Fleeting expletives and wardrobe malfunctions: FCC vs Fox Television and CBS

Can television broadcasters, particularly of live events, be fined if the FCC deems some of the language offensive?

"Taboo language," particularly when broadcast over Federally regulated radio spectrum is a contentious class of repugnant transactions. Some of the relevant jurisprudence was discussed in a memorably titled (and clearly and informatively written) article by the OSU law professor Christopher Fairman: "Fuck," 28 Cardozo Law Review 1171 (2007).

There have been some pretty funny "workarounds" to avoid the wrath of the FCC, such as the frequent use of the neologism "frak" on the now-ended tv series Battlestar Galactica.

All this is brought to mind by the recent Supreme Court review of the case FCC v. Fox Television Stations. The FCC derives its authority to regulate language from regulations regarding sexual content. So the question before the court is, when someone like Bono says that an award is "fucking brilliant," does that statement have sexual content? (Judge for yourself, at around minute 5:40 in this video of the 2003 Golden Globes award in which U2's song "The Hands that Built America" won a best song award for the film The Gangs of NY.)

It's entertaining to read a carefully worded NY Times account of the recent Supreme Court decision sending the case back to a lower court. The column, called Gentlemen Cows in Prime Time, doesn't use any of the offensive words, and the title of the column is explained in the text:
"In 1623, the English Parliament passed legislation to prohibit “profane swearing and cursing.” Under that law, people could be fined for uttering oaths like “upon my life” or “on my troth.” In the Victorian era, the word “bull” was considered too strong for mixed company; instead, one referred to “gentlemen cows.” Times change, notwithstanding the fervent wishes of prescriptivists to keep dirty words dirty. "

Another account in plain (Anglo-Saxon) English: You Can't Say That On Television, makes it easier to understand the context of the case.

The Supreme Court also sent back to a lower court the case of Janet Jackson's Superbowl "wardrobe malfunction." The FCC had fined CBS, an appeals court eventually overturned the fine, and now the issue is up for grabs again: Court Sends Janet Jackson Case Back for Review.
"The high court on Monday directed the 3rd U.S. Circuit Court of Appeals in Philadelphia to consider reinstating the $550,000 fine that the Federal Communications Commission imposed on CBS over Jackson's breast-baring performance at the 2004 Super Bowl.
The order follows the high court ruling last week that narrowly upheld the FCC's policy threatening fines against even one-time uses of curse words on live television.
In a statement, CBS said the Supreme Court's decision was not a surprise given last week's ruling and expressed confidence the court will again find the incident was not and could not have been anticipated by the network.
Last year, the appeals court threw out the fine against CBS, saying the FCC strayed from its long-held approach of applying identical standards to words and images when reviewing complaints of indecency.
The appellate court said the incident lasted nine-sixteenths of one second and should have been regarded as "fleeting." The FCC previously deviated from its nearly 30-year practice of fining indecent broadcast programming only when it was so "pervasive as to amount to 'shock treatment' for the audience," the court said.
The FCC appealed to the Supreme Court. The case had been put off while the justices dealt with a challenge led by Fox Television against the FCC's policy on fleeting expletives.
The case is FCC v. CBS Corp., 08-653. "

Open source software

A new NBER working paper discusses the creation of "open source" marketplaces:
Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem by Michael Schwarz, Yuri Takhteyev #14946 http://papers.nber.org/papers/W14946 (and an ungated version here)

As the title suggests, the paper is about (avoiding) the problem of holdup that would arise if you make a lot of complementary investments in particular software, but are then vulnerable to arbitrary increases in its price. Part of the paper's considerable charm is a long section on the history of open source software (which, because it is not proprietary, avoids much of the holdup problem). Two sections which I excerpt from below concern the 1950's, and the 1960's-'70's.

SHARE and FORTRAN
"Early on, however, IBM also had a different idea for reducing customers’ programming expenses: encouraging the clients to share software with each other. It pursued this strategy by setting up an association for its users in 1952, with a mission of helping IBM customers help each other (CampbellKelly 2003). The association was later renamed “SHARE,” the new name explicitly representing the objective of sharing knowledge and software..."

An early contributor of shared software was United Aircraft:
"To understand United Aircraft’s interest in getting other organizations to use their software for free, and in fact their readiness to put additional resources into modifying it to suit the needs of some of the other SHARE members, we must consider, first of all, that United Aircraft already had an assembly program (UASAP) that it had written for its own needs, and quite likely had made a complementary investment into software written for it. If UASAP were accepted as the standard by other members, United Aircraft could benefit from the future software that other organizations would write for it and at the same time get to keep the software that it had written for UASAP."


ARPANET and Unix
"While modern open source institutions diverge substantially from scientific institutions, both in how they attract external funding and in their handling of credit, they share important characteristics and have clear historical links, the ARPANET project being an important opportunity for a transfer of institutions."

"Among the less successful projects funded by ARPA in 1960s was a new operating system called “Multics.” Multics promised to deliver features that were of interest to AT&T and that IBM had been willing to provide in its software (Ceruzzi 2003, p. 156). AT&T’s Bell Laboratories then joined the Multics project with the hope of accelerating it and steering it closer to AT&T’s needs (Ceruzzi 2003, p. 155, also Salus 1994, p. 26). The Multics project failed, likely due to its excessive complexity. However, a number of Bell Labs researchers produced a simplified version of Multics which they called “Unix.” Unix proved an immediate success."
...
"In 1973 Unix was rewritten in C, a new language also developed at AT&T. While FORTRAN and COBOL had already enabled portability for certain kinds of software, a combination of C and Unix made it possible to write almost any software in a way that would allow it to be moved between computers. Doing so, however, required access to the source code, because different binary software had to be generated for each machine and modifications to the source code were often required. Being able to move software between computers also meant being able to use it on later computers, increasing the time horizons for software users. While much of the software written in 1960s (including all of the ARPANET software) was hardwarespecific and could be expected to become obsolete eventually, most of the software written for Unix in 1970s can be used today. Increased time horizons made access to source code even more important, as some users could now plan to use their software for decades."

The paper goes on to trace how changes in copyright law and the rise of cheap personal computers influenced the open source movement, including the marketing effort that led to the name "open source" replacing "free software".

Auctions of airport slots: dead in the water, again.

The latest news on plans to auction off takeoff and landing slots at NY's LaGuardia airport: DOT scraps auction plan for NYC airports .

NYC's airports are the most congested in the nation, but plans for an auction have been politically troubled from the start (see some of my related earlier posts). What is the nature of the politics? Perhaps some of the airlines that fly in and out of NYC airports actually like the congestion, since it keeps out new competition by preventing airlines that don't presently have any slots from getting any.

Freakonomics has a non-auction suggestion for relieving the congestion: Shut Down LaGuardia.

Non-simultaneous trades in basketball

One of the pleasures of market design--a pleasure it shares with good gossip--is being able to explore in detail the rules by which other people live. The NBA Salary Cap FAQ is full of such details.

It turns out that some details involved in managing an NBA team have something in common with the non simultaneous kidney exchange chains I recently blogged about. This is because NBA teams can exchange players, but the Salary Cap imposes some constraints:

What are the rules regarding trades?
"Teams under the salary cap may make trades as they please, as long as they don't end up more than $100,000 above the salary cap following a trade. But if a team is over the cap, or they are under the cap and a trade would take them more than $100,000 over the cap, then an exception is required. An exception is the mechanism that allows a team to make trades or sign free agents and be over the salary cap. Since teams are usually over the salary cap, trades are usually accomplished using exceptions."

