Culture is something like the “final frontier” for the most empirically-minded social scientists.  International migration provides interesting evidence and proxies for beliefs, social capital, and similarly “unobservable” factors.  When you (or your parents) migrate, you bring along your human capital, but most social capital stays behind in your home country… unless you settle in an ethnic neighborhood. 

“Culture: An Empirical Investigation of Beliefs, Work and Fertility”
RAQUEL FERNANDEZ, New York University
ALESSANDRA FOGLI, New York University
http://papers.ssrn.com/paper.taf?abstract_id=776764
Date: May 2005

Given the different time and place, only the beliefs embodied in the cultural proxies should be potentially relevant to women’s behavior in the US in 1970. We show that these cultural proxies have positive and significant explanatory power for individual work and fertility outcomes, even after controlling for possible indirect effects of culture (e.g., education and spousal characteristics). We examine alternative hypotheses for these positive correlations and show that neither unobserved human capital nor networks are likely to be responsible. We also show that the effect of these cultural proxies is amplified the greater is the tendency for ethnic groups to cluster in the same neighborhoods.

Dos buenos papers para entender, entre otras cosas, las causas y consecuencias de la disciplina partidista y, por otro lado, de dónde vienen (y cuánto tardarán en irse) las preferencias redistributivas del electorado que vivió bajo el socialismo.

BY:  GENE M. GROSSMAN, Princeton University
ELHANAN HELPMAN, Harvard University
http://papers.ssrn.com/paper.taf?abstract_id=754085
July 2005

ABSTRACT:
 Preferences for redistribution, as well as the generosities of  welfare states, differ significantly across countries. In this  paper, we test whether there exists a feedback process of the  economic regime on individual preferences. We exploit the  experiment of German separation and reunification to establish  exogeneity of the economic system. From 1945 to 1990, East  Germans lived under a Communist regime with heavy state  intervention and extensive redistribution. We find that, after  German reunification, East Germans are more in favor of  redistribution and state intervention than West Germans, even  after controlling for economic incentives. This effect is  especially strong for older cohorts, who lived under Communism  for a longer time period. We find that East Germans’ preferences  converge towards those of West Germans, and we calculate that it  will take one to two generations for preferences to converge completely.

American taxpayers spend nearly $100 million a year to fund the Congressional Research Service, a “think tank” that provides reports to members of Congress on a variety of topics relevant to current political events. Yet, these reports are not made available to the public in a way that they can be easily obtained. A project of the Center for Democracy & Technology, Open CRS provides citizens access to CRS Reports that are already in the public domain and encourages Congress to provide public access to all CRS Reports.

CRS Reports do not become public until a member of Congress releases the report. A number of libraries and non-profit organizations have sought to collect as many of the released reports as possible. Open CRS is a centralized utility that brings together these collections to search.

Unfortunately, there is no systematic way to obtain all CRS reports. Because of this, not all reports appear on the Open CRS web site. CDT believes that it would be far preferable for Congress to make available to the public all CRS Reports.

All of our students at CIDE should take a look at this nice article:

http://www.newyorker.com/printables/critics/051010crat_atlarge

GETTING IN
by MALCOLM GLADWELL
The social logic of Ivy League admissions

A few excerpts:

“In 1905, Harvard College adopted the College Entrance Examination Board tests as the principal basis for admission, which meant that virtually any academically gifted high-school senior who could afford a private college had a straightforward shot at attending. By 1908, the freshman class was seven per cent Jewish, nine per cent Catholic, and forty-five per cent from public schools, an astonishing transformation for a school that historically had been the preserve of the New England boarding-school complex known in the admissions world as St. Grottlesex.

