Sunday, November 30, 2008

Pirate ransom: counterparty risk

Arranging to deliver the ransom for the Ukranian ship captured by Somali pirates, and to receive the ship and hostage crew in return is a delicate matter without a legal framework to reduce the counterparty risk (sort of like a drug buy): Mediator Says Ransom Deal Has Been Reached for Pirated Ukrainian Freighter

"Andrew Mwangura, who as head of a Kenyan maritime association has helped mediate the situation, said Sunday that the Somali pirates who captured the freighter more than two months ago and the ship’s owners had agreed on a ransom. He would not reveal the figure, but he said that the only thing left was to figure out how to get the money to the pirates and hand over the ship.
Still, that is no simple feat, given the band of jumpy pirates on board and the half-dozen American and European naval vessels circling the freighter."

The related story in the Telegraph notes that
"The US military has overflown the hijacked vessel several times to take pictures of the crew lined up on the bridge and verify that all were in good health. "

Saturday, November 29, 2008

Signaling on the Economics Job Market

The signaling mechanism run by the American Economic Association closes on Monday at midnight (but signalers must register by Sunday). Economists may use it to send up to two signals of interest to potential employers. The mechanism is described here, together with some advice for candidates and departments.

My advice to candidates: read the advice, talk to your advisor, think about where to send your signals, but don't stress out about it; signals are just one small factor in your overall campaign. Good luck to all.

Friday, November 28, 2008

The changing market for surrogate wombs

Here is a longish set of excerpts from a very interesing NY Times Magazine story about surrogacy: Her Body, My Baby . It touches on a number of issues that also come up in discussions of organ transplantation, and the controversy about compensation for donors.

"Before I.V.F. became a standard fertility treatment, about 15 years ago, the only surrogacy option available to infertile couples who wanted some genetic connection to their child was what is now called traditional surrogacy. That is when the woman carrying the baby is also the biological mother; the resulting child is created from her egg and sperm from the donor father. When the surrogate mother is carrying a child genetically unrelated to her, she is gestating the child, and the process is called gestational surrogacy. Now that there are hundreds, if not thousands, of doctors in the United States who can perform I.V.F., surrogacy agencies report that the numbers have shifted markedly away from traditional surrogacies toward gestational surrogacies.
There are no national statistics documenting this shift, however, or documenting much of anything about surrogacy. Shirley Zager, director of the Organization of Parents Through Surrogacy, a national support group, told me that there have probably been about 28,000 surrogate births since 1976, a figure that includes gestational and traditional surrogacies. Sherrie Smith, the program administrator for the East Coast office of the Center for Surrogate Parenting, a surrogacy and egg-donation agency, said that of the 1,355 babies born in their program since 1980, 226 were created through artificial insemination — traditional surrogacies — and the rest were gestational surrogacies, using either a donor egg or the intended mother’s own egg."
"Surrogacy is unregulated, and laws vary by state. In the states where it is legal, there is no box on the birth certificate to check “surrogate birth.” In many states that don’t expressly prohibit surrogacy — like Pennsylvania, where our child was eventually born — the genetic parents’ names could be the only ones that appear on the birth certificate. If, however, our baby had been born in New York, where we live and where it is illegal to compensate someone for surrogacy, we would have had to adopt our biological child from Cathy, the woman who carried our child, and her husband. But our contracts were signed in New Jersey, and the consent form that Dr. Fateh had Cathy sign skirted any remaining legal issues."
Of the potential surrogate moms:
"None were living in poverty. Lawyers and surrogacy advocates will tell you that they don’t accept poor women as surrogates for a number of reasons. Shirley Zager told me that the arrangement might feel coercive for someone living in real poverty. Poor women, she also told me, are less likely to be in stable relationships, in good health and of appropriate weight. Surrogates are often required to have their own health insurance, which usually means the surrogate or her spouse is employed in the kind of secure job that provides such a benefit.
While no one volunteering to have our baby was poor, neither were they rich. The $25,000 we would pay would make a significant difference in their lives. Still, in our experience with the surrogacy industry, no one lingered on the topic of money. We encountered the wink-nod rule: Surrogates would never say they were motivated to carry a child for another couple just for money; they were all motivated by altruism. This gentle hypocrisy allows surrogacy to take place. Without it, both sides would have to acknowledge the deep cultural revulsion against attaching a dollar figure to the creation of a human life.
In fact, charges of baby selling have long tarnished the practice of traditional surrogacy, and charges of exploiting women have lingered even as more couples opt for gestational surrogacy. We were not disturbed by the commercial aspect of surrogacy. A woman going through the risks of labor for another family clearly deserves to be paid. To me, imagining someone pregnant with the embryo produced by my egg and my husband’s sperm felt more similar to organ donation, or I guess more accurately, organ rental. That was something I could live with. "
"THE PREVIOUS WINTER, a Catholic priest, upon hearing of our impending birth and my plans to raise the boy in the same liberal Catholic tradition in which I was raised, sniffed and said to me, “You know, the church frowns on science babies.” "