What is the Traded Player exception?
"The Traded Player exception is the primary means used by teams over the cap for completing trades. It allows teams to make trades that leave them over the cap, but it places several restrictions on those trades. Trades using the Traded Player exception are classified into two categories: simultaneous and non-simultaneous. As its name suggests, a simultaneous trade takes place all at once. Teams can acquire up to 125% plus $100,000 of the salaries they are trading in a simultaneous trade. For example, a team trading a $5 million player in a simultaneous trade can receive one or more players whose salary is no more than 125% of $5 million, plus $100,000, or $6.35 million in return.
A non-simultaneous trade may take up to a year to complete. "

What is a non-simultaneous trade?
"A trade in which more than one player is traded away can only be simultaneous; non-simultaneous trades are allowed only when a single player is traded away (although teams can sometimes find ways to configure multi-player trades as multiple single-player trades which are non-simultaneous).
Here is an example of a non-simultaneous trade: a team trades away a $2 million player for a $1 million player. Sometime in the next year, they trade a draft pick (with zero trade value itself) for a $1.1 million player to complete the earlier trade. They ended up acquiring $2.1 million in salary for their $2 million player -- they just didn't do it all at once, or even necessarily with the same trading partner.
In the above example, after the initial trade of the $2 million player for the $1 million player, it was like the team had a "credit" for one year, with which they could acquire up to $1.1 million in salaries without having to send out salaries to match. ....
"Here is a more complicated example of a legal non-simultaneous trade: a team has a $4 million Traded Player exception from an earlier trade, and a $10 million player it currently wants to trade. Another team has three players making $4 million, $5 million and $7 million, and the teams want to do a three-for-one trade with these players. This is legal -- the $5 million and $7 million players together make less than the 125% plus $100,000 allowed for the $10 million player ($12,600,000), and the $4 million player exactly fits within the $4 million Traded Player exception. So the $4 million player actually completes the previous trade, leaving the two teams trading a $10 million player for a $5 million and a $7 million player. From the other team's perspective it's all just one big simultaneous trade: their $4 million, $5 million and $7 million players for the $10 million player. "

HT Steve Leider (who we're trading, non-simultaneously, to Michigan next year)

Organs for transplant in Japan

The London Times reports on the shortage of transplantable organs in Japan, where deceased donation is very limited due to the legal requirement of cardiac death. The article is about future possibilities of cloning human organs in sheep. Nearer at hand, the article describes how the organ shortage in Japan is made more serious by the decreasing availability of organ transplants overseas, through growing restrictions on "transplant tourism": Japanese scientist claims breakthrough with organ grown in sheep:

"The reason for Professor Hanazono’s sense of urgency — and for the entire organ harvest project being undertaken at the Jichi Medical University — lies many miles away in Tokyo and with a historical peculiarity of the Japanese legal system.
Japan defines death as the point when the heart permanently stops. The concept of brain death — the phase at which organs can most effectively be harvested from donors — does exist, but organs cannot be extracted at that point.
The long-term effect of the legal definition has been striking: organ donation in Japan is virtually nonexistent, forcing many people to travel abroad in search of transplants. In the United States, the rate of organ donors per million people is about 27; in Japan it is under 0.8.
The effect, say paediatricians, has been especially severe for children. The same law that discounts brain death as suitable circumstances for organ donation broadly prevents children under 15 from allowing their organs to be harvested.
To make matters worse, international restrictions on transplant tourism are becoming ever tougher, making Japan’s position even more untenable. To avert disaster, say doctors, Japan either needs the science of synthetic organ generation to advance faster than seems possible, or it needs a complete rethink on the Japanese definition of death. "

Market for concierge health care

Is it hard to get an appointment with your doctor, who must see patients every fifteen minutes? Perhaps you are in the market for concierge health care (as described in these two stories, one from 2005 and one from this past Sunday):
For a Retainer, Lavish Care by 'Boutique Doctors'
Despite Recession, Personalized Health Care Remains in Demand

"One promise made to patients paying for concierge service is that waiting will not be a part of their health care experience. Patients are guaranteed that phone calls will be returned promptly, appointments will be scheduled on a same-day basis if necessary, and appointment times will be honored. ...
"A relatively simple tradeoff is responsible: the extra fees collected from patients let concierge doctors, who leave regular practice for concierge medicine, slash their caseloads. Before Dr. Kaminetsky became a concierge doctor five years ago he had 2,500 patients in his practice - a standard number for most primary care internists. His list now numbers 600. "

"The practices typically charge at least $1,500 a year, with the most elite services asking $25,000 or more per family. The fees cover a thorough physical exam and enable physicians to limit the number of patients they see so they can provide premier service. "...

"Critics of concierge medicine consider it elitist and say it has widened the already significant class disparities in American medicine. They also say it has exacerbated the shortage of primary care physicians by leaving more patients to be treated by a shrinking pool of doctors.
But advocates counter that the concierge movement reflects deep exasperation with the two-hour waits and 10-minute appointments of conventional primary care. Given the burnout among physicians who must see more than two dozen patients a day, they say the concierge model may sustain doctors who would otherwise hang up their stethoscopes.
Dr. Thomas W. LaGrelius of Torrance, Calif., who leads the Society for Innovative Medical Practice Design, a professional association of concierge physicians, estimated that there were 5,000 such doctors in the United States, out of an estimated 240,000 internal medicine physicians and related subspecialists. "

Horse meets versus horse meat

The question of Why can't you eat horse meat in the U.S.? takes on special force when the horses in question are retired race horses. The NY Times reports that the slaughter of such horses for human consumption arouses special repugnance.
The article Ignoble Endings Far From Winner’s Circle reports(emphasis added):

"The most significant source of racehorse deaths is the slaughter industry, one driven by overbreeding and demand from the lucrative global meat market. According to the American Society for the Prevention of Cruelty to Animals, more than 100,000 American horses are slaughtered each year in Canada and Mexico to satisfy horse meat markets in Europe and Asia.
The slaughter of domestically bred horses represents a breach of the American covenant between horses and humans: horses bred for sport, industry and agriculture are not part of our food chain. They are not supposed to meet death in a slaughterhouse."
...
"Many owners, faced with the choice of keeping retired horses and continuing to pay for their feed and care, instead opt to sell them at auction for $300 to $500 a horse, not realizing or not caring that if they are exported they can eventually be slaughtered.
“We’ve got lots of work to do here,” Waldrop said. “The problem is far from being solved. There is a high demand for horse meat around the world, and they create a market for horses that competes with our efforts to adopt and retrain these horses.”
The last of the horse slaughterhouses in the United States were shut down in 2007. But at least four states — Montana, Illinois, North Dakota and Tennessee — have either proposed or contemplated legislation to reintroduce horse slaughter. Two bills stuck in committee in the House and the Senate would make it illegal to transport horses across state lines or to foreign countries for the purpose of slaughter. The industry should push Congress to pass pending anti-slaughter legislation."

In a related story, concerned with wild horses also, see Pickens Once Raced Horses, Now Works to Save Them

HT: Muriel Niederle

Market for adultery, in a recession

In an earlier post, I mentioned a website that caters to married people seeking an affair. It turns out that the business is countercyclical:
Adultery business cashes in on world's recession worries
"At the Ashley Madison agency, which revels in the motto, "Life is short. Have an affair," the global economic downturn is proving a boon for business. "

"Membership has soared from one million to 3.6 million in just 12 months, and he expects another surge after the company launched a service allowing members to access the site from their mobile phones. The innovation is aimed at would-be cheaters who are nervous about leaving evidence of their infidelity on their computer at home or work.
Mr Biderman said that many couples who would otherwise have divorced were seeking affairs at the moment because of the cost of hiring lawyers and the difficulty of selling the marital home. "

Marriage and dating online in Korea

Soohyung Lee has a paper about an online marriage market in Korea, whose findings are similar in some respects to those in the papers described in my two earlier posts today, and different in others: Preferences and Choice Constraints in Marital Sorting: Evidence From Korea.

Like the paper by Hitsch, Hortaçsu, and Ariely, Lee's paper considers detailed transactional data from an online site, this one aimed at marriage rather than more casual dating, and uses the data to estimate preferences for mates, based on a variety of observable traits. Like both Hitsch et al. and the paper on Indian marriages by Banerjee, Duflo, Ghatak and Lafortune, Lee's paper looks at stable matches produced by a deferred acceptance algorithm based on the estimated preferences, and compares them to the observed marriages in population data. Unlike those two papers, the findings in Korea are that the simulated stable matchings look different than the population matchings; they are less assortative on some dimensions (such as employment in the same industry).

The paper suggests that some aspects of Korean marriage data therefore reflect choice constraints on who meets whom, and that as these constraints are relaxed (perhaps by increased use of internet matchmaking), some aspects of Korean life may change.

Market design update (5/12/09): Professor Lee sends me the following email describing how her work has proved useful in the design of the matching site, which uses an algorithm to suggest several possible dates to each participant:
"FYI, the matchmaking company partially adopted my estimates to adjust its matching algorithm. Previously, it assumed all men and all women have the same preference ranking. Under the revised algorithm, it classifies men and women based on their characteristics and allows them to have heterogeneous preference rankings (which I find in my estimation).
With the revised algorithm, the company was able to increase the probability of a proposal turning into an actual first date by a factor of 2. "

Marriage and dating online

Günter J. Hitsch, Ali Hortaçsu, and Dan Ariely have a paper about online dating and matching forthcoming in the AER: Matching and Sorting in Online Dating.

