Presentation Schedule

April 13: Ryan, Katy, Zafar
April 18: Justin/Jonathan
April 20: Susie, Rick?
April 25: Craig, Sam
April 27: Rob, Chris, Evan
May 2: Rick??

Dont have all too much to say about Freakonomics, I enjoyed it but wasn't as interested as I was while reading Sachs, Easterly et al. While it does encourage me to apply economic analysis to questions in my everyday life, I was already aware that economics can explain many interesting phenomena. If anything, it has once again emphasized my need to take econometrics and stats.

Anyways, there is one point in particular that I would like to evaluate. If parents' levels of education are indicators of our own intelligence, and our names can be indicators of our parents' levels of education, what are the moral implications of such studies on society? How aware is society, consciously or unconsciously, of such relations? Should they be the basis for overt, covert or no discrimination? Should I start putting R Florian Heilmayr on my resumes hoping that my middle name will elicit a positive response from employers? This is a single issue I have with the majority of levitt and dubner's analysis. It seems that they overemphasize the rationality and predictability of humanity. Although the majority of economics rests on such ideas, calling for everyone to apply economic analysis to everyday questions would seem to oversimplify the world around us. Furthermore, I fear that there could be some moral and sociological results which might not be the most appetizing to all of us PPEers. I don't advocate hiding information for utilitarian reasons, but wonder about some of the practical repercussions. Just some quick ideas which we could evaluate more carefully tomorrow.

Im Back!

Hello once again. China was amazing, more on that when I see everyone’s shining faces once again. So I still wanted to weigh in on the Sachs discussion since I missed the class etc. I’ll keep it short since everyone might feel like everything has been hashed out and this isn’t actually contributing to the class discussion on Tuesday, but nevertheless, I still wanted to say a few things.

Primarily, I’d like to try to make the point that I don’t think Easterly and Sachs are contradicting each other too thoroughly. Maybe I’m just interpreting them both as I see fit because I liked them both, but I think their positions on aid and debt could be compatible. Concerning foreign debt: Easterly includes an entire chapter on the failures of debt forgiveness. Nevertheless, he ends his chapter with an explanation of how debt forgiveness can work. “A debt relief program could make sense if it meets two conditions: 1) it is granted where there has been a proven change from an irresponsible government to a government with good policies; 2) it is a once-for-all measure that will never be repeated.” Although the scale of debt relief may differ under the two economists, Sachs’ successful uses of debt forgiveness seem at least to fulfill condition 1. His arguments for forgiving Poland? It used to be a communist satellite. For Bolivia? Debt forgiveness would be a part of large-scale macroeconomic reform. For Russia? Once again a move away from communism. Sachs does not seem to be arguing for reckless forgiveness. Sachs says of debt relief, “It has made sense in the long term for the creditors as well as the debtors, since – when applied wisely – it has allowed countries to get back on their feet.”[1] Obviously, Sachs advocates greater levels of debt forgiveness than Easterly with statements that all HIPCs should get full relief but I hold out hope that such debt relief packages could fulfill at least some of Easterly’s conditions if done wisely.

Concerning Foreign Aid: I was never under the impression that Easterly was against foreign aid. It just seems that he claimed that past aid was misdirected, and as a result ineffectual. Sachs mentions many forms of aid through technology sharing which Easterly would love. His sections on India’s IT boom, Asia’s Green Revolution and Bangladesh leapfrogging to cell-phones are all examples of developing the technology base and creating the environment for matches which Easterly advocates as needed to escape poverty traps.

Trying to keep to my promise, I’ll end on that. By comparing the two, however, I feel that Sachs has successfully implemented multiple solutions at once to provide comprehensive aid which works. This is greatly in line with many of Easterly’s demands to have wise and effective systems for development.

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[1] 101

Freakin Awesome

OK, first let's dispense with the pleasantries. Loved the book, wanted more, etc. With regard to the ideas found in the book, I would say that if there was a "unifying theme" it was that economic tools can be used in interesting and insightful ways, however, this book removed the economic analyses to such a large degree that one couldn't really check the underpinnings for mistakes. That is not to say that I assume that there are any, but what about another respectable economist who comes to precisely opposite conclusions, having claimed to have controlled for roughly similar variables? It seems like this book could have fruitfully given a way to distinguish between good economics and bad economics. It seems as though there are so many "well-respected" economists out there, and yet it's almost impossible for most to tell whether or not they overstep their "good economist" capacity on a regular level (Paul Krugman, perhaps?). In any event, I think the strategies are well-described in the book, but they seem anecdotal more than formulaic; as the authors note, "It should be said that regression analysis is more art than science" (163). If that's the way we should look at it, what aesthetic philosophy can we use to separate good regression analysis from the bad? Though the thought is all the more horrifying if politicians are involved, it seems as though a regression could claim to "prove" anything if its purveyor is previously "well-regarded" by other economists who have come to opposite conclusions.

The other issue I take with the style of problem-solving presented in the book is that it exclusively represents hindsight. There is no expertise to be offerred for nascent fields or emerging issues that do not have exhaustive data to analyze. Nowhere do the authors offer policy ideas or outlooks because they skeptically wonder if such an attitude is even appropriate. Granted, understanding the past is the key to understanding the future, but economists themselves may be subject to the trappings of the conventional wisdom; they usually exclude the possibility of exogenous influences in their determinations, which may inappropriately rule out the possibility of some unconsidered or unexaminable cause. However, I would still argue that these objections apply to a very small number of issues at best; the analysis clearly works in a number of useful areas. I only wonder at the fallibility of economics, but I suppose that at the moment there is well more than enough public and political skepticism of economics to keep it in line for a while.

Regarding potential freakonomics questions, I too had thought of Chris' gas stations on the corner question. Another possible question to examine would be the effect of the presence of police cars on accident rates (or more generally examining the influence exerted on driving behavior by the mere presence of police cars), though such a question would involve lots of controls on whether or not accidents get reported at all, how serious they were and so on. Perhaps comparing standard accident rates to rates during police balls or something like that would work; I bet Steven Levitt could work it out.

One other possible experiment would be to look at steroid use in professional sports and compare the costs and benefits (in terms of salary) of using steroids and being discovered, and so on. Though it would be nearly impossible to find out what athletes used or are using illegal performance-enhancing drugs, I bet it would have similar results as the crack dealer living with their moms analysis.