Ethics of test preparations--for kindergarten

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

Languages as marketplaces

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

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

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

Medical marijuana laws

Laws about marijuana give a different window on repugnant transactions.

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

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

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

Same sex marriage; recent developments

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

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

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

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

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

Mortgages, "strategic default," and repugnance

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

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

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

Money laundering

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

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

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

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

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

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

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

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

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

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

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

There are also some European meetings with job market components.

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

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

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

A kidney exchange in Minnesota

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

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

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

Incentives for organ donors at MR and the WSJ

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

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

Critiques of higher education

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


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

Unraveling of primary elections

Further unraveling, that is.

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

Market for childbirth, when it comes with a passport

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

Martha Nussbaum on same sex marriage

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

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

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

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

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

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

Polygamy in Malaysia

Malaysian Polygamy Club Draws Criticism
"“Men are by nature polygamous,” said Dr. Rohaya, Mr. Ikram’s third wife, flanked by the other three women and Mr. Ikram for an interview on a recent morning. The women were dressed in ankle-length skirts, their hair covered by tudungs, the Malaysian term for headscarf. “We hear of many men having the ‘other woman,’ affairs and prostitution because for men, one woman is not enough. Polygamy is a way to overcome social ills such as this.”
The Ikhwan Polygamy Club is managed by Global Ikhwan, a company whose businesses include bread and noodle factories, a chicken-processing plant, pharmacies, cafes and supermarkets. Mr. Ikram is a director of the company.
While polygamy is legal in predominantly Muslim Malaysia, the club has come under fire from the government and religious leaders, who suspect it may be an attempt to revive Al-Arqam, a defunct Islamic movement headed by Mrs. Hatijah’s husband, Mr. Ashaari Mohamad, who is the founder and owner of Global Ikhwan. Al-Arqam was banned in 1994 for “deviant” religious teachings." (emphasis added)

That explains the criticism, I guess.

Academic job market in a recession year

Inside Higher Ed has an article on the downturn in number of positions advertised through the Modern Language Association, the American Historical Association, and the American Economic Association, compared to last year: No Entry

The situation is exacerbated by last minute hiring freezes, such as the one announced today by the University of Illinois (along with furloughs and other measures).

Spam newspaper

One of the odder features of the internet ad economy is that it is apparently profitable to create internet sites that draw some search traffic, without having any real theme or original content. I'm speculating that CamKh.com is such a site, since it is regularly reposting my blog posts, without however linking to this blog. (In fact, my posts seem to make up a large part of the non-ad content of their Technology section) The site has a vaguely Cambodian theme, but obviously doesn't feel obliged to stick to that.

So, if you happen to be reading this on CamKh.com, the link to my actual blog is here: Market Design.

Update: and (recursively), here is this post, uploaded automatically on the spam newspaper itself.

Recruitment of male high school athletes by ... girls

Inside Higher Ed reports: "A string of scandals involving alcohol, sex and male high school sports stars -- and the National Collegiate Athletic Association's adoption of new rules in 2004 -- seemed to put a stop to college teams’ decades-old practice of organizing groups of female students whose goal was to charm prospects into choosing their university. "

At some schools, recruiting groups are now co-ed. But has this really changed anything?

"At Texas A&M University, membership in the Aggie Hostesses is open to male students, but neither the name nor the fact that the group is all-female makes it particularly appealing to male applicants. Lindsey Bounds, a 2008 graduate of Texas A&M who is the group’s head coordinator, said “men can try out” for the group, but none have, and she has heard no criticism of its gender breakdown. “I don’t feel like anyone really notices it’s an all-female group.” "

Matching and Market Design at the ASSA meetings in Atlanta

I'm not at the meetings in Atlanta, but if I were, I'd try to catch this session this morning:

Matching and Market Design

Presiding: Soohyung Lee (University of Maryland)

Why Deferred Acceptance?: An Experimental Look at Strategy in Two-Sided Matching Markets
Clayton Featherstone (Stanford University)
Eric Mayefsky (Stanford University)

Decentralized Matching with Aligned Preferences
Muriel Niederle (Stanford University)
Leeat Yariv (Caltech)

Inefficiencies in Trade Networks
Matthew Elliott (Stanford University)

Do Roses Speak Louder than Words? Signaling in Internet Dating Markets
Soohyung Lee (University of Maryland)
Muriel Niederle (Stanford University)

Market for class notes, posted by students

There are lots of sites that sell study aids to college students, and there are lots of college courses whose notes are posted online (e.g. see my courses on Market Design and Experimental Economics). The Boston Globe reports on a site, FinalsClub.org, that pays students to post their class notes, after getting permission of the professor. Some of my Harvard colleagues have given their permission, and some have not.

It turns out I'm a Business professor

The same lecture can be described in subtly different ways to different audiences. I see this a lot, because I have a joint appointment between Harvard's Economics Department and the Harvard Business School.

I've been asked to speak at an HBS program for alumni, and I agreed to give a talk that I called Computer-Assisted Markets.

Here's the abstract that came back after I sent in a draft of my slides. It's accurate, and I like it, but I couldn't help noticing that it has a different feel than the abstracts I write myself for economics audiences.

"Designing 21st Century Markets
While efforts to control market behavior are centuries old, computers are enabling new mechanisms of exchange. Drawing on his deep research and expertise in game theory, market design, and computationally assisted markets, HBS Professor Alvin E. Roth will share lessons learned and the implications for markets today and tomorrow. Topics include:
· Exploring the many ways that computers can assist in market exchange—from simple transaction execution to complex algorithms
· Examining the three characteristics of successful markets—ensuring thickness, avoiding congestion, and creating a safe marketplace
· Reviewing successful and not-so-successful examples of market design—from labor market clearinghouses to kidney exchange to school choice mechanisms"

Aside from the title and the description of the speaker, I think the turn of phrase that most surprised me, but that I recognize as a certain style, was the "the" as the second word of the second bulleted item...