They write
"Using a novel data set from an online dating site, we first estimate mate preferences and then use the classic Gale-Shapley algorithm to predict matching outcomes. Online dating exists to facilitate the search for a partner. Our results suggest that the particular site that we study leads to approximately efficient matching outcomes (within the set of stable matches), and that search frictions are mostly absent. Hence, the site appears to be efficiently designed."

Their dataset allows them to look at all the clicks and messages of a subset of participants. So they can see which profiles people look at, and whom they choose to contact. This allows them to form estimates about preferences (on the assumption that if you browse two profiles and contact one of them, you prefer the one you contacted.) And they can observe when email addresses or phone numbers are mutually exchanged, which gives them their proxy for matches.

They compare the matchings they see both to marriages in the population at large (from Census data), and to stable matchings obtained by running the deferred acceptance algorithm, using the estimated preferences. They write:
"We saw that both actual marriages and the predicted matches from the Gale-Shapley model exhibit strong intra-ethnicity sorting patterns. However, even in the absence of search frictions it is not obvious whether same-race preferences alone cause sorting within ethnicity groups: because other attributes, such as income and education, are correlated with race, preferences over these other attributes could lead to intra-ethnicity sorting as well. To investigate what fraction of the predicted endogamy patterns is driven by same-race preferences, we remove these preferences from the utility specification and simulate the corresponding stable matches. Tables 10 and 11, panel (IV), show that intra-ethnicity sorting is strongly diminished, although small degrees of endogamy remain. These results suggest that racial sorting is mostly due to the same-race preferences; preferences for non-race attributes can not quantitatively account for the small fraction of marriages across different ethnic groups."

Marriage market in India

A recent paper by Abhijit Banerjee, Esther Duflo, Maitreesh Ghatak and Jeanne Lafortune studies marriage in Bengal: Marry for What? Caste and Mate Selection in Modern India .

The nature of this marriage market (in which courtship begins with ads and letters) allows the authors to gather data on preferences for mates, by interviewing matrimonial advertisers about their preferences over the letters they receive, and then to follow up to determine eventual marriages.
"First, the parents or relatives of a prospective bride or groom place an ad in the newspaper. Each ad indicates a PO box (provided by the newspaper), and sometimes a phone number, for interested parties to reply. They then get responses over the next few months (by mail or by phone), and elect whether or not to follow up with a particular response. While ads are placed by both sides of the market, "groom wanted" ads represent almost 63 percent of all ads placed.
When both parties are interested, the set of parents meet, then the prospective brides and grooms meet. The process takes time: in our sample, within a year of placing an ad, 44 percent of our sample of ad-placers whom we interviewed, were married or engaged although most had placed only a single ad. Of those who got married, 65 percent met through an ad, the rest met through relatives or, in 20 percent of the cases, on their own (which are referred to as "love marriages")."

They find that preferences for caste are very high (emphasis added):
"These alternative estimations methods lead to very similar qualitative conclusions: education, beauty, light skin, and high incomes are preferred. But the most striking result is that the preference for mating within one's own caste is strong: for example, we find in one specification that parents of a prospective bride would be willing to trade off the difference between no education and a master's degree to avoid marrying outside their caste. For men seeking brides, it is twice the effect of the difference between a self-described "very beautiful" woman and a self-described "decent-looking" one."

But they find that the cost of satisfying these preferences is not large, since supply and demand are well balanced within each caste, so that assortative matching that takes account of caste does not look different than simulated assortative matching on other observables when caste is ignored.

Overall, they conclude that matchings are stable, in the sense of the two-sided matching literature, i.e. they find that search and matching frictions are low enough, or preferences well enough aligned, so that matches simulated by the deferred acceptance algorithm are hard to distinguish from those they observe.

Update: the paper is now an NBER working paper http://papers.nber.org/papers/w14958

Repugnant transactions concerning brides

From the sale of child brides in Saudi Arabia to the difficulty of enforcing the laws against Suttee (self-immolation on the husband's funeral pyre) in India, marriage is a fertile area of contention about practices that many find repugnant even in cases that the parties themselves may not.

In Saudi Ariabia, a small victory for social liberals in the contest with social and religious conservatives over whether sales of children into marriage are a repugnant transaction: Victory for Saudi girl, 8, sold by her father to a 50-year-old man
"The girl, who has not been named and who has been living with her mother in the city of Onaiza, was given to the older man in marriage by her father to pay off a debt." ...

"The case has reopened the debate in Saudi Arabia on whether a minimum age for marriage should be introduced. After the first two petitions failed, the Saudi newspaper columnist Amal al-Zahid wrote: “The trafficking of child brides — a most reactionary practice that takes us back to the days of concubines [and] slave girls” should be outlawed. She added that the country was incurring “behavioural abnormalities and problems of which only Allah knows”.
Human rights groups in Saudi Arabia and abroad have condemned the practice of child marriages. "
...
"Some attempts are being made to strengthen women’s rights. The Justice Ministry is reported to be considering reforms to impose a minimum age for marriage and to end abuses of the system by fathers of girls.
In February King Abdullah appointed Norah al-Fayez as the Deputy Minister for Women’s Education, the first woman minister in the kingdom. It has also signed up to the UN Convention on the Rights of the Child.
Despite such efforts, many traditionalists in positions of influence in government and religious life are becoming more strict in their observance of Islamic law. The country’s highest religious authority, Grand Mufti Sheikh Abdul Aziz al-Shaikh, has said that it is not against Islamic law to marry girls under the age of 15."

In India, suttee has been illegal since the 1800's, but in some Indian communities it continues to be thought of as a source of honor, and it has been difficult to entirely eradicate, in part because some instances seem to be voluntary decisions by the wives.

Like the sale of child brides in Saudia, the prospect that some of these instances may not be voluntary casts them in a different light, and changes the debate from one that might resemble the controversies involving assisted suicide to the more straightforward debates about human trafficking and murder. But the discussion is complicated by the fact that, in both Saudi Arabia and India, there is a not insubstantial community that finds such transactions appropriate.

Austin Hoggatt: 1929-2009

Austin Hoggatt, professor emeritus at the Haas School, dies at age 79

"Hoggatt served as the director of UC Berkeley's Computer Center from 1961-62. At the business school, he co-founded the Management Science Laboratory with Professor Fred Balderston in 1968 and served as its chairman. Haas School Professor Thomas Marschak said the lab, which was funded by the National Science Foundation, was the first to run computer simulations in game theory and experimental economics with human-to-computer interface.
...
"He was a pioneer in computing even before the field of computer science had emerged," said Marschak, who remembered Hoggatt collaborating with German Nobel Laureate Reinhard Selten on experimental economics and with faculty colleagues Julian Feldman and Edward Albert Feigenbaum, who went on to do groundbreaking research in artificial intelligence.
Hoggatt and Balderston co-authored an influential book, "Simulation of Market Processes," that was based on computer simulations they had conducted on the lumber industry. "The book was a breakthrough because this kind of analysis of an entire industry was not possible before the advent of computers," said Marschak."

NYC school chancellor Klein on kindergarten waitlists

NYC school chancellor Joel Klein has a straightforward description in the current issue of The Villager of the waiting list situation for Manhattan kindergartens. (He can't magically make overcrowding go away, but he can explain clearly what is going on. NYC seems to be pretty fortunate in some of its top public servants...) Here are his comments in their entirety.

