Friday 26th of November

This week, Anne will present Does the quest for randomization make us lose sight of interesting research questions?

Does the quest for randomization make us lose sight of interesting research questions?

Randomized control trials are often criticized for low external validity, identifying only point estimates for a heterogeneous population, and not allowing us to understand the mechanisms underlying the effect of an intervention. Another concern, less often discussed, is the fact that the quest for randomization also puts restrictions on the questions that we can answer. Conducting an RCT requires a set of well-defined, measurable outcome indicators. This has made research on health and education particularly popular among development economists. Other interesting topics, such as political accountability or the access to justice, are less suitable for randomization, as outcomes in theses fields are more difficult to measure. As RCTs are conducted in real life time, they also prevent us from answering questions about the long-term change of cultural values, or the inter-generational transmission of ideas. Given that an RCT is a large investment in time and resources, randomistas are also unlikely to experiment with interventions whose effect is uncertain. At the same time, the “new generation RCTs” now use more and more sophisticated outcome indicators and are designed to disentangle different impact channels and understand their interaction (see links below for examples).

Some of the questions we can discuss tonight are “Does the quest for randomization prevent us from answering the most interesting research questions?” “Or does randomization instead guide us to the most interesting questions, as it forces us to think about interventions with strong potential for impact?” “Is randomization in this sense any different from other empirical methods, where the availability of data and the existence of an identification strategy also restrict the questions that can be answered?” “How can we ensure that the methodological concerns do not prevent us from answering the most interesting research questions?”

http://www.annualreviews.org/doi/full/10.1146/annurev.polisci.12.060107.155922

http://aidwatchers.com/2009/07/development-experiments-ethical-feasible-useful/

http://aidwatchers.com/2010/07/is-impact-measurement-a-dead-end/

Friday 19th November

This week, Patrick will present "Should firms be allowed to vote?"

Corporate legal personality seems to have emerged to enable contracting

by firms, and to limit the problems created by personal limited

liability of the owners and of the workers.

But this may have perverse effects.

In January 2010, corporate legal personality has disturbingly led in the

US to invasion of the political sphere by corporations, the free speech

of which is now protected as that of "persons" (under the First

Amendment of the American constitution). (Citizens United vs. Federal

Election Commission) It means corporations are now free to sponsor

advertisements endorsing specific campaign candidates, by ruling of the

Supreme Court. But why stop there? If they are recognized as legal

persons, corporations should also be allowed to vote.

Is this the flip of the coin to excessive limited liability?

To make the case worse, one could argue that limited liability has

largely shifted the risk-bearing of entrepreneurship on owners (vs.

workers) at the corporate level, and it has shifted risk-bearing on

society (vs. owners) at a wider level, resulting in uncontrolled moral

hazard.

So have we gone too far with corporate legal personality, or should we

take it all the way and grant firms the right to vote? Or should limited

liability be relaxed?

Some readings:

* http://www.guardian.co.uk/world/2010/jan/21/citizens-united-supreme-court-ruling

* http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission

* Section 4.3 of Laffont-Martimort

Friday 12th November

This week, Kara will present “You’re not the boss of me!”: How do we allocate rights between parents, children, and the state?

The relationship between parent and child is often fraught with conflicts of interest, preference and obligation. For reasons both practical and philosophical, society gives many decision rights to parents regarding their children’s education, health, and social environment, among others. When the interests of the parents and the child conflict, what criteria should we use in allocating decision rights? What is the appropriate role of the state in mediating that conflict of interest? Furthermore, the state is often not an uninterested party in matters concerning children’s upbringing. To use a gratuitous military metaphor, when the battleground for the fight between social welfare and individual liberty is a child, what should be the rules of engagement?

Some interesting issues:

Naming (e.g. the brothers named Winner and Loser)

Education (compulsory attendance, homeschooling)

Health (right to refuse treatment, notification requirements)

Removal (Type I vs. Type II errors)

A few articles just to get you thinking:

Naming: http://news.bbc.co.uk/1/hi/magazine/6939112.stm

Health: http://articles.cnn.com/2009-05-26/us/minnesota.forced.chemo_1_chemotherapy-alternative-medicine-daniel-hauser?_s=PM:US

Removal: http://news.bbc.co.uk/panorama/hi/front_page/newsid_8928000/8928337.stm

Friday 5th November:

This week, Tara will present Should the state subsidise the production and consumption of art?

“The public is wonderfully tolerant. It forgives everything except genius.” - Oscar Wilde

“The history of modern art is also the history of the progressive loss of art's audience. Art has increasingly become the concern of the artist and the bafflement of the public.” - Paul Gauguin

Art is given a special place in many societies. In addition to providing enjoyment to consumers of art, it is often considered to play an important role in challenging norms and provoking thought among the general public. But does this mean that it should be subsidised by the state? Why should markets not decide the value of art and reward artists accordingly? Who gets to decide what qualifies as ‘art’ and how much value it gives to society?

There are a number of ways in which the state chooses to subsidise art. In 1969, Ireland introduced a law which made artists exempt from paying tax. In 2006, the government made what we like to call the ‘U2 amendment’, which put a cap on the exemption at 250,000 euro, but any earnings under that amount that come from ‘creative’ work are free from taxation. The arguments behind this are as follows:
• Art brings prestige to the country.
• Art generates income in other industries such as tourism.
• Artists’ incomes are highly variable and so income in one good year may be needed to survive a number of bad years.
• Often, art is not fully appreciated at the time in which it is created.
• This policy is a signal that Ireland holds artists in high regard.

