. A number of Gulf countries have been investing in universities, and it will be interesting to see how well they succeed, and how that changes them if they do.
(A very interesting paper by my colleague Eric Chaney looks at the history of scientific productivity in the Muslim world, and gives some food for thought about what aspects of the general culture might promote vibrant universities: "Tolerance, Religious Competition and the Rise and Fall of Muslim Science")
"The Academic Ranking of World Universities (ARWU) was first published in June 2003 by the Center for World-Class Universities and the Institute of Higher Education of Shanghai Jiao Tong University, China, and then updated on an annual basis. ARWU uses six objective indicators to rank world universities, including the number of alumni and staff winning Nobel Prizes and Fields Medals, number of highly cited researchers selected by Thomson Scientific, number of articles published in journals of Nature and Science, number of articles indexed in Science Citation Index - Expanded and Social Sciences Citation Index, and per capita performance with respect to the size of an institution. More than 1000 universities are actually ranked by ARWU every year and the best 500 are published on the web. "
Here are the 2009 rankings.
Two of the top ten are from England (#4 Cambridge and #10 Oxford), the rest are in the U.S. The difference in the "overall score" between #2 and #10 is smaller than the difference between #1 and #2, but this may just have to do with how the scales are normalized. The highest ranked university from a country other than the U.S. or England is University of Tokyo, at #20.
Here is a table of Percentage Distribution of Top Universities by Country with Their Share of Global Population and GDP
Only 15 countries have universities ranked in the top 100, and an additional 24 countries have at least one university ranked in the top 500. The top producers of universities are producing them disproportionately to their share of world GDP or population, for example the U.S. has 55.0% of the top 100 universities, and 30.3% of the top 500, but only 23.6% of GDP and 4.5% of population. (Israel is a big outlier, with 1.0% of the top 100 and 1.4% (i.e. 7 universities ) of the top 500, from an economy with 0.3% of world GDP and 0.1% of population.
I have taught at the universities ranked #1, 25, and 50, and studied at #2 and 7. Based on this limited and skewed sample, and on other universities I know well, I can see that both wealth and the quality of the students are big components of university quality, not always perfectly correlated. (What makes the #1 university so extraordinary is the extent to which it succeeds in assembling so much of both in the same place, and what makes the Israeli universities so remarkable is certainly not their wealth.)
Based on the quality of students from various countries who we see in the U.S., I would guess that, if student quality were the main thing being measured, both Turkey and Iran (each with one university in the #400-500 range) are not getting the credit they deserve. (Many of our students from those places had their undergraduate education at home, and apparently got it at pretty good places; even those who come to the U.S. for their undergraduate education are obviously being drawn from pools of students for whom education is a priority.)
Similarly, there may also be countries where wealth rather than student quality is doing most of the work in putting one of their universities into the top 500, and talented and committed students there might be better advised to study overseas if they can. I'm thinking of Saudia Arabia, with one university in the 400-500 range. A number of Gulf countries have been investing in universities, and it will be interesting to see how well they succeed, and how that changes them if they do.
(A very interesting paper by my colleague Eric Chaney looks at the history of scientific productivity in the Muslim world, and gives some food for thought about what aspects of the general culture might promote vibrant universities: "Tolerance, Religious Competition and the Rise and Fall of Muslim Science")
Final remarks in our market design class
Harvard's new academic calendar and Thanksgiving combined to produce an early end to the lecture part of our Market Design class. I ended with some concluding remarks (here are the accompanying slides: 12.3 concluding remarks ).
One remark is that market design is an eclectic field, drawing on game theory, experiments, computation, and field observation of all sorts (rules are data!).
Teaching the class over the last not-quite-a-decade has been an invigorating intellectual experience. When Paul Milgrom and I began the class (when he spent a year at Harvard in 2001), he had the FCC spectrum auction experience under his belt, and I had the redesign of the National Resident Matching Program under mine, and we had plenty of ideas.
I entertained a faint worry that, at the end of the decade, those might still be the only major applications we had to talk about. But, as things turned out, we can no longer fit all the newly implemented market designs into one course (and Susan Athey will again teach a second semester of Market Design, focused on many recent auction applications, in the Spring). Among the designs we talked about this semester are other health care labor markets, Kidney Exchange, School choice mechanisms, signaling for new economists, internet ad auctions, and more.
I've also been gratified by developments in market design as a field of study. Not only have there been successful applications, there's starting to be an academic literature focused on practical market design, and the theoretical and empirical questions it raises. While there are still some special obstacles that have to be overcome to publish market design papers in general economics journals, we've come a long way since I worried about that in my 2002 paper "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics.
As I remarked in two earlier posts (see Market design is coming of age, and Market design courses this Fall at Harvard and MIT) another sign that the field is healthy is that it is attracting some of the most creative young minds. Some alumni of Harvard and the course who are presently active in market design and/or matching are Estelle Cantillon (with whom I taught the course for two years), Muriel Niederle, John Asker, Nicole Immorlica, Mohammad Mahdian, Michael Ostrovsky, Parag Pathak, Fuhito Kojima, Robin Lee, Mihai Manea, Eric Budish, and Scott Kominers.
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.
Sunday, November 22, 2009
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.
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
"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
Saturday, November 21, 2009
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."
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."
Subscribe to:
Posts (Atom)
Posts