A new equity and transparency in school admissions
By Joel Klein
"Registering your child for kindergarten is often stressful — many of you are preparing to send your son or daughter to school for the first time. Reports of kindergarten wait lists for the fall at public schools in District 2 have added to the anxiety this year. I want to assure families in the community that we’re taking steps to enroll all students who have applied for kindergarten as quickly and fairly as possible.
Let me begin with the facts. A total of six District 2 elementary schools have wait lists for their zoned students: P.S. 6, P.S. 59, P.S. 183 and P.S. 290 on the Upper East Side; and P.S. 3 and P.S. 41 in the West Village (although there is one combined wait list for these two schools). In all of District 2, a total of 242 students are on a wait list at the school they are zoned for. This is a much smaller number than recent news accounts have reported.
These wait lists are the result of two changes we made to the kindergarten admissions process this year. First, we eliminated the practice of first-come, first-served admissions that many schools used in the past, which gave an advantage to well-connected parents who knew when a particular school would begin registering students, and had time to wait in line that first day. Instead, this year each school accepted kindergarten applications until March 6; schools then admitted students based on a clear list of priorities, with the highest being given to the students living within the school’s zone.
Second, we asked all schools to maintain wait lists of students to whom they could not immediately guarantee a seat. Every spring it is common for schools to receive more applications from zoned students than they can actually enroll. The difference this year is that schools registered only students to whom they could guarantee a seat and placed all other applicants on a wait list. This change gives parents a clearer picture about their children’s chances of being able to attend a particular school. It also lets us immediately identify schools that are experiencing a surge in demand and work with them to find ways to accommodate it. In the past, these issues were not addressed until September.
If you’re a parent of a student on a wait list, however, you’re understandably frustrated and confused; it’s reasonable to want to know now where your child will attend school in September.
The answer is that she will almost certainly attend her zoned school. This is because three factors are reducing wait lists even as you read this. Let’s use P.S. 3 and P.S. 41, where there are currently a combined 90 zoned students waiting for a seat, as an example.
We are considering relocating the pre-kindergarten programs at P.S. 3 and P.S. 41 to nearby locations for the 2009-’10 school year. This move will open as many as 75 additional kindergarten seats at the schools, which we will offer to students on the wait list within the next week.
Second, 26 students who are zoned for P.S. 3 and P.S. 41 qualified for kindergarten gifted and talented programs this year. Many of these students either have a seat at one of the schools or are on the wait list, but will instead choose to enroll in the gifted program that we will offer them next month.
Finally, some families who accepted kindergarten placements will ultimately decide to enroll in a nonpublic school or a school outside New York City. This happens every year as families weigh their educational options, but this year’s application deadline gave families an additional incentive to apply to their zoned school — even if there was only a small chance they would want their child to attend.
All of this means that many of the students currently on the wait list at P.S. 3 and P.S. 41 will receive a placement at one of the two schools by the end of next month. Any students who remain on the wait list are still guaranteed a kindergarten seat. These students will receive a placement at a nearby school by the end of June and will be able to remain on the wait list at P.S. 3 and P.S. 41. Seats will likely open up for these students before the start of the school year, since families often move over the summer.
The combination of these three factors will also reduce or eliminate wait lists on the Upper East Side and Upper West Side. There, too, the few students who do not have a placement by the end of next month will receive one at a nearby school.
No explanation I can give will fully make up for the stress and inconvenience of being placed on a kindergarten wait list. But whether you have a child on a wait list or not, I hope you can recognize that we’re trying to bring equity and transparency to an admissions process which did not have either before this year. The families we welcome into our schools every year deserve nothing less, and the placement of every child is important to us. "

HT Parag Pathak

Same sex marriage in Maine

New England is now clearly the region of the country most hospitable to same sex marriage (not even counting the honorary New England state of Iowa): Maine Governor Signs Same-Sex Marriage Bill . And Maine continues the trend of having its elected politicians, not just judges, reverse this ancient repugnance.

"Gov. John Baldacci of Maine signed a same-sex marriage bill on Wednesday minutes after the Legislature sent it to his desk, saying he had reversed his position because gay couples were entitled to the State Constitution’s equal rights protections.

“It’s not the way I was raised and it’s not the way that I am,” Mr. Baldacci, a Democrat, said in a telephone interview. “But at the same time I have a responsibility to uphold the Constitution. That’s my job, and you can’t allow discrimination to stand when it’s raised to your level.”
Yet gay couples may not be able to wed in Maine anytime soon. Laws typically go into effect 90 days after the Legislature adjourns, which is usually in late June. But opponents have vowed to pursue a “people’s veto,” or a public referendum, in which Maine voters could overturn the law. "

Markets for hair, blood plasma, and eggs

A recession report from the Detroit News is headlined Michiganians mine bodies for cash to make ends meet. It reports on a number of legal ways you can monetize your body.

You can sell your hair on TheHairTrader.com, and it looks like some sales have been in the $2,000 range.

You can sell blood plasma at $50 a shot, apparently as often as once a week, judging from the seller interviewed in the story. Here's a site called bloodbanker.com on which you can search for a clinic near you.

If you are young and female you can donate eggs to help couples with fertility problems. Perhaps the lingering repugnance of selling eggs is reflected by the first of these two pricing notes.
Conceiveabilities.com states on their web site that
"ConceiveAbilities strictly adheres to the guidelines as established by the American Society for Reproductive Medicine (asrm.org) which state egg donor compensation more than $10,000 is unethical. Simply stated, a reputable agency will adhere to the guidelines and those that don’t should be viewed with extreme skepticism. "
Egg.donor.com states
"What fees are paid to the Donor?An Egg Donor's fee can range from $5,000 to $15,000. Exceptional and repeat Donors will often receive higher compensation. "

HT Jeffrey Condon

NYC school choice; various updates

The NYC high school choice process (for schools at all levels) is entering its late stages. On the high school front, although the large majority of students are matched to high schools they ranked highly on their preference lists, in a system the size of NYC (with approx 90,000 new high school students each year), there are many students who are not well matched (and for whom the upcoming appeals process may provide some relief).
The Daily News has a story featuring several such students: Education Department fails to place thousands of students in any high school on their list of picksRead more: Education Department fails to place thousands of students in any high school on their list of picks.
"Education Department spokesman Andrew Jacob said the percentage of eighth-graders who went unmatched has improved to 9% from 16% in 2004, when choice was implemented.
The number of students who got their first choice has improved to 51% from 34% since the same year, Jacob added.
"We want all of the 86,000 students who applied for high school to be able to attend a school that's right for them," he said. "Any student who's unhappy at the end of the second round can appeal it."

The problem is that the system is stretched to capacity, so that schools with excess capacity are those which are undesirable in some respects. The things that market designers know about the difficult problems of school choice don't fix this underlying problem of resources.

The NYCDOE provides a bit of information on the different kinds of high schools here, a very brief description of the admissions process here, and information about each high school here.
There are also brief descriptions of the very different, still decentralized processes for pre-kindergaten, elementary schools, and middle schools.

Waiting lists for public school kindergartens, in NYC and in England

If being on a college's waiting list is nerve wracking, having your child on a public kindergarten waitlist is positively infuriating: Kindergarten Waiting Lists Put Manhattan Parents on Edge

"The Department of Education would not say how many schools had waiting lists or how many children were on them, explaining that officials were still reviewing the information that principals in Manhattan were required to submit earlier this week (principals in other boroughs must do so by Friday). But parent advocates and public officials in pockets throughout the city said in interviews that they had heard more complaints this year than ever from panicked parents who were told that there may not be seats for their 5-year-olds at their neighborhood schools.
The notion of a waiting list for students living within a school’s zone is not unprecedented in New York; last fall, 34 schools outside Manhattan capped their enrollment, turning away neighborhood children. But this year, after a change in city policy to standardize kindergarten admissions and encourage registration earlier in the year, the waiting lists seem to have proliferated, making their way into Manhattan neighborhoods where parents often make expensive real estate decisions with a specific school in mind.
David Cantor, the chancellor’s press secretary, said that schools previously had grappled with supply and demand in an ad-hoc way, and that the Bloomberg administration’s approach was more fair. Children who are still on waiting lists at the end of June will be offered slots at other schools in their district (there are 32 across the city), and parents can keep their children’s names on the lists through the summer in hopes that spots open up. City officials expect lists to shrink as some students choose gifted and talented programs, whose placements are to be completed in mid-June, or other options.
Before, Mr. Cantor said, “students remained on wait lists without a school unless a parent knew how to navigate the system.”
“This administration’s position is that equity of access and transparency for every parent is essential,” he added. “This year, for the first time, we stepped in to quantify wait lists, assist schools in managing their wait lists, and will ensure that children have a placement offer by the end of June.”

Something similar is happening in England. The Telegraph reports Thousands of children face being denied a place at their local primary school this year following a sharp rise in demand caused by the recession and increased birth rates:
"Competition is so intense that many families will have to accept their second, third or even fourth choice school, possibly several miles from home. Some four and five year-olds could be left without any place for September. Almost a third of councils across England surveyed by The Daily Telegraph were struggling to cope with demand, with many forced to create more places by building temporary classrooms.
The problem has been blamed on rising birth rates coupled with the economic downturn, which has forced some parents to abandon fee-paying schools for state education."
...
"In Bristol, about 300 children were left without a place at any of their preferred primary schools when the first round of offers was made in February, although most have now been found a school."