As the sociologist Jerome Karabel writes in “The Chosen” (Houghton Mifflin; $28), his remarkable history of the admissions process at Harvard, Yale, and Princeton, that meritocratic spirit soon led to a crisis. The enrollment of Jews began to rise dramatically. By 1922, they made up more than a fifth of Harvard’s freshman class. The administration and alumni were up in arms. Jews were thought to be sickly and grasping, grade-grubbing and insular. They misplaced the sons of wealthy Wasp alumni, which did not bode well for fund-raising. (…)
The difficult part, however, was coming up with a way of keeping Jews out, because as a group they were academically superior to everyone else. Lowell’s first idea—a quota limiting Jews to fifteen per cent of the student body—was roundly criticized. Lowell tried restricting the number of scholarships given to Jewish students, and made an effort to bring in students from public schools in the West, where there were fewer Jews. Neither strategy worked. Finally, Lowell—and his counterparts at Yale and Princeton—realized that if a definition of merit based on academic prowess was leading to the wrong kind of student, the solution was to change the definition of merit.
(…)
In the wake of the Jewish crisis, Harvard, Yale, and Princeton chose to adopt what might be called the “best graduates” approach to admissions. France’s École Normale Supérieure, Japan’s University of Tokyo, and most of the world’s other élite schools define their task as looking for the best students—that is, the applicants who will have the greatest academic success during their time in college. The Ivy League schools justified their emphasis on character and personality, however, by arguing that they were searching for the students who would have the greatest success after college. They were looking for leaders, and leadership, the officials of the Ivy League believed, was not a simple matter of academic brilliance. “Should our goal be to select a student body with the highest possible proportions of high-ranking students, or should it be to select, within a reasonably high range of academic ability, a student body with a certain variety of talents, qualities, attitudes, and backgrounds?” Wilbur Bender asked. To him, the answer was obvious. If you let in only the brilliant, then you produced bookworms and bench scientists: you ended up as socially irrelevant as the University of Chicago (an institution Harvard officials looked upon and shuddered). “Above a reasonably good level of mental ability, above that indicated by a 550-600 level of S.A.T. score,” Bender went on, “the only thing that matters in terms of future impact on, or contribution to, society is the degree of personal inner force an individual has.
(…)
If you are sick and a hospital shuts its doors to you, you are harmed. But a selective school is not a hospital, and those it turns away are not sick. Élite schools, like any luxury brand, are an aesthetic experience—an exquisitely constructed fantasy of what it means to belong to an élite —and they have always been mindful of what must be done to maintain that experience.”

This year’s nobel prize in economics was awarded to Thomas Shelling and Robert Aumann. This is a very powerful pair of game theorists. Interestingly enough, you can see that a lot of Schelling’s most intriguing work is not very mathematical–although later on, other people provided mathy models of his ideas–and yet, he takes you from very reasonable premises to really counter-intuitive results. Aumamn’s work, on the other side, is very mathematically sophisticated… and yet, full of philosophical implications.

Which goes to show you that you can make valuable contributions in social science with or without mathematical sophistication… but you have to be just as smart as Schelling.

Marginal Revolution provides valuable info:

Thomas Schelling

But beware of other psychological heuristics:

Well-known:

• Anchoring and adjustment
• Availability heuristic
• Representativeness heuristic

Lesser-known:

• Affect heuristic
• Contagion heuristic
• Effort heuristic
• Familiarity heuristic
• Fluency heuristic
• Peak-end rule
• Recognition heuristic
• Scarcity heuristic
• Similarity heuristic
• Simulation heuristic
• Social proof
• Take-the-best heuristic

Via Brad DeLong, some words of wisdom (ok, sort of, depending on how though you are with the biases of the author of this op-ed) from Leszek Balcerowicz (of Poland’s central bank) on “the Polish escape route from Really Existing Socialism”:

The Wealth of Nations: [I]t is so important to analyze which policies work and which ones fail, to generate lasting convergence — and to bring poor countries out of poverty…. Communism, an extreme form of statism, went farthest to suppress markets and criminalize entrepreneurship. The opportunity costs of this organized folly were enormous: relative per-capita income in Poland, for example, declined from about 100% of that in Spain in 1950 to only 40% in 1990. And with the collapse of the communist system, a great natural experiment began. Looking at its results, one is struck by the huge differences among countries of the former Soviet bloc:

• In 2004, GDP had increased, relative to 1989, by 42% in Poland, 26% in Slovenia, and 20% in Slovakia and Hungary. In contrast, it declined by 57% in Moldova and 45% in Ukraine. If the shadow economy were included in the calculations, the differences in output would be smaller, but they would still be large.
• All transition economies have made considerable progress in lowering inflation, yet better long-run growth performance went hand in hand with lower inflation. This confirms that in countries that inherit high inflation, successful disinflation is conducive to long-term economic growth.
• Foreign direct investment usually follows past economic success and strengthens future economic success. Between 1989-2003, the Czech Republic attracted $3,700 per capita in FDI, Hungary $3,400, the three Baltic countries $1,000-$2,400 and Poland $1,300. FDI inflows per capita to Ukraine and Moldova were only $128 and $210, respectively.

Countries with better economic outcomes tend to achieve better non-economic results as well… energy efficiency… life expectancy… infant mortality….

In terms of GDP growth, it is tempting to look at differences in the initial conditions…. [D]ifferences in initial conditions, however, can explain only a part of the difference…. [D]ifferences in longer-run growth are largely due to more extensive market-oriented reforms and more successful macroeconomic stabilization….