Market for wind, and information

A Land Rush in Wyoming Spurred by Wind Power
"The man who came to Elsie Bacon’s ranch house door in July asked the 71-year-old widow to grant access to a right of way across the dry hills and short grasses of her land here. Ms. Bacon remembered his insistence on a quick, secret deal (emphasis added). ...
"Ms. Bacon did not agree to the deal from the Little Rose representative, Ed Ahlstrand Jr. Instead, she joined her neighbors in forming the Bordeaux Wind Energy Association — among the new cooperative associations whose members, in a departure from the local culture of privacy and self-reliance, are pooling their wind-rich land.
This allows them to bargain collectively for a better price and ensures that as few as possible succumb to high-pressure tactics or accept low offers. Ranchers share information about the potential value of their wind."

"The financial arrangements of each association are unique, but in the case of the Slater Wind Energy Association, 55 percent of the total annual royalties is to be distributed among the landowners who have turbines on their properties. The rest is to be distributed among all association members, both those with turbines and those without. "

Wednesday, November 26, 2008

Market for recorded music

Digital Sales Surpass CDs at Atlantic
"Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones. "

"At the Warner Music Group, Atlantic’s parent company, digital represented 27 percent of its American recorded-music revenue during the fourth quarter. (Warner does not break out financial data for its labels, but Atlantic said that digital sales accounted for about 51 percent of its revenue.)
With the milestone comes a sobering reality already familiar to newspapers and television producers. While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast. Analysts at Forrester Research estimate that music sales in the United States will decline to $9.2 billion in 2013, from $10.1 billion this year. That compares with $14.6 billion in 1999, according to the Recording Industry Association of America.
As a result, the hope that digital revenue will eventually compensate for declining sales of CDs — and usher in overall growth — have largely been dashed....
Instead, the music industry is now hoping to find growth from a variety of other revenue streams it has not always had access to, like concert ticket sales and merchandise from artist tours. “The real question,” Mr. Rose said, “is how does the record industry change its rights structure so it captures a fairer percent of the value it creates in funding, marketing and managing the launch of artists?” "

In related news, a Boston judge has thrown out a suit by the RIAA (Recording Industry Association of America) against Boston U., seeking to subpoena IP addresses at which illegal downloads may have been made, on the grounds that
"The University has adequately demonstrated that it is not able to identify the alleged infringers with a reasonable degree of technical certainty. As a result, the Court finds that compliance with the subpoena as to the IP addresses represented by these Defendants would expose innocent parties to intrusive discovery."

Tuesday, November 25, 2008

Marriage market

In an effort to make sure the marriage market is two-sided, British Law Aims at Preventing Forced Marriage

"A British law went into effect Tuesday that allows courts to prevent someone from being forced into marriage -- a move that comes as governments across Europe confront immigrant practices that sometimes clash with more liberal values...
"It is not a crime in Britain to force someone into marriage. But the practice often includes offenses such as abuse, assault, rape and kidnapping...
"Under Islamic law, consent is required for marriage, but forced unions do occur, especially in the more conservative and traditional countries of the Middle East."

The Big Donor Show wins an Emmy

A hoax Dutch television show in which three desperately ill contestants vied with each other to be given a donor kidney has won an Emmy in New York.

Before (and after) the hoax was revealed, the show sparked a good deal of discussion of organ donation rules in the Netherlands.

HT Ivo Welch

Saturday, November 22, 2008

Inter-caste marriage in India

Old repugnancies die hard:
Indian Government Supports Mixed Unions, But Couples Who Defy System Face Violence

"Even though India legalized inter-caste marriage more than 50 years ago, newlyweds are still threatened by violence, most often from their families. As more young urban and small-town Indians start to rebel and choose mates outside of arranged marriages and caste commandments, killings of inter-caste couples have increased, according to a recent study by the All India Democratic Women's Association. "
"As part of a controversial incentive for inter-caste couples to marry, the government recently began offering $1,000 bonuses. That's nearly a year's salary for the vast majority of Indians. Smaller cash payments first started in 2006 after a Supreme Court ruling in which judges described several high-profile honor killings as acts of "barbarism" and labeled the caste system "a curse on the nation." "

Early decision and early action college admission

The Times updates us on the thriving state of binding early decision, single choice early action, and early action in this year's college admissions: Early-Decision Applications Are Up at Colleges, in Spite of the Economy

