Andrew Leigh

My group - the Research School of Social Sciences at ANU - has a handful of PhD scholarships on offer. Details below.

The Research School of Social Science has a number of PhD scholarships available which must be taken up by the end of August 2008. The scholarships are available to Australian citizens, Australian permanent residents and New Zealand citizens. The value of the stipend is $20,00 per annum for 3 years, subject to satisfactory progress.

Scholarships are offered in the areas: -

Economics
History
Political Science
Philosophy
Sociology

Interested economics applicants should contact Alison Booth. For the other four disciplines, applicants should send a CV and a two page outline of their research to Professor David Marsh, Director, RSSS, CASS

I’m in Stockholm this week, visiting the Research Institute of Industrial Economics (IFN), as the guest of Daniel Waldenstrom. The main purpose of the visit is a workshop on inequality - something Swedes don’t have much of, but seem very keen to talk about. At the same time, I hope to find out how Daniel manages to get a CV like this while working 14 hours a week (he’s been on paternity leave since Aug 2006).

This is my first visit to Sweden, and my first trip to Scandinavia travelling with a child. Sweden’s child-friendliness is much-touted, but seeing it up close really makes a strong impression. Many of the parks have sandpits, complete with plastic shovels and buckets (not attached by strings, yet unstolen - puzzling…). On weekends, adults can take up to 6 children (aged <18) on the metro while paying for only one ticket. And every cafe seems to have half a dozen high-chairs available (Ikea, natch). Sweden’s taxes and prices are famously high, but strolling Stockholm, you’re not left in any doubt where the money goes.

As we draw near to budget time, there has been plenty of talk about what “middle Australia” will get. But where exactly is the middle? To provide a more precise sense, I’ve tabulated the pre-tax annual income distributions for individuals and households, in the 2008-09 tax year. My raw data is the 2006 HILDA survey, which was roughly coincident with the 2006-07 tax year. Those numbers are then inflated by 8%, which is roughly what the budget papers suggest nominal wage growth has been over the past two years.

Households
 1%        $10,389              
 5%        $18,036             
10%        $25,920             
25%        $46,252             
50%        $80,826                
75%       $122,040        
90%       $172,152        
95%       $217,555        
99%       $388,368        
Mean: $95,542

Individuals
1% $0
5% $0
10% $0
25% $1,620
50% $19,440
75% $48,600
90% $75,686
95% $97,416
99% $175,532
Mean: $32,337

In other words, half the households in Australia have a pre-tax income of less than $80,826, while 35% of households and 5% of individuals have pre-tax incomes over $100,000.

It goes without saying that there is plenty of exploitation in the people-smuggling business. But it’s wrong to think that the smuggler has all the power. A new paper looking at migrants smuggled from Afghanistan and Pakistan to the UK finds arrangements that mirror what large companies in developed countries often do: if you don’t trust the party on the other side of the transaction, put the money in escrow until the deal is done.

Why Migrant Smuggling Pays
Khalid Koser
International Migration
Drawing on empirical research in Afghanistan and Pakistan, this article ‘follows the money’ for 50 migrants smuggled to the UK, to cast light on the financing of smuggling. The means used to raise the money to pay smugglers ranged from drawing on savings to selling property, land and jewellery. Payments were made to a third-party, who did not release the payment to the smuggler until migrants had arrived in their destination - effectively a ‘money-back guarantee’ on smuggling. Smugglers disbursed about half of their fee to forgers, procurers of passports, airport officials and other intermediaries required to facilitate smuggling. Most migrants quickly found work in their destination and started remitting soon after their arrival. On average remittances were at a sufficient level to repay the initial outlay on smugglers’ fees after two years, and thereafter remittances on average more than doubled household incomes at home. In this case study, smuggling therefore paid for the range of intermediaries involved in facilitating it, for migrants themselves, and for migrants’ households at home.

(HT: Yuji Tamura. I can’t find a non-gated version - apologies.)