Postcommunist countries that moved more toward a market economy achieved better economic (and non-economic) results than those that implemented fewer market-oriented reforms or none at all…. [N]o poor country has achieved lasting convergence under any of the statist or failed-state systems…. [T]he acceleration of growth does not have to wait until “good” institutions emerge… growth may accelerate during the reform process… [if] reforms increase output and productivity in previously repressed sectors (agriculture in China or the service sector in the Soviet system), or because the previous incentive structure encouraged massive waste (command socialism)….

The common features of the “miracle countries” include low tax-to-GDP ratios due to a lack of extensive welfare states. This tends to increase labor supply and promote private savings…. An extensive welfare state crowds out the voluntary forms of human solidarity, and — especially in poorer economies — can obstruct economic growth. This is a warning to those poorer economies which have now much higher public-spending-to-GDP ratios than Sweden, Germany or France did when they had similar income per capita….

Reforms are frequently announced, but not implemented, or they may be implemented initially but then reversed or seriously amended. In such cases, criticizing the failure of market reforms is misplaced. Market-oriented reforms may well fail — if they are incomplete in critical ways. One example would be introducing a fixed exchange rate regime without fiscal discipline. Argentina’s recent collapse reminds us that fiscally irresponsible politics may undermine the results of genuine market reforms. Market-oriented reforms may also fail to generate lasting convergence if some of their crucial elements are badly structured, e.g. a serious miscalculation of the initial level of a fixed exchange peg or a bad incentive structure in the bankruptcy law. None of these problems validate the search for a “Third Way” solution…. They are merely hurdles to be overcome on the path to a full-fledged market economy

Columbia se puso a contratar new faculty al mayoreo este año:

http://www.columbia.edu/cu/economics/

New Faculty 2005-2006
		Arriving From
Senior
Patrick Bolton (joint with Business School)		Princeton
Yeon-Koo Che		Wisconsin
Pierre-André Chiappori		Chicago
Janet Currie		UCLA
W. Bentley MacLeod (joint with SIPA)		USC
Bernard Salanié		Ecole Polytechnique
Edward Vytlacil		Stanford
Junior
Stefania Albanesi		Duke Fuqua Business School
Kate Ho		Harvard
Wolfram Schlenker (joint with SIPA)		UCSD

——————————————

Aquí está el chisme con más detalle:

Freakonomizing
To cash in on the hottest academic trend, Columbia bought in bulk.
Who They Hired
Columbia added seven renowned scholars to its economics department in just one year.
Who They Might Hire
The buying spree’s not over.
A Closer Look at Sunspot Theory
How it could rewrite the rules of recruiting.

This is Robert Frank on having his students look for interesting questions and stories and then write about them, like:

“Why do brides often spend thousands of dollars on wedding dresses they will never wear again, while grooms often rent cheap tuxedos, even though they will attend many formal social events in the future?”

(…) there is no better way to master an idea than to write about it. Although the human brain is remarkably flexible, learning theorists now recognize that it is far better able to absorb information in some forms than others. Thus, according to the psychologist Jerome Bruner, children “turn things into stories, and when they try to make sense of their life they use the storied version of their experience as the basis for further reflection.” He went on, “If they don’t catch something in a narrative structure, it doesn’t get remembered very well, and it doesn’t seem to be accessible for further kinds of mulling over.” Even well into adulthood, we find it easier to process information in narrative form than in more abstract forms like equations and graphs. Most effective of all are narratives that we construct ourselves.

The economic-naturalist writing assignment plays to this strength. Learning economics is like learning a language. Real progress in both cases comes only from speaking. The economic-naturalist papers induce students to search out interesting economic stories in the world around them. When they find one, their first impulse is to tell others about it. They are also quick to recount interesting economic stories they hear from classmates. And with each retelling, they become more fluent in the underlying ideas.

Many students struggle to come up with an interesting question for their first paper. But by the time the second paper comes due, the more common difficulty is choosing which of several interesting questions to pursue.

(…) Daniel Boorstin, the former librarian of Congress, used to rise at 5 each morning and write for two hours before going into the office. “I write to discover what I think,” he explained. “After all, the bars aren’t open that early.” Mr. Boorstin’s morning sessions were even more valuable than he realized. Writing not only clarifies what you already know; it is also an astonishingly effective way to learn something new.

I agree, a most good economics boils down to good story-telling–but you have to understand the underlying model, btw. Unfortunately, many economists focus more on the size of their toolbox than in the power of the stories they can tell with even the most basic tools.