Wednesday, November 19, 2008

Market for major league baseball players: international trade

The NY Times reports: Japanese Irked at U.S. Interest in Pitching Phenom

"Many Japanese baseball officials are outraged that United States teams are courting Tazawa, a hard-throwing right-handed pitcher, because they insist it is long-established practice for amateurs like him to be strictly off limits to major league clubs..."
"“This was more than just a gentleman’s agreement, but rather an implicit understanding that the major leagues would do no such thing,” Nippon Professional Baseball said in a news release on signing Japanese baseball amateurs. “That a handful of clubs from the majors is trying to break this gentlemen’s agreement is truly regrettable.”
..."The protocol agreement between Major League Baseball and Nippon Professional Baseball does not address the signing of either nation’s amateur players. It does formalize how Japanese veterans may switch continents: on the open market after nine seasons in the Japan major leagues, or earlier if a player’s club chooses to auction off his rights through a procedure commonly known as posting. Established in 1998, posting established stars like Daisuke Matsuzaka has generated as much as $51 million for their Japanese clubs, and losing top amateurs could hurt that pipeline."
..."The Yomiuri official Hidetoshi Kiyotake has said he fears for the viability of the entire Japanese majors should the major leagues descend on his nation’s amateur talent. In a recent issue of the Japanese magazine Weekly Baseball, he wrote that South Korea’s major league has been seriously harmed by 38 amateur players signing directly with major league clubs since 1994.
..."Fearful that Tazawa’s signing such a contract would encourage more Japanese amateurs to follow him, Nippon Professional Baseball recently passed a rule that requires any amateur who jumps to a major league team to sit out two or three years before being able to return to play in Japan."

Europe's first auction of carbon emissions permits

The London Times reports controversy about how the auction revenue should be spent:
Protests as carbon permits auction raises £54m
The Government has provoked anger by saying proceeds of sale will not necessarily be used to tackle climate change issues

"Yesterday's auction marked a departure from the policy of handing out the permits to industry for free."
"Campaigners said that the Treasury's decision to put the proceeds into its coffers rather than ringfencing them for use in environmental projects plays into the hands of critics, who fear that the ETS will be treated as little more than a green tax. "

I gather "ringfenced" is an antonym of "fungible."

Market for kidneys: Singapore

The Straits Times reports on proposed new kidney legislation in Singapore.

The new legislation would raise penalties for third party brokers, allow compensation for donors (from a single payer, state fund I think), and allow kidney exchange.

"ORGAN trading syndicates and middlemen will be punished more severely if the proposed changes to the Human Organ Transplant Act (Hota) are approved by Parliament.
They will be fined up to $100,000 or jailed up to 10 years or both - 10 times the current penalties.
In Singapore's first-ever organ trading conviction in September this year, Wang Chin Sing, 44, who was fingered as the middleman was jailed a year and two months. "
"Two other changes include removing the age limit for cadaveric donation, now set at 60 years, and allowing paired donations. This is where a donor, whose kidney is not a match for a relative, gives it to someone else who also has a relative willing to give up a kidney [kidney exchange]. "

"Earlier this month, an 18-member national committee on medical ethics had supported reimbursing donors so long as the sum is not so large as to become 'an undue inducement, nor amounting to organ trading'.
The draft Bill spells out measures to protect donors' welfare. These include providing them with long-term follow-up care and short-term life insurance coverage for risks linked to surgery. They will also get priority for receiving an organ in case of any organ failure.
On the issue of compensation, it says that this should be for expenses incurred as a result of the donation, and indirect losses such as lost earnings.
Reactions to the proposed changes have been mixed. Religious bodies like the National Council of Churches of Singapore support 'the provision of reasonable compensation' that helps donors allay fears of incurring high medical costs before, during and after the donation.
'These compensations should not provide incentives for donors out to make a financial gain from their donation,' said the council which represents 193 churches and Christian organisations.
Dr Lam Pin Min, deputy chairman of the Government Parliamentary Committee for Health, said that while changes to the upper age limit and allowing paired matching are 'straightforward and non-controversial', he felt the amendment to allow reimbursement remains contentious for several reasons.
'How are we going to determine what is a fair amount to compensate donors and how do we draw a clear line between compensation and inducement?' he asked.
A spokesman for the ministry told The Straits Times that a committee comprising medical professionals and lay persons will be formed once the amended law is passed 'to look into what is considered fair value in terms of compensation and what should or should not be reimbursed'.
Mr Khaw had hinted at a five- or six-figure sum. "

HT to Marginal Revolution, who focus on the latter.

Market for sex workers, and human trafficking

The AP reports UK Government Unveils Plan for Sex Trade Crackdown, which has drawn some nuanced reactions from sex workers and others.