Waiting lists from the colleges' point of view

May 1 was the deadline by which students admitted to colleges were supposed to send in their acceptances, so, later this week, when all the mail is in, colleges will finally be in a position to see how many students they might like to admit from their waiting lists.

Unlike rejection letters, which break off a relationship, letters informing candidates that they are waitlisted are meant to influence future behavior. One important goal of the waiting list letter is to encourage those who are most likely to attend if given a (late) offer to signal their willingness in a way that might reliably identify those who will accept an offer from the waiting list if one is offered. That way, if the college has to hurry to fill its places from its waiting list, it can make offers to those most likely to come.

Rice University's FAQ about their waiting list is interesting both for what it reveals and what it conceals:

"What is an "alternate?" What is the "waiting list?"
Your application received strong enough support from the Admission Committee to be approved for admission. However, Rice's small size (only 850 new students) prevents us from admitting all such students. As an “alternate” to the class you are given the opportunity to be placed on the “waiting list.” Students on the waiting list are considered for positions in the class that remain unfilled in May and June.
How many students are on the waiting list?
No one knows yet. Only students who respond affirmatively by May 1, 2009 will be on the waiting list. Not all of the students offered this opportunity will choose to remain an alternate, so the actual size of the waiting list will not be known until May.
How many offers will be made to wait-listed students?
The number of available spaces cannot be determined until after all admitted students respond to our offer of admission by May 1. If fewer than 850 students accept our offer of admission by that date, we will make offers from the waiting list to fill the class in May or June. Over the last four years, 174 students have been admitted from the wait list.
Is the waiting list rank-ordered?
No. All wait-listed students will be reviewed for all available spaces.
Is it appropriate for me to accept an offer of admission from another school while I wait to hear from Rice? What about other waiting lists?
Yes. All schools expect students to commit to one (and only one) school by May 1. However, students may remain on any school’s waiting list throughout the summer. The only rule is that you must withdraw your admission deposit from a school once you accept another school’s offer – you may commit to only one school at a time.
If admitted from the waiting list, how will I be notified?
Students admitted from the waiting list are contacted by telephone. Be sure we have the home phone number and cell phone number (if available) where you can be reached throughout the months of May and June. If you are planning a trip away from home, send a contact number where you can be reached to riceapps@rice.edu.
...
What can I do to increase my chances of admission?
You should update your file in writing via mail or email, informing us of your interest in Rice or spring term accomplishments.
...
It is our goal to send an update to all wait-listed students by June 1, 2009. The waitlist process will be concluded by July 1."

Update (5/8/09): A Crimson story has some information on Harvard's waitlist plans: Yield Holds Steady For 2013 :
"The first round of waitlist deliberations will run from today until the 19th. Fitzsimmons said that “at least 85 if not more” will be taken off the list in the coming weeks, as the office is still waiting to hear from some admitted students. The admissions office aims to have all decisions out by July 1, Fitzsimmons said. He added that it is possible that students admitted off the waitlist will begin hearing as early as today, but more should find out by the middle of next week. The number of students admitted from the waitlist will depend in part on the number of students who choose to defer their offers of admission for a year. So far, 31 students have elected to defer, a number that the admissions office expects to rise. This number is usually between 30-50 students and does not seem to be affected by any particular variable, Fitzsimmons said, though he added it was possible that the bad economy could cause fewer people to defer this year. "

Same sex marriage in Canaan

I've posted several times about recent developments in the U.S. on the legalization of gay marriage, most recently here: Same sex marriage in Iowa, and New England . These developments involve the legality of a contract between two willing adults that third parties may find repugnant. This repugnance is of ancient origin, as I was reminded by the Torah portion read yesterday, which includes Chapter 18 verse 22 of Leviticus, which forbids (a male) lying with a male. This comes immediately after the prohibition against handing over your children "to Moloch" (which is often read as a ban on human sacrifice), and after the prohibitions against any kind of incest.

At the blog PaleoJudaica.com there's a discussion of some of the rabbinic discussion about this verse, and one of the comments points to a midrash claiming that the ancient Canaanites, who preceded Israel in the land, used to practice same sex marriage:
"The reference is to the Sifra 8:8, on Leviticus 18:2ומה היו עושים? האיש נושא לאיש והאשה לאשה, האיש נושא אשה ובתה, והאשה ניסת לשנים. לכך אמר ובחוקותיהם לא תלכוThe Hebrew can be translated as, "And what did they used to do? A man married a man and a woman a woman, a man married a woman and her daughter, and a woman married two men. Therefore it says, By their rules you shall not walk." "

So, some transactions have a very long history indeed of being regarded as repugnant. And still, views can change.

Market for sabbatical homes

Professors and some other kinds of teachers have periodic leaves, for a semester or an academic year, that don't match well with the usual rental real estate market, in which leases tend to be for a calendar year. This opens up a niche for a specialized rental market for sabbatical homes.

A professor with an upcoming leave might look to such a market both to rent his or her own home while on leave, and to rent a home where he will be spending his leave. Since other professors are the people most likely to want to rent (in either direction) for a corresponding time period, this opens up the possibility of a dedicated marketplace in which participants in this small slice of the large real estate market can efficiently find each other. (Such a marketplace may also serve to thicken the market for people with taste for the kinds of homes that professors live in, and may make it easier for owners to verify details about potential renters that make them more comfortable to temporarily rent their homes.)

When I searched on the web (under "sabbatical homes"), I found the following contenders for a share of this market, all of which appear to operate as simple listing services (i.e. they post ads, and people can then contact each other).

SabbaticalHomes.com, WanderingEducators.com , AcademicHomes.com

Update (on the market for goat rentals, as a lawn mowing substitute): This post elicited the following email from Mary O'Keeffe:

"Your post on the sabbatical rental market brought back memories of a year my husband and I spent a couple terms as visiting assistant professors at Caltech in 1981 and rented an incredibly nice luxury Pasadena townhouse from a senior professor who was on leave during the same two terms that year. We got a great below-market price and he got responsible tenants whose schedules aligned with his needs.

Anyway, I thought you might be interested in this article about the developing goat rental market in Silicon Valley:

http://www.webpronews.com/topnews/2009/05/01/google-and-yahoo-both-use-goats-for-lawn-mowing"

Football bowls: market design by Congress?

Sports fans will no doubt be relieved to learn that the Feds are on the case: Congress examining fairness, financing of BCS system .

"Tackling an issue sure to rouse sports fans, lawmakers pressed college football officials Friday on switching the Bowl Championship Series to a playoff, with one Texas Republican calling the current system as unworkable as communism and joking it should be labeled "BS," not "BCS."
John Swofford, the coordinator of the BCS, rejected the idea of switching to a playoff, arguing it would threaten the existence of celebrated bowl games. Sponsorships and TV revenue that now go to bowl games would instead be spent on playoff games, "meaning that it will be very difficult for any bowl, including the current BCS bowls, which are among the oldest and most established in the game's history, to survive," Swofford said.
Rep. Joe Barton of Texas, who has introduced legislation that would prevent the NCAA from labeling a game a national championship unless it's the outcome of a playoff system, said that efforts to tinker with the BCS were bound to fail.
"It's like communism," he said at the House Energy and Commerce Committee's commerce, trade and consumer protection subcommittee hearing. "You can't fix it." "

While the BCS system is already a kind of camel (i.e. a horse designed by a committee), it is a considerable improvement over the unraveled market that came before it, in which bowl matchups were frequently mis-matches arranged several weeks before the end of the regular season, see
Frechette, Guillaume, Alvin E. Roth, and M. Utku Unver, "Unraveling Yields Inefficient Matchings: Evidence from Post-Season College Football Bowls," Rand Journal of Economics, 38, 4, Winter 2007, 967-982, with an online appendix).

I'm skeptical that Congress will push this very far, but it is good to know that the country is in such good shape that some of our Congress persons can devote their efforts to this.

HT: Utku Unver

College letters of rejection

Today is the day by which students must accept an offer of admission from most colleges. So it's a good time to think about those applications that were not accepted. The WSJ has a story reviewing (in the sense of a book review) the variety of ways colleges convey rejections: Rejection: Some Colleges Do It Better Than Others

"Toughest: Bates College, Lewiston, Maine. Most rejection letters, in an effort to soften the blow, follow a pattern: We're sorry, we had a huge applicant pool, all our applicants were terrific, we wish we could admit everyone. Bates, a competitive, 1,700-student college, expresses its regrets to rejected applicants and praises its applicant pool. But it delivers a more direct, and perhaps more honest, message: "The deans were obliged to select from among candidates who clearly could do sound work at Bates," the letter says."