These links come from Sandra Peart’s new blog: Adam Smith Lives!

• Searchable, extensive database of works in the History of Econ Ideas (ECONLIB)
• History of Economic Thought Website (New School)
• History Of Economics Society
• McMaster University Archive for the History of Economic Thought
• Summer Institute for the HET
• ANU – History of Economic Thought Society of Australia
• ECHE – European Conferences on the History of Economics
• JSHET – Japanese Society for HET
• The Economists’ Papers Project at Duke University
• Economists’ Portraits

Two (unrelated?) papers on institutional choice… one with an innovative
methodology, the other with a cool history lesson.

“The Choice of Institutions: The Role of Risk and Risk-Aversion”
DIANA WEINHOLD
University of London
PAUL J. ZAK
Claremont Graduate University
http://papers.ssrn.com/paper.taf?abstract_id=784765

ABSTRACT:
Institutions can affect individual behavior both via their efficiency impact
and via their risk reducing mechanisms. However there has been little study
of the relative importance of these two channels in how individuals choose
between simultaneously extant institutions. This paper presents a simple
model of institutional choice in a labor market when there is a risk/reward
trade-off, and tests the predictions of the theory. Using a novel empirical
approach that adapts an ARCH-in-mean to cross-sectional survey data from
China, we find that risk and risk aversion are strongly related to the
choice of a labor market institution. Further, risk and risk aversion are
quantitatively more important than the sectoral wage differential in
explaining employment institution choices. Specifically, we find that wage
risk has two orders of magnitude greater impact on labor market
institutional choice than the wage difference, with a one standard deviation
increase in earnings risk reducing the number of workers choosing jobs in
the private (risky) sector by 22%.

JEL Classification: P3, J21, J40

“‘Rulers Ruled By Women’ An Economic Analysis of the Rise and Fall of
Women’s Rights in Ancient Sparta”
ROBERT K. FLECK
Montana State University – Bozeman
F. ANDREW HANSSEN
Montana State University – Bozeman
http://papers.ssrn.com/paper.taf?abstract_id=788106

ABSTRACT:
Throughout most of history, women as a class have possessed relatively few
formal rights. The women of ancient Sparta were a striking exception.
Although they could not vote, Spartan women reportedly owned 40 percent of
Sparta’s agricultural land and enjoyed other rights that were equally
extraordinary. We offer a simple economic explanation for the Spartan
anomaly. The defining moment for Sparta was its conquest of a neighboring
land and people, which fundamentally changed the marginal products of
Spartan men’s and Spartan women’s labor. To exploit the potential gains from
a reallocation of labor – specifically, to provide the appropriate
incentives and the proper human capital formation – men granted women
property (and other) rights. Consistent with our explanation for the rise of
women’s rights, when Sparta lost the conquered land several centuries later,
the rights for women disappeared. Two conclusions emerge that may help
explain why women’s rights have been so rare for most of history. First, in
contrast to the rest of the world, the optimal (from the men’s perspective)
division of labor among Spartans involved women in work that was not easily
monitored by men. Second, the rights held by Spartan women may have been
part of an unstable equilibrium, which contained the seeds of its own
destruction.

JEL Classification: D23, D70, J16, J20, K11, N33, N43

This is Pete Boettke on the incoming class to my Ph.D. program at GMU:

“Our students are unusual for PhD students and many of them are more likely
to be weighing a PhD in another discipline rather than another economics
department when making their decision.”

In my case, that was true–during my first year I considered switching to Political Science in Rochester, of all places. And these are words of wisdom:

“For those entering the PhD program with the hope of pursuing an academic career, they need to start thinking about research papers right now. For students coming from an out of sync [that is, non-mainstream] department such as GMU the most important signal they can send is with published papers in refereed journals, and in particular published papers in mainstream journals. Failure to do so will result in a frustrating job search. I have been telling graduate students for a decade that the formula for success is:

PhD in hand + refereed publication(s) + strong teaching evaluations = tenure track job

The other factor in this equation is the ‘lunch tax’ that the individual represents. The more difficult the person is to take as a personality, the stronger publications they will have to have in order to signal that they are worth it.”

Did I land my first job with a publication in hand? No. And I don’t have my Ph.D. yet either, which tells you how lucky I was when CIDE bought my services–I guess I must have a big “lunch subsidy” somewhere :-). More seriously, notice the direction of causality: If you have all those observable ingredients, a good job is secured–if not, your job prospects are less certain and cling on other unobservable factors.

Bottomline: Make whatever you need so that your skills and potentials are observable.