"The British government announced plans Wednesday to make it illegal to pay for sex with women forced into prostitution and to name men who solicit sex on the streets -- measures that prostitutes say will put more women at risk.
As part of the Home Office's ''name and shame'' campaign, people who pay for sex with a prostitute ''controlled for another person's gain'' could face criminal charges and a fine of 1,000 pounds ($1,500).
The crime would be a ''strict liability offense,'' which means men would be held accountable even if they didn't know a woman had been trafficked or was working for a pimp, according to the Home Office."
"Sex trade workers, however, said the wording of the proposed law would make it illegal for men to use prostitutes who work for other women at brothels or in other voluntary arrangements.
''This is a very dangerous moral crusade,'' Cari Mitchell, spokeswoman for the English Collective of Prostitutes, said Wednesday. ''What this will ultimately do is drive the sex trade further underground and put the focus on criminalizing clients that, for the most part, women aren't complaining about. This plan is of no benefit to women.'' "
"[Home Secretary] Smith said there was no public support for a ''wholesale ban'' on paying for sex and the measures were aimed at cutting down on exploitation."
"Under current laws in England and Wales, it is illegal to loiter and sell sex on the streets or elsewhere in public. Keeping a brothel is unlawful, but a lone woman selling sex inside is not. Similarly, paying for sex is legal. But solicitation has largely been tolerated."

Organs for transplant: supply and demand

An interesting post at Freakonomics brings to attention a paper in the International Journal of Health Services by Herring, Woolhandler, and Himmelstein titled

The subtitle tells much of the story, the paper finds that "16.9 percent of organ donors but only 0.8 percent of transplant recipients were uninsured"

The paper begins with the following story:
"In September of 2005, one of us (Herring), then a third-year medical student, cared for a previously healthy 25-year-old uninsured day laborer who arrived at the emergency department with rapidly advancing idiopathic dilated cardiomyopathy. The patient was ultimately deemed unsuitable for cardiac transplantation.
The decision on transplantation was driven, in part, by realistic concern about the patient’s inability to pay for long-term immunosuppressive therapy and to support himself during recovery. Absent such resources, the likelihood of a successful outcome is compromised (1–4). The clinicians caring for him faced a wrenching dilemma: deny the patient a transplant, or use a scarce organ for a patient with a reduced chance of success. He died of heart failure two weeks after his initial presentation. This tragedy inspired us to examine data on the participation of the uninsured in organ transplantation, both as recipients and as donors."

HT Scott Kominers

Tuesday, November 18, 2008

Matching students to high schools in NYC

The final version of our paper on the design of the NYC high school match is now available: Abdulkadiroglu, Atila , Parag A. Pathak, and Alvin E. Roth, "Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match,'' revised, November, 2008, American Economic Review, forthcoming.

This paper had a long evolution, partly because of the actual work it represents, and partly because of the lengthy and interesting process of figuring out and negotiating (among coauthors and with editors and referees) how to write a paper that properly represents the mix of theory, institutional detail, and empirical work that is integral to practical market design.

Monday, November 17, 2008

Incentives for kidneys

Kidney Disease Takes a Growing Toll reports the Times, as a result of diabetes and hypertension. The article touches on the debate about compensation for donors.

Writing of the National Kidney foundation the article says
"The organization has also been criticized by advocates who support financial compensation for organ donors, which the foundation firmly opposes as unethical and unlikely to increase the availability of organs. (In contrast, the American Association of Kidney Patients supports research into how financial incentives would affect organ donation.)"

Receivables exchange

The NY Times reports on a new online market in which companies can sell their receivables: An Online Market for Selling I.O.U.’s

"Businesses getting pinched by the credit squeeze can now tap a new source of cash — by selling the money owed to them by other companies.
A new online marketplace, the Receivables Exchange, was formally introduced on Monday after 18 months in development. It allows companies to sell their outstanding receivables at a discount to a panoply of financial institutions."

Truth in advertising: I'm on their advisory board.

Sunday, November 16, 2008

Market for health care: adding choice in Britain

Choice is having an effect on Britain's National Health Service, the Telegraph reports:
NHS hospital units shunned by patients face closure
NHS hospitals units are facing closure as patients choose to be treated in more successful medical centres, new figures show

"Patients are now able to choose where they are treated, with many snubbing the traditional visit to their local hospital and opting for units with the best treatment records, facilities and, crucially, cleanliness and infection control.
GPs can also choose where to send their patients. Crucially, hospitals no longer receive a guaranteed block grant and are paid according to the number of patients they treat. "

"The internal market reforms were the source of a bitter struggle within the Labour Government. Tony Blair and Alan Milburn, his Health Secretary, fought against union and backbench opposition to force through many of the changes to the way the NHS was run. "

Gay marriage: protests over election setbacks

I think of bans on who can marry whom as being pure cases of repugnant transactions, namely transactions that some people don't want other people to be able to participate in. In the case of gay marriage, we're seeing the beginning of the end of an ancient ban, but it may not come easily.