"Stanford University sends a steely "don't call us" message embedded in its otherwise gentle rejection letter. In addition to asserting that "we are humbled by your talents and achievements" and assuring the applicant that he or she is "a fine student," the letter says, "we are not able to consider appeals." It links to a Q&A that reiterates: "Admission decisions are final and there is absolutely no appeal process." It also discourages attempts to transfer later, an even more competitive process."

"Kindest: Harvard College. Despite an estimated admission rate of about 7% this year, this hotly sought-after school sends a humble rejection letter.
"Past experience suggests that the particular college a student attends is far less important than what the student does to develop his or her strengths and talents over the next four years." "

"Most Discouraging: Boston University. To students who have family ties to the university, its letter begins: "We give special attention to applicants whose families have a tradition of study at Boston University. We have extended this consideration in the evaluation of your application, but I regret to inform you that we are unable to offer you admission."

"Biggest Spin: Numerous colleges spin the data in their rejection letters as a well-intentioned way of comforting denied students. University of California, Davis, says it had "42,000 applicants from which UC Davis could enroll a freshman class of 4,600." This implies an 11% acceptance rate. Its actual admission rate is closer to 50%, because many accepted candidates ultimately enroll elsewhere."

Cadavers for dissection by medical students

I've written before about how the purchase of cadavers (even) by medical schools for anatomy classes was for many years a repugnant and largely an illegal transaction in Europe and the U.S., but no longer. A recent review of a book of photographs of medical students posed with cadavers reveals something about the changing cultural attitudes that have accompanied this shift. Shifts of these kinds are potentially interesting to economists because of what they might tell us about changes in which transactions are regarded as repugnant more generally.

Recent news stories have covered the practice in Asia of having students treat the cadavers as honored teachers, sometimes at ceremonies attended by the families of the deceased: Taiwanese Med Students Honor Cadaver Donors.
"A Taiwanese medical school is responding to the island nation’s shortage of cadavers for study by bringing the family of the deceased fully into the program, the Wall Street Journal reports. At Tzu Chi University, medical students meet with donors' families and even compose poems to their “silent mentors” to express their gratitude. And before they wield their scalpels, they participate in a farewell ceremony."

It turns out such ceremonies have a reasonably long history. From the English language abstract of an article in a Chinese medical journal, Anatomy cadaver ceremonies in Taiwan:
"The practice of holding annual ceremonies in honor of cadaver donors in Taiwan's medical schools has a history of nearly a hundred years. It originated in Japan, where such ceremonies have been widely held in medical schools since the practice was founded by Toyo Yamawaki, who was the first medical scholar in Japan to engage in dissection of the human body and was the author of the first anatomy book to appear in Japan, the Zoshi. The practice of holding donor ceremonies was introduced into Taiwan after the Jaiwu Sino - Japanese war, when the island became a Japanese colony. The tradition was upheld in the Viceroy's Medical School, the Viceroy's College of Medicine, and Taihoku (Taipei) Imperial University College of Medicine, and continued since the restoration of Chinese power to the present. The practice of holding cadaver donor ceremonies in institutions of medical education is intended to express respect for the donor as well as to encourage the practice of cadaver donation to the benefit of medical education."

But going further back in time, it sounds as if the Asian experience may have been quite similar to the European history regarding cadavers. Here is the English abstract of an article published in Japanese on the History of collecting cadavers in Japan
"This study investigated how and from where medical students had acquired cadavers for research throughout Japanese history. At the beginning of dissection in the mid Edo era, they cut up executed prisoners granted by the Tokugawa Shyogunate to study internal body parts. After the Meiji Restoration, the social mechanism of delivering cadavers underwent a complete transformation and they began to utilize 1) dead bodies of inpatients who had received free medical treatment and 2) unclaimed bodies mainly from homes for the aged and prisons. It was quite recently that "kentai", voluntary body donation, became common practice of collecting cadavers. Consequently the history of cadavers submitted to dissection faithfully reflects the relation between medical science and society."

I can't help being reminded of the current cautious attempts in the U.S. to encourage organ donation for transplantation, about which I blogged yesterday: Tax credits for organ donors, and medals.

Tax credits for organ donors, and medals

The issue of what compensation or reimbursement if any to allow for organ donation continues to be raised, very slowly, cautiously, and modestly in American legislation. The latest attempt, in the current (111th) Congress: Living Organ Donor Tax Credit Act of 2009 (Introduced in House), proposes

"In General- In the case of an individual who donates a qualified life-saving organ of such individual for transplantation into another individual during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the sum of--
`(1) unreimbursed costs paid by the taxpayer in connection with such transplantation, and
`(2) any lost wages of the individual in connection with such transplantation.
`(b) Limitation- The credit allowed under subsection (a) with respect to any individual for any taxable year shall not exceed $5,000."


If this sounds excessively cautious, note that the previous (110th) Congress passed, and on October 14, 2008, President George W. Bush signed into law, the Stephanie Tubbs-Jones Congressional Gift of Life Medal Act (HR 7198) (Public Law No: 110-413). (It was passed without opposition in both houses of Congress). The Congressional Research Service summary of the law reads (emphasis added)

"10/14/2008--Public Law.
(This measure has not been amended since it was introduced. The summary of that version is repeated here.)
Stephanie Tubbs Jones Gift of Life Medal Act of 2008 - Makes any organ donor, or the family of any organ donor, eligible for a Stephanie Tubbs Jones Gift of Life Medal.
Requires the Secretary of Health and Human Services to direct the Organ Procurement and Transplantation Network to establish an application procedure, determine eligibility, and arrange for the presentation of medals.
Allows only one medal per family. Requires that such medal be presented to the donor or, in the case of a deceased donor, the family member who signed the consent form authorizing the organ donation.
Authorizes the Network to collect funds to offset expenditures relating to the issuance of medals.
Prohibits federal funds from being used to carry out this Act. "

Private sales of artworks, in a down market

Auctions are good for price discovery, and price discovery is particularly important for "common value" goods, i.e. goods whose value to each buyer may be substantially influenced by what other buyers are willing to pay. So, what should you do if you want to unload a common value asset but want to avoid disseminating potentially bad news about what it might be worth? The NY Times reports More Artworks Sell in Private in Slowdown .

"During good times, an auction is the obvious choice for any collector wanting to sell a work of art. But as the recession takes its toll, many collectors have changed strategies and retreated to the more hidden, and potentially less lucrative, world of private sales.
"For many sellers, the driving factor is fear. Fear that their friends will discover they need money. Fear that if a Picasso or Warhol, Monet or Modigliani does not sell at auction, it will be considered yesterday’s goods.
If they do not have to, fewer collectors are putting their holdings up for auction at Sotheby’s and Christie’s, where prices and profits have plummeted. But executives at both houses say business in their private-sale departments has more than doubled in recent months. "
...
" “The game has definitely shifted,” said Christopher Eykyn, a former head of Impressionist and modern art at Christie’s who is now a dealer in New York. “A lot of clients don’t want to be seen selling, so the private route is suddenly more attractive.” "
...
"There are exceptions, of course. Estates continue to go to auction because executors have a fiduciary responsibility and prices are rarely challenged after public sales.
For the auction houses, private sales are lucrative and inexpensive. Generally Sotheby’s and Christie’s charge 5 to 10 percent of the purchase price of an artwork, depending on its value and the agreement with the seller. (If a work goes to auction the houses charge sellers 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million and 12 percent of the rest.) Money earned from private transactions comes cheap, without expenses like advertising, insurance and shipping associated with auctions.
The dismal sales in New York in November, when night after night paintings by Monet and Matisse, Bacon and Warhol went unsold, meant big losses for Sotheby’s and Christie’s, which had a financial interest in most of this expensive art in the form of guarantees, undisclosed sums paid to sellers regardless of a sale’s outcome.
After the fall auctions, both houses immediately began changing the way they conduct business. In addition to announcing hundreds of layoffs, with perhaps more to come, they mostly halted the practice of guarantees and stopped giving consignors a cut in the fees they charge buyers. The days of publishing luscious catalogs have ended as well.
For their part, dealers say that their phones started ringing after Sept. 15, the day Lehman Brothers filed for bankruptcy. “It’s been pretty steady ever since,” said Steven P. Henry, director of the Paula Cooper Gallery in Chelsea. He said he had been getting inquiries about selling art from people who had investments with Bernard L. Madoff, or who had seen the value of their stock or real estate assets collapse."