I popped into the ABC studios on my ride to work today to do a pre-record with Life Matters this morning on why the Baby Bonus is bad policy and should be scrapped. Cycling into work afterwards, a thought occurred to me. There are approximately a quarter of a million babies born in Australia each year, and approximately a quarter of a million teachers. If we accept that the Baby Bonus should be scrapped, and that teacher salaries have declined in recent decades (some of my own evidence here), then scrapping the Baby Bonus would give us about $5000 per teacher per year to spend on teacher pay (I’m ignoring complications like the mooted policy change, and the fact that one-third of teachers are employed in private schools). So in theory, we could:

(a) Raise all teachers’ salaries by $5000

(b) Raise salaries for the best 20% of teachers by $25,000

(c) Raise salaries for the best 10% of teachers by $50,000

In other words, option (c) would give us a substantial group teachers on six-figure salaries. Good public policy would of course ensure that those teachers taught in the most disadvantaged schools.

My own preference would be a small-scale randomised trial of (a), (b) and (c), putting the claims of the critics and proponents of merit pay to the test. (For a discussion on how you might determine “best”, type “fair merit pay” into the search box on the right.)

In my view, any of the three options would be an improvement on the status quo.

My opinion piece today is on the multifarious uses for income contingent loans. Full text over the fold.

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…comes from Paul Collier, commenting on a Martin Wolf column about the food crisis in the FT. There’s this:

The best solution to a problem is often not closely related to its cause (a proposition that that might be recognized in the climate change debate). China’s long march to prosperity is something to celebrate. The remedy to high food prices is to increase food supply, something that is entirely feasible. The most realistic way to raise global supply is to replicate the Brazilian model of large, technologically sophisticated agro-companies supplying for the world market. To give one remarkable example, the time between harvesting one crop and planting the next, in effect the downtime for land, has been reduced an astounding thirty minutes. There are still many areas of the world that have good land which could be used far more productively if it was properly managed by large companies. For example, almost 90% of Mozambique’s land, an enormous area, is idle.

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My father flew with budget carrier Tiger Airways from Canberra to Melbourne yesterday, and had the exciting experience of having part of his window fall out. Fortunately, it was the rim of the inner casing of the window, rather than the outside part. As he puts it:

The inner plastic moulding that clips around the window just dropped down to the floor. I tried to push it back into place, and noticed that it had previously been sticky taped into place by tiger mechanics. Staff were quite nonchalant, just picked it up and put it in with the cabin baggage. Guess that their new A320’s must have had a few bumpy landings that shook things loose.

My colleagues up the road are looking for an economics lecturer. Details over the fold.

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With my colleagues Chikako Yamauchi and Xin Meng, and thanks to the generous support of AusAID, I’m co-organising an ANU conference on New Techniques in Development Economics on 19-20 June. We have a bevvy of international speakers, and the discussion should be relevant for anyone working on improving our foreign aid programs.

Better policy evaluation also matters for people who are only interested in domestic issues. I was chuffed to see the PM’s injunction last week (”In fostering a culture of policy innovation, we should trial new approaches and policy options through small-scale pilot studies.”). In that spirit, we have papers on the program that are relevant to policymakers in Treasury, Indigenous Affairs, Education, Health, and Immigration. 

Here are a few of the presentations:

• Paul Gertler - Empowering Women: How Mexico’s Conditional Cash Transfer Program Raised Prenatal Care Quality and Birth Weight
• Leigh Linden - Conditional Transfers in Education: Design Features, Peer and Sibling Effects - Evidence from a Randomized Experiment in Columbia 
• Steven Stillman - The Impacts of International Migration on Remaining Household Members: Omnibus Results from a Migration Lottery Program
• Dean Karlan - Put Your Money Where Your Butt Is: A Commitment Savings Account for Smoking Cessation
• The Economics, Ethics and Politics of Randomised Policy Trials - Roundtable discussion

The full program is here. Oh, and did I mention that registration is free?