The NY Times reports that demonstrations have been held in protest over Proposition 8 in California: Across U.S., Big Rallies for Same-Sex Marriage

"In New York, some 4,000 people gathered at City Hall, where speakers repeatedly called same-sex marriage “the greatest civil rights battle of our generation.”"

"The big crowds notwithstanding, it has been a tough month for gay rights. Proposition 8 was just one of three measures on same-sex marriage passed on Nov. 4, with constitutional bans also being approved in Arizona and Florida. In Arkansas, voters passed a measure aimed at barring gay men and lesbians from adopting children. "

"The protests over Proposition 8 also come even as same-sex marriages began Wednesday in Connecticut, which joined Massachusetts as the only states allowing such ceremonies. By contrast, 30 states have constitutional bans on such unions. "

Saturday, November 15, 2008

Organized crime in Japan

The market for crime is organized differently in Japan. The NY Times reports on a local lawsuit involving the headquarters of a yakuza headquarters: Neighborhood in Japan Sues in Bid to Oust Mafia

"The Dojinkai is one of the country’s 22 crime syndicates, employing some 85,000 members and recognized by the government.
Traditionally, the yakuza have run protection rackets, as well as gambling, sex and other businesses that the authorities believed were a necessary part of any society. By letting the yakuza operate relatively freely, the authorities were able to keep an extremely close watch on them."

Thursday, November 13, 2008

British organ donation: opt in versus opt out

The Telegraph reports that A report into organ donation ordered by Gordon Brown will not recommend a system of presumed consent.

"The group ordered to look into the system as a possible solution to a shortage of donors is due to report at the start of next week. It will recommend that ministers work to increase the number of donors but is expected to favour a situation where donors still register to donate organs after their death.
The group is understood to have come under pressure from Muslim organisations to keep the opt-in system.
But senior government figures, including the Prime Minister and Liam Donaldson, the Chief Medical Officer, are understood to believe that presumed consent is the only way to solve the problem. "

The London Times also covers the story, with a different emphasis: Brown’s organ donor plan is rejected by scientists

"Mr Brown has argued previously that presumed consent, already used in Spain and other countries, could help to “close the aching gap between the potential benefits of transplant surgery in the UK and the limits imposed by our current system of consent”. ...
But the taskforce, an expert working group of healthcare professionals, lawyers and ethicists set up to look at ways to increase the number of organ donations, is understood to believe that an opt-out system would do little to boost the number of life-saving transplants. It is expected to say such a move would create practical problems for the NHS and risk a potential backlash among the public.
Last night a senior Whitehall source told The Times: “It’s fair to say this report is not helpful to the case for a change in the law to presumed consent.” "

Thaler and Sunstein will be disappointed too.

Update: Thaler emails me as follows
"Thaler and Sunstein will NOT be disappointed. We favor mandated choice for two reasons. First, presumed consent raises hackles. Second, it leads to more overrides by family since the donor's intentions may be only implicit.
Illinois has adopted this with zero fanfare. When you renew your license they just ask you "donor or not donor". Perfect."

Repugnant transactions in Inauguration tickets

eBay to Ban Resale of Inaugural Tickets

"eBay Inc. is banning the sale of coveted free tickets to the swearing-in of President-elect Barack Obama after a U.S. senator said she was crafting a bill to make such online sales a federal crime.
Representatives of the online auction site met with the Joint Congressional Committee on Inaugural Ceremonies this week and came to a mutual decision on the prohibition, said Nichola Sharpe, a spokeswoman for eBay.
“The tickets are free. We felt that it is an official event,” Sharpe said in an interview today. “We think it’s in the best interest of all concerned.”
Sen. Dianne Feinstein (D-Calif.), chairman of the committee, announced Monday that she was contacting sites, like eBay and Craigslist, to ask them to stop selling the tickets to the Jan. 20 event. She also said she was drafting legislation to criminalize the sales. "

Market for lawyers

A NY Times article reports that the recession is causing some law firms to contract: Law Firms Feel Strain of Layoffs and Cutbacks .

It contains two insights into the market that struck me:

"Lawyer departures, whether voluntary or through layoffs, pose special risks to firms. Layoffs scare off law school recruits, who crave security and wealth. "

“Clients often don’t want to invest in discretionary litigation in a downturn,” Mr. Younger said. Responding to government investigations has been keeping lawyers busy but does not generate continuing work for armies of associates, like a big lawsuit does, he said. “There are tons of government investigations going on now.”