Rankings of universities: vintages and coordination of expectations

US News and World Report has published its annual ranking of American universities. One thing that the rankings make clear is that, while they may move around a bit from year to year (and the precise rankings are not so informative), it takes a long time to rise to the top.

This year the first place goes to the oldest American university, founded in 1636, and spots 2 and 3 go to universities established in 1746 (as the College of New Jersey), and 1701. Two universities that opened more than a century later, in 1861, and 1891 , are tied for 4th place. The two universities tied for 6th are of different vintages, 1891 and 1755, as are the three tied for 8th place, 1754, 1838, and 1892. The top dozen ranks are filled out by universities open for business since 1769, 1855, and 1856.

At number 17, Rice University, opened in 1912, seems to be the highest ranked university on the list to have begun in the 20th century.

So, while ranking is far from perfectly correlated with age (which is in turn correlated with wealth, among other things), a university that wants to rise to the top of these rankings must take a long view.

It would be good to know more about how rankings (and changes in rankings, especially changes of more than a few places) influence the success of universities in attracting students and faculty. Compared to fundamentals, the rankings themselves shouldn't do much (although they are correlated with features that make a university a desirable place to study and teach). But rankings may also serve as a coordination device for students. For example, if two otherwise similar universities have substantially different rankings, e.g. one is listed in the top 20 and the other in the top thirty, it may be that over time the top 20 university will attract better students, and become a better university. If so, universities that concern themselves with signaling their quality by trying to raise their ranking may not be misguided.

Rankings of international universities (for which the precise rankings are even harder to interpret as being deeply informative) reveal that age is less well correlated with ranking than might appear from looking at American universities alone. For example, in this ranking and in this one, Oxford and Cambridge Universities, both so old that no reliable founding dates are known (although 1096 and 1226 are mentioned in their histories) are both in the top 10. But the much younger American universities dominate the top of the lists, where the equally old universities in continental Europe are scarce.

Update: Here's a November 2009 article from across the pond, which suggests that independence of universities from government may play a role: The American lesson: How to be top

Market for bogus colleges

Colleges not only educate students, they also give them credentials and certifications. So it is not too surprising that there is both a demand for credentials without education, and a supply.

In the United States, the focus seems to be on degrees. (If you type "college degrees" into Google, you find a number of intriguing options, including one that offers a degree in a week. Of course, maybe they have discovered a teaching and learning technology that we should all emulate...)

In Britain, it appears that the market focuses on obtaining a letter of admission, for immigration purposes: Fake colleges enable foreigners to disappear through the loophole.

"Bogus colleges set up to help foreign workers to enter Britain illegally have long been considered the biggest loophole in British immigration controls.
Often little more than two rooms over a takeaway restaurant or newsagents, the colleges have been enrolling hundreds of “overseas students” each year to enable them to obtain visas.
Phil Woolas, the Immigration Minister, described the bogus colleges last month as the Achilles’ heel in the immigration system. The Government announced a crackdown on them in 2003 but regulations did not come into force until the end of last month.
Under the new rules, all universities, colleges and schools must be approved by the UK Border Agency before they can issue visa letters to foreign students. Of the 2,100 institutions that applied for a sponsor licence, 467 have failed the vetting. More than 3,000 other colleges estimated to have been accepting foreign students have not applied for a licence."

One of the latest terrorist suspects to be arrested in Britain appears to have entered Britain from Pakistan with a visa from a bogus college: Terror suspect was enrolled at college shut down by Home Office

Update: a subsequent story, 5/21/09 Sham colleges open doors to Pakistani terror suspects

Efficient random allocation of discrete goods, Mihai Manea

In this season of Ph.D. dissertation defenses, Mihai Manea just completed the last defense that I'm intimately involved in. His work includes papers on the ex-ante efficiency of allocations involving lotteries in large markets.
This is a topic that comes up in school choice systems, for example, with the random element coming from the fact that a given school may not have the capacity to serve all the students who would like to enroll, so that some random tie breaking procedure has to be employed.

An important paper by Bogolmanaia and Moulin (2001) noted that random serial dictatorship, although ex post efficient, may be ex ante inefficient. They proposed an "ordinally efficient" random mechanism called the probabilistic serial mechanism. An ordinally efficient mechanism chooses a probability matrix (assigning each player some probability of obtaining each object) that cannot be Pareto improved upon by another random assignment that first order stochastically dominates the first.

Random serial dictatorship is the procedure for allocating indivisible goods by putting the claimants in a random order, and then allowing the first to choose the object he prefers, the second to choose the object he prefers from those that remain, etc. This results in a lottery over ex post efficient allocations, which B&M noted may be an inefficient lottery: it induces a stochastic allocation matrix with the property that some claimants would be willing to trade some of their probability of getting one object with one another, to yield a mutually preferable stochastic matrix. One of Mihai's early papers shows that efficient probability-exchange contracts of this sort can be written by agents agreeing to exchange their orders in some realizations: i.e. the agents can write an ordinally efficient ordering-exchange contract that they all prefer to the random serial dictatorship allocation in the sense of first-order stochastic dominance. (Random Serial Dictatorship and Ordinally Efficient Contracts, International Journal of Game Theory 2008.)

One drawback of the probabilistic serial mechanism is that, while it is ordinally efficient (unlike random serial dictatorship) it does not make it a dominant strategy for agents to state their true preferences (again, unlike random serial dictatorship). Mihai and Fuhito Kojima show that this drawback goes away when the number of identical copies of each object is sufficiently large: Strategy-Proofness of the Probabilistic Serial Mechanism in Large Random Assignment Problems . Their result isn't just a limit theorem, rather, they show that there is a finite number such that, when the number of identical copies of each object is larger than that, the psm is strategy proof.

Separately, Mihai and Fuhito study the efficiency of random serial dictatorship in different ways as markets grow large. Mihai shows that , as the market becomes large (in particular, as the number of types of objects grows along with the number of participants), the proportion of preference profiles at which rsd is ordinally inefficient goes to one in the limit. (Asymptotic Ordinal Inefficiency of Random Serial Dictatorship, forthcoming Theoretical Economics.)

Fuhito, together with Yeon-Koo Che, shows, in a market that grows large in a different way (the number of copies of each object type grows along with the number of participants) that random serial dictatorship converges to the probabilistic serial mechanism. (Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms , 2008.)

In general, looking at efficiency ex-ante as well as ex post opens up new avenues for investigation, and how these interact in large markets has been a fruitful way to start thinking about them.

Welcome to the club, Mihai.

Behavioral contract design; Steve Leider

Steve Leider defended his dissertation last week. He's an eclectic experimenter, but among his varied interests is how insights from psychology might change our view of contract design. In particular, if people are nicer than the standard economic model supposes (e.g. more inclined to reciprocate favors, more inclined to keep promises and uphold social norms), how might that change our views of how contracts might function, and therefore how they should be structured?

Among his papers, the following best exemplify that part of his work.

Norms and Contracting (with Judd Kessler) (Job Market Paper) Abstract: We argue that agents create norms specific to their relationships, particularly through the contracts they establish. We build a theory of how the enforceable and unenforceable aspects of a contract determine the norm, and how norms impact behavior. We then demonstrate experimentally that even totally incomplete contracts (i.e. contracts with no enforceable restriction on actions) move behavior substantially towards the first best in a variety of games. A contract with only unenforceable agreements is often more effective than a contract with only enforceable restrictions. Combining enforceable restrictions with an unenforceable agreement is frequently no more effective (and sometimes strictly less effective) than an unenforceable agreement alone. Consistent with our modeling approach that violating the norm creates disutility, many subjects often choose not to make unenforceable agreements, despite earnings substantially higher payoffs with the agreement.

Directed Altruism and Enforced Reciprocity in Social Networks (with Markus M. Mobius, Tanya Rosenblat, and Quoc-Anh Do) [Forthcoming in the Quarterly Journal of Economics] Abstract: We conduct online field experiments in large real-world social networks in order to decompose prosocial giving into three components: (1) baseline altruism towards randomly selected strangers, (2) directed altruism that favors friends over random strangers, and (3) giving motivated by the prospect of future interaction. Directed altruism increases giving to friends by 52 percent relative to random strangers, while future interaction effects increase giving by an additional 24 percent when giving is socially efficient. This finding suggests that future interaction affects giving through a repeated game mechanism where agents can be rewarded for granting efficiency-enhancing favors. We also find that subjects with higher baseline altruism have friends with higher baseline altruism.