The consumption of art is also often subsidized. In the UK and Ireland, entry into many museums is free. What is the justification for this? Does it make sense? Does it increase art consumption among the general public or does it just reduce the cost for art lovers? Also, the public pay a TV licence so that public TV and radio stations don’t have to rely on revenue from advertisements. This means that they don’t have to compete with other stations for viewers and can show ‘better’ and more educational programs. Does this assume that the general public don’t know what is good for them and therefore it shouldn’t be left to market forces to decide what TV shows should be broadcast?

What makes art different from other sectors? Are some forms of art more valuable to society than others? Are there externalities to the consumption of art? Or by subsidising art are we insulting the intelligence of the general public by assuming that they are not capable of judging the true value of art?

Friday 29th October: Too Many Immigrants?

This week Oliver will present Too many immigrants? Immigration policies in times of economic crisis.

Despite some convergence on income levels across countries, the gap between rich and poor remains wide. This incentivises people in developing countries to look for better opportunities in developed countries. But in times of economic crises, restricting immigration becomes a widespread popular demand in developed countries like the UK and the US. What should be the immigration policy for developed countries both in the long run and in times of economic crises?

· Should countries like the US persist on current policies despite the huge amount of illegal immigration?

· What should be done with illegal immigrants?

· Should they be rewarded with amnesties even though they broke the law?

· Should their presence be tolerated, even though they free ride on welfare state?

· What about their children (14th Amendment)?

· Should immigration caps be implemented, as proposed by the current UK government?

· Or should we implement new radical policies, like the one suggested by Gary Becker: Except obvious exceptions, anyone who pays say $50.000, should be allowed in

· What if the increasing immigration leads to a undesirable shift of values in developed societies?

· Should illegal as opposed to legal immigration be encouraged, as suggested by some libertarian economists?

Some background links:

Gary Becker's proposal: http://www.vimeo.com/12809147

Samuel Hunington's controversial essay: http://www.foreignpolicy.com/articles/2004/03/01/the_hispanic_challenge

Pritchett and Clemens argue for immigration as development aid: http://www.cgdev.org/content/publications/detail/15552/

Friday 22nd October: Fighting Fees

Last Tuesday the Independent Review of Higher Education and Student Finance led by Lord Browne of Madingley recommended removing the £3,290pa cap on UK student fees. The prospect of unlimited fees has lead to student protests, including at the LSE (see image attached). But do they have anything to complain about? Any UK student who is admitted to a UK higher education institution will have their fees paid upfront by the government, and repay the loan at a fixed percentage of earnings once they are working and earning over £21,000, with breaks in repayments for those whose earnings fall below threshold. Those who don’t manage to pay off their loan after 30 years will have the rest of their loan written off.

The private benefits of higher education in the UK are over 50% higher than the public benefits – a figure which is higher than for other OECD countries – though private returns are still higher in most OECD countries. So why do only Korea, Japan, New Zealand, Australia and Canada charge fees over $2,000?

What are the implications for equity of these proposals, and for access to the most selective higher education institutions? Are students able to make accurate decisions about the returns to higher education, and is this ability to discern returns and discriminate between universities heterogeneous across student groups? In the UK, since the introduction of higher fees (and more bursaries for poorer students) in 2006, access to higher education as a whole amongst those from the poorest in society has risen, but yet the proportion of students from lower income families attending the top third of universities has remained flat since the 1990s. On the other hand, is it equitable for students at the most and least selective universities to be paying the same fee of £3,290, as is currently the case?

Will these proposals, as promised, allow Universities to access levels of funding that will allow them to compete internationally, particularly with US schools? Or do the proposals simply shift the burden of paying for higher education from the taxpayer to the students, whilst in the wake of the Comprehensive Spending Review universities struggle to retain current levels of spending per student at levels of fees that students will accept?

Suggested readings

A brief summary: The Guardian Q&A on the Browne Recommendations: http://www.guardian.co.uk/education/2010/oct/12/tuition-fees-questions-and-answers

Implications of the market for fees: From the BBC http://www.bbc.co.uk/news/education-11520958

Some economic analysis: IFS briefing on Browne Review Recommendations: http://www.ifs.org.uk/pr/browne_review.pdf

Widening participation at the most selective institutions: http://www.offa.org.uk/press-releases/director-of-fair-access-sets-out-way-forward-for-widening-access-to-highly-selective-universities/

Link to the Comprehensive Spending Review: http://www.independent.co.uk/news/education/education-news/universities-face-cuts-of-1634bn-leaked-memo-says-2108195.html

Longer reports:

1) The Browne Review: http://www.bis.gov.uk/assets/biscore/corporate/docs/s/10-1208-securing-sustainable-higher-education-browne-report.pdf (there is an executive summary included in it, but to be honest, it’s pretty idiotic – just a statement of good things about the recommendations without any analysis

2) For international comparisons: OECD Education Indicators, September 2010: http://www.oecd.org/dataoecd/45/39/45926093.pdf