Wednesday, November 12, 2008

Treasury abandons plans for reverse auction to purchase troubled assets

The Treasury announced today what had already become clear, which is that it has abandoned the initial plan to purchase troubled assets, in favor of buying equity in troubled companies: Remarks by Secretary Henry M. Paulson, Jr. on Financial Rescue Package and Economic Update

"As credit markets froze in mid-September, the Administration asked Congress for broad tools and flexibility to rescue the financial system. We asked for $700 billion to purchase troubled assets from financial institutions. At the time, we believed that would be the most effective means of getting credit flowing again.
During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets – our initial focus – would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks. "

HT to Eric Budish (a market designer on the market)

Tuesday, November 11, 2008

Market for medical services: time of day

Timing is an important part of many markets: Beth Israel Medical Center in NYC is experimenting with a 24 hour a day clinic for non-emergency services, intended to serve parts of the market that have trouble making appointments during standard doctors' hours: When You Just Have to Get a Flu Shot... at 3 A.M.

Monday, November 10, 2008

Market for spam

The BBC, reporting on the work of Stefan Savage, director of UCSD's Collaborative Center for Internet Epidemiology and Defenses, says that the number of sales generated by spam are surprisingly small, so that spam networks might be vulnerable to measures that would increase their costs even slightly: Study shows how spammers cash in

Savage's study involved sending his own spam, he must have had an interesting conversation with UCSD's Institutional Review Board (i.e. human subjects committee...)

Sunday, November 9, 2008

College admissions, international

Harvard's director of admissions visits China: Colleges scour China for top students

"There are no quotas, no limits on the number of Chinese students we might take," Fitzsimmons told a standing-room-only crowd of more than 300 students during a visit to Beijing No. 4 High School. "We know there are very good students from China not applying now. I hope to get them into the pool to compete."

Saturday, November 8, 2008

Market for check cashing and payday loans

The NY Times has a nuanced article about the business and recent sale of a big check cashing chain: Check Cashers, Redeemed

"Selling to the poor is a tricky business. Poor people pay more for just about everything, from fresh groceries to banking; Prahalad, the economist, calls it the “poverty penalty.” They pay more for all kinds of reasons, but maybe most of all because mainstream firms decline to compete for their business. Nix has served customers that traditional financial institutions neglected, but he has also profited from that neglect. Whether he profited too much, charging poor communities what the market would bear — that’s a moral question as much as an economic one. And there’s no simple answer. "

Academic marketplace

Tough Times Strain Colleges Rich and Poor
"“Budget cuts mean that campuses won’t be able to fill faculty vacancies, that the student-faculty ratio rises, that students have lecturers instead of tenured professors,” said Mark G. Yudof, president of the California system. “Higher education is very labor intensive. We may be getting to the point where there will have to be some basic change in the model.” "

In the meantime, there's concern that the credit crisis will reduce the availability of student loans:
U.S. Buying More Loans to Students
"While students are still able to obtain federally backed loans, the credit crisis has hurt the lenders that provide them. Dozens have stopped offering the loans, blaming market conditions.
The initiative by the Education Department is intended to make it easier for these loan companies to obtain financing. In the 2009-10 academic year, the agency will purchase loans, as it has this year. The agency will also pledge to be the buyer of last resort for loans purchased by a private intermediary in an effort to foster investment in the student loan industry."

Pope Benedict speaks about organ transplantation

Pope condemns organ transplant abuses as ‘abominable’, the Catholic News Agency reports. (stale link is updated at bottom of post)

 The Pope spoke to a conference at the Pontifical Academy for Life. "Pope Benedict began his address to the conference entitled, “A Gift for Life. Considerations on Organ Donation.” by applauding the great advances of medical science in the realm of issue and organ transplants. Though these measures give hope to people who are suffering, he lamented the problem of a limited availability of organs, as evidenced “in the long waiting lists of many sick people whose only hopes of survival are linked to a minimal supply which in no way corresponds to effective need." Despite the fact that the supply of organs is limited, the Pontiff emphasized that people can only donate, “if the health and identity of the individual are never put at serious risk, and always for morally-valid and proportional reasons. Any logic of buying and selling of organs, or the adoption of discriminatory or utilitarian criteria ... is morally unacceptable,” he stressed. " "The Pope went on to address abuses in the transplant plant of organs and tissues such as organ trafficking, which often affect innocent people such as children. These abuses, he said, “must find the scientific and medical community united in a joint refusal. These are unacceptable practices which must be condemned as abominable.”
Update of stale links (June 2022)

Thursday, November 6, 2008

Animal organs for human transplants

The Times of London reports on hopes of
Pig organs ‘available to patients in a decade’

If the formidable immunilogical barriers to such xenotransplants can be overcome, it would be a welcome development that could overcome the present dire shortage of transplantable organs. I'd be happy to see kidney exchange replaced by even better alternatives.