Contractual and Organizational Structure with Reciprocal Agents (with Florian Englmaier) [Submitted] Abstract: Empirically, compensation systems generate substantial effort despite weak monetary incentives. We consider reciprocal motivations as a source of incentives. We solve for the optimal contract in the basic principal-agent problem and show that reciprocal motivations and explicit performance-based pay are substitutes. A firm endogenously determines the mix of the two sources of incentives to best induce effort from the agent. Analyzing extended versions of the model allows us to examine how organizational structure impacts the effectiveness of reciprocity and to derive specific empirical predictions. We use the UK-WERS workplace compensation data set to confirm the predictions of our extended model.

Gift Exchange in the Lab and in the Field - It is not (only) how much you give ... (with Florian Englmaier) Abstract: We build on the theoretical results from our companion paper, Englmaier and Leider (2008), that an important aspect in determining the effectiveness of gift exchange relations is the ability of the agent to “repay the gift” to the principal. To test this hypothesis, we conduct a real effort laboratory experiment and a field experiment where we vary the effect of the agent’s effort on the principal’s payoff. Furthermore we collect additional information that allows us to control for the agents’ effort costs and whether they can be classified as reciprocal or not. From our model we derive nontrivial predictions about which is the marginal agent in terms of ability affected by our experimental variation and how different types of individuals, selfish and reciprocal, will react to it. The experimental data lend support to our hypotheses.

Steve's email address will have a "umich.edu" in it starting next semester, when he starts work at the University of Michigan's Ross School of Business.

Welcome to the club, Steve.

Course allocation, by Eric Budish

The problem of allocating courses to students is a famously hard problem of market design. The reasons include the fact that, in most applications, it isn't acceptable to sell the most desirable class places at higher prices to richer students. Also, students take multiple classes, and may have preferences for how their bundle is composed. So the problem is substantially more difficult than how to auction multiple goods, or how to allocate each student a single place, as comes up e.g. in assigning students to schools.

Eric Budish, who defended his Ph.D. dissertation at Harvard this week, has made a substantial, practical dent in the problem. His motivation comes from a detailed study, with Estelle Cantillon, of how classes are assigned to second year MBA students at the Harvard Business School, and how students approach this assignment problem strategically: Strategic Behavior in Multi-Unit Assignment Problems: Theory and Evidence from Course Allocations .

Largely motivated by what they learn about the good and not so good properties of the HBS mechanism, Eric then proposes a new mechanism: The Combinatorial Assignment Problem: Approximate Competitive Equilibrium from Equal Incomes. Eric's work, like market design in general, is eclectic. Among other things, he formulates new notions of what constitutes "fair" outcomes in cases hedged in by the impossibility results that abound when allocating indivisible goods.

Although allocating multiple indivisible items to each student makes the standard economic goals involving efficiency and incentives more difficult to achieve, it gives the designer somewhat more leeway to think about fairness, since although class places are indivisible, the package of classes that each student gets is not. And Eric’s investigations of existing course allocation institutions has convinced him that concerns about avoiding excessive ex-post unfairness are an important constraint on what kinds of mechanisms can be implemented in practice.

Eric's mechanism looks like it has legs, and may be ready for practical implementation in the not so distant future. Perhaps he'll get a chance to have more than the usual impact next year when he brings market design to U. Chicago's Booth School of Business (until recently Chicago GSB).

Welcome to the club, Eric.

Market for authenticity: sports memorabilia

Sports memorabilia from specific games can be valuable, but used to be hard to authenticate. No more. Now Major League Baseball Fights Fakery With an Army of Authenticators, on the spot to tag items as they become sports history.

"Nothing is too mundane to be authenticated, if deemed potentially valuable. Cans of insect repellent used to combat the midges that swarmed the 2007 playoffs in Cleveland were authenticated. So were urinals pulled from the old Busch Stadium in St. Louis and office equipment from since-razed Veterans Stadium in Philadelphia. The Phillies are cutting the clubhouse carpet from last season into authenticated 18-by-24-inch mats. "

Indeed, "...every game has at least one authenticator, watching from a dugout or near one. The authenticators are part of a team of 120 active and retired law-enforcement officials sharing the duties for the 30 franchises. Several worked the home openers for the Yankees and the Mets, helping track firsts at the new stadiums. They verified balls, bases, jerseys, the pitchers’ rosin bag, even the pitching rubber and the home plate that were removed after the first game at Yankee Stadium. "

"With Yankee Stadium emptied after the opening 10-2 loss to Cleveland, Lubrano watched groundskeepers shovel dirt from the mound and home plate into five-gallon buckets. Lubrano sealed the lids with tape, then stuck holograms on each bucket, lid and seal. The dirt will be divided into small containers at a warehouse, in front of an authenticator."

How's that for product differentiation?

Update: Tyler Cowen at MR has a post on a related subject, titled Department of Unintended Consequences. Apparently, fraudulent items in the (unauthenticated) market for antiquities on eBay have driven out genuine items, driving down prices (for genuine as well as fake items, since there's no authentication) with the unintended but welcome consequence that grave robbing has become less profitable.

Giving anonymously, through an intermediary

I recently blogged about a service set up to enable people to give (relatively) small gifts anonymously, Giving anonymously, for a fee .

Larger gifts, e.g. to university endowments, are also often given anonymously. But "anonymous" is a relative term, and often someone at the gift-receiving institution knows who the donor is. (Here at Harvard, my HBS office is in a building called Baker Library, whose southern side now sports a new wing called Bloomberg. It was anonymous for a while; all we knew was that the donor wished his identity to remain unknown until he had completed his election for a second term as mayor of New York.)

Now a number of gifts to universities have been made behind a deeper than usual veil of anonymity: Mystery donors give over $45M to 9 universities.

"A mystery is unfolding in the world of college fundraising: During the past few weeks, at least nine universities have received gifts totaling more than $45 million, and the schools had to promise not to try to find out the giver's identity.
One school went so far as to check with the IRS and the Department of Homeland Security just to make sure a $1.5 million gift didn't come from illegal sources.
"In my last 28 years in fundraising ... this is the first time I've dealt with a gift that the institution didn't know who the donor is," said Phillip D. Adams, vice president for university advancement at Norfolk State University, which received $3.5 million.
The gifts ranged from $8 million at Purdue to $1.5 million donated to the University of North Carolina at Asheville. The University of Iowa received $7 million; the University of Southern Mississippi, the University of North Carolina at Greensboro and the University of Maryland University College got $6 million each; the University of Colorado at Colorado Springs was given $5.5 million; and Penn State-Harrisburg received $3 million.
It's not clear whether the gifts came from an individual, an organization or a group of people with similar interests. In every case, the donor or donors dealt with the universities through lawyers or other middlemen. Some of the money came in cashier's checks, while other schools received checks from a law firm or another representative.
All the schools had to agree not to investigate the identity of the giver. Some were required to make such a promise in writing."

Market for hand crafted food, continued

When I last wrote about the market for hand crafted food, I focused on a concentration of producers in Brooklyn. The fact that there are several of them in the same vicinity allows them to support each other and a growing common set of retailers and customers.

Around Passover, there's also an export market of sorts, and we recently enjoyed hand made "shmura" matzah from both Brooklyn and the nearby Long Island town of Lawrence (made respectively by the Boro Park Shmura Matzoh Bakery and by Tiferes Matzah). Matzah is unleavened bread, and shmura ("watched") matzah is baked very quickly after the wheat is ground into flour and water is added, to make sure no leavening takes place. The handmade matzot are round, and much bigger and denser than machine made matzah, and we always buy enough to enjoy for several days after the Passover seders.

The market for kosher food is a very interesting one, because while it is a very important one for observant Jews, most commercially produced kosher food in the United States is bought by non-Jews (since Jews constitute such a small part of the population). In some cases, non-Jewish consumers may not even notice that the food is kosher: for processed food, the kosher symbols are often inconspicuous. (The New Yorker recently had an article on the growing export of kosher food from China.) In other cases, e.g. for kosher meat, which is more expensive, consumers may be attracted by the extra steps of inspection. In any event, the fact that there is a wide market for kosher food increases its availability and lowers its cost.

A guest also brought us some handmade goat cheese, from Twig Farm in Vermont. As in Brooklyn, Vermont seems to support a variety of handmade food producers who support each other. Along with the goat cheese from their own goats, came some cow's milk cheese, made by a neighboring organic farmer.