Pig kidneys for transplantation would presumably be sold without becoming a repugnant transaction of the kind that selling human kidneys is widely seen to be. However the breeding of transgenic pigs involves some of the same perception of repugnance:

"Professor Winston said that “organs that might be transplantable” could be ready “within two to three years” and on the basis that research went smoothly they would be fully licensed and tested in as little as ten years. He expected the first “proof of principle” pigs to be bred next year.
Two months ago he hit out at the “red tape” blocking the project’s progress in Britain. Under UK and EU rules, his team has been banned from mating and producing offspring from the transgenic pigs. Research in developing transgenic pigs is now likely to move to the US where the regulatory system is more relaxed. "

Wednesday, November 5, 2008

Market for professors

A report from Boston College's Center for International Higher Education says that Saudi Arabia has the highest academic salaries, and China the lowest. (I suspect that this may not reflect the qualities of the universities that will emerge in those two very different places...)

Gay marriage: one step forward, 3 steps back

Election day was a good day for studying repugnant transactions, that is, transactions that some people want to engage in, but others don't want them to be able to:
Bans in 3 States on Gay Marriage

In Massachusetts, a referendum banned greyhound racing.

In other referenda relating to repugnant transactions, Colorado and South Dakota voters rejected bills banning most abortions, Arkansas voted to prohibit unmarried couples from adopting children, Massachusetts voters decriminalized possession (but not sale) of less than 1 ounce of marijuana, Michigan legalized marijuana for medical uses, voters in the State of Washington legalized physician-assisted suicide for terminally ill patients, and San Franciscans defeated a proposition that would have prevented police from enforcing laws against prostitution.

Monday, November 3, 2008

School choice in England

School choice in England is in disarray: schools aren't supposed to be able to use their own preferences to select students, and this is a hard rule to enforce, the Telegraph reports:

Admissions chaos as thousands of schools flout rules
Schools face tighter admissions rules after thousands were found to be flouting guidelines designed to stop middle-class pupils dominating places.

Telephone call pricing between telephone companies

Ever wonder how payments are regulated/arranged between phone companies when you call someone who is a customer of a different company?
FCC Scraps Vote on Controversial Phone-Rate Plan

"Mr. Martin had proposed to lower the rates phone carriers pay each other to transfer calls to almost nothing and allow companies that would lose money from the change to raise their monthly subscriber rates by as much as $1.50 for residential phone lines. Business increases would have gone as high as $2.50 per month.
The current phone-exchange payment system, which dates back to the breakup of the Bell system in 1984, is widely divergent, with some carriers charging a fraction of a penny per minute for outside calls to their customers and others charging hundreds of times that much for the same service.
The FCC has for years tried to reform the payment system, but policy makers and industry sectors can't agree on a solution."

The market for science

The "republic of science" is the original open source public good, and its origins are traced to Renaissance patronage of science and math, in Paul David's essay in Capitalism and Society, The Historical Origins of 'Open Science': An Essay on Patronage, Reputation and Common Agency Contracting in the Scientific Revolution

The essay is accompanied by a comment by Ken Arrow, who summarizes the issue as follows:
" Scientific activity, like any other, requires resources, in the first instance: human resources usually with considerable alternative value, but also material
resources of an increasingly expensive nature. The typical dissemination of scientific information does not, in general, yield any income; indeed, publication itself is costly and was more so before the invention of printing.
"David concentrates in this paper on the development of scientific activity from the 15th to the 17th centuries, a period clearly of the greatest importance in setting the tone and style of the modern Scientific Revolution. His thesis, amply documented, is that the prestige to patrons, generally rulers, was an important motive for the support of science. They were not unaware of the practical usefulness of scientific discovery in technological development, but the sheer display value was an additional and powerful motive. To achieve this prestige, though, it was necessary to evaluate the qualities of the scientists to be supported. Especially in the case of mathematics, this was beyond the capacity of the rulers or their ministers. An open diffusion of science, then, was needed to permit critical evaluation, as well, indeed, as to display the prestige-granting science. Hence, the gradual emergence of the apparatus and value-system of science: publications, the opportunity for comment and criticism, and, eventually, the emergence of publicly supported academies, such as the Royal Society in England and the Académie des Sciences in France, and of periodicals for the diffusion of ideas."

Sunday, November 2, 2008

Incentives for students who get good grades

The Washington Post reports on experimental programs to reward inner city kids when they do well in school: Incentives Can Make Or Break Students: Ethical Issues Come With Gains on Tests
"The inducements range from prepaid cellphones to MP3 players to gift certificates. But most of them are cash: $10 for New York City seventh-graders who complete a periodic test; $50 for Chicago high school freshmen who ace their courses; as much as $110 to Baltimore students for improved scores on the Maryland High School Assessments. "

Some find this repugnant: "Critics denounce the initiatives as bribery and say the money could be better invested in ideas known to work, such as smaller class size. They also point to a body of psychological research suggesting that tangible rewards can erode children's intrinsic motivation. DePaul University education professor Ronald Chennault says there are ethical issues posed by the ventures, most of which are experimental and dependent on private funding and local political support."

Harvard's Roland Fryer is directing some of these experiments. "This is not a silver bullet," he said during a recent visit to the District. "But it's better than sitting around and doing nothing."

Saturday, November 1, 2008

Labor Market Intermediation

David Autor has an essay on The Economics of Labour Market Intermediation"

"One might have speculated that in an era of rapid information flows and substantial job mobility, the importance of labour market intermediaries would wane. Indeed, the most prominent labour market intermediary, the traditional labour union, has been in secular declines for decades. Yet, the decline of labour unions is the exception rather than the rule. Two of the intermediaries discussed above – online search engines and centralised medical matches – have only recently gained prominence. And another labour market intermediary not even considered above, temporary help agencies, has risen from relative obscurity to international significance over the last two decades. "

The Federal Reserve’s Term Auction Facility

As the credit crisis unfolded, the Fed prepared to auction funds to banks. Among other design features (such as how expressive a bidding language to allow) they thought about adverse selection: they wanted to reduce the signal value "stigma" of participation.

The Federal Reserve’s Term Auction Facility
July 2008 Volume 14, Number 5
Authors: Olivier Armantier, Sandra Krieger, and James McAndrews

Abstract: "As liquidity conditions in the term funding markets grew increasingly strained in late 2007, the Federal Reserve began making funds available directly to banks through a new tool, the Term Auction Facility (TAF). The TAF provides term funding on a collateralized basis, at interest rates and amounts set by auction. The facility is designed to improve liquidity by making it easier for sound institutions to borrow when the markets are not operating efficiently."

Auction Design: "Once the Federal Reserve concluded that an auction format was an effective funding alternative, it added features aimed at ensuring the most efficient distribution of funds to banks with a high demand. In particular, the Fed established a minimum rate at which bids could be submitted that was set in a comparable, competitive market (rather than a penalty rate, which is set at a premium to existing market rates).This market-based minimum bid rate was likely to encourage participation and reduce any stigma associated with receiving auctioned funds, since banks would not necessarily signal an abnormally high demand by bidding. The Federal Reserve also chose a uniform-price (or single-price) auction rather than a discriminatory (pay-your-bid) auction in part to spur participation further. By using the uniform-price structure common in Treasury auctions, the Fed reasoned that banks would be more comfortable with bidding. Finally, to allow for the widest allocation of funds, the central bank imposed a cap on the bid amount corresponding to 10 percent of the auction size.
The Fed also imposed two important rules. First, based on its experience with option auctions in 1999, it would allow each bidder to make two rate-amount offers. This rule represents the Fed’s resolution of the trade-off associated with multiple rate-amount offers: as the number of offers increases, the auction becomes more complex, but participants are able to make bids that are more representative of their demand. Second, the central bank would require TAF participants to pledge collateral beyond the amount necessary to secure credit in the new facility. This rule was imposed to ensure that bidders in the new facility could still borrow through the discount window’s primary credit facility to meet unexpected overnight funding needs."

Credit Default Swaps: reducing counterparty risk

New York Fed Welcomes Further Industry Commitments on Over-the-Counter Derivatives

"The following areas constitute our central priorities for addressing both operational and market design concerns for OTC derivatives:
Institute a Central Counterparty (CCP) for Credit Default Swaps (CDS)...
Reduce Levels of Outstanding Trades via Portfolio Compression. Market participants continue to reduce the number of outstanding CDS trades through multilateral trade terminations (tear-ups)
Enhance Market Transparency.

HT to PrefBlog

Bank secrecy:

U.S. and Swiss law differ regarding U.S. citizens who keep accounts in Swiss banks that do business in the U.S., and an interesting game is afoot:
IRS, Justice Target Undisclosed Assets In Swiss Accounts

"Over the summer, the IRS won permission from a federal court to demand that UBS turn over the identities of an estimated 19,000 American clients who have failed to disclose their Swiss-based accounts on U.S. tax returns. It remains unclear what has or will come of that effort. Swiss law restricts the bank's ability to breach client confidentiality. Swiss law also gives clients the opportunity to oppose the release of their names through a judicial process that could slow any disclosures. "...

"James Nason, a spokesman for the Swiss Bankers Association, said, "UBS itself cannot decide to hand over client data because then it would be violating Swiss law." Any Swiss bank "waits for instructions from the Swiss authorities," Nason said, adding, "Switzerland doesn't allow fishing expeditions." ...

"Whether or not the Swiss officially give up clients' secrets, the U.S. government could have other ways of getting information. For example, bank employees have an incentive to expose tax evaders to the IRS, Skarlatos said, because whistle-blowers could receive 30 percent of the money they help the government collect. "