Adrian Wong has asked me to remind people about the RBA Essay Competition, open to all economics students presently studying at Australian universities. This year’s topic:

Housing Costs and Affordability in Australia

Housing is an important component of household expenditure and household balance sheets. Essays should discuss:

a) how housing costs and affordability have changed in Australia over the past two decades, and the factors that have contributed to these changes; and

(b) whether there is a role for government in improving housing affordability and if so, which policies you would recommend. Take care to explain the efficiency and equity implications of any policies you identify.

Entries close 22 August 2008. First prize is $1500, or 21% of the value of the First Homeowner’s Grant.

According to today’s press, the Baby Bonus is about to be means-tested:

But yesterday Mr Rudd began the speculation the baby bonus and other forms of so-called middle-class welfare would be means-tested in the budget.

“I say people at the upper end of the income spectrum don’t actually need direct support from the government, much,” he told radio 3AW.

The bonus is worth $4187 per child* and is scheduled to rise to $5000 on July 1.

As I’ve argued before, the Baby Bonus is bad policy and should be scrapped. Still, means-testing it would be a step forward. But there’s one important thing to bear in mind - any change to the Bonus should come into effect on the day it’s announced, and not on July 1. We already have an incentive for eligible parents to shift births from June to July. The last thing we need is another incentive for affluent parents to shift births back from July to June. If that occurs, then here’s the kind of thing we can expect.

With the alcopops tax, the federal government has demonstrated that it can change policy immediately when it sees the potential for people to game the system. The same should happen with any changes to the Baby Bonus.

* Not that it matters much, but the Baby Bonus is actually worth $4258 at present.

At 39, Dalton Conley is the chair of the New York University department of sociology. He’s also one of my favourite sociologists, having written about race, class, health, and biology. His work ranges across lived experience (including Honky, a superbly written book about race in America). But Dalton also uses natural experiment techniques much beloved of economists. His latest paper gives a sense of how close the work of many US economists and sociologists has become.

Bribery or Just Desserts? Evidence on the Influence of Congressional Voting Patterns on PAC Contributions from Exogenous Variation in the Sex Mix of Legislator Offspring
by Dalton Conley, Brian J. McCabe
Evidence on the relationship between political contributions and legislators’ voting behavior is marred by concerns about endogeneity in the estimation process. Using a legislator’s offspring sex mix as an exogenous variable, we employ a two-stage least squares estimation procedure to predict the effect of voting behavior on political contributions. Following previous research, we find that a legislator’s proportion daughters has a significant effect on voting behavior for women’s issues, as measured by score in the “Congressional Record on Choice” issued by NARAL Pro-Choice America. In the second stage, we make a unique contribution by demonstrating a significant impact of exogenous voting behavior on PAC contributions, lending credibility to the hypothesis that Political Action Committees respond to legislators’ voting patterns by “rewarding” political candidates that vote in line with the positions of the PAC, rather than affecting or “bribing” those same votes — at least in this high profile policy domain.

I’ve recently completed two chapters for a forthcoming Oxford University Press Handbook on Economic Inequality. They’re rather long, but anyone who’s interested in a survey of the literature on top incomes, or health and inequality (coauthored with Christopher Jencks and Tim Smeeding), may be interested in them.

According to ABC news, Australia is to get another thinktank, with the Commonwealth and Victorian governments announcing the establishment of the University of Melbourne-based Australian Institute for Public Policy. More players in the ideas space must be a good thing, but with the recent establishment of the Lowy Institute and Per Capita (not to mention smaller outfits like the Eidos Institute and the Centre for Policy Development), it’s going to be harder for the AIPP to find a niche than would have been the case five years ago. A quote from John Brumby suggests that he would like to see something like the Lowy Institute on Collins Street. Here’s Lowy’s mandate:

The Lowy Institute is an independent international policy think tank based in Sydney. Its objective is to generate new ideas and dialogue on international developments and Australia’s role in the world. Its mandate is broad. It ranges across all the dimensions of international policy debate in Australia - economic, political and strategic – and it is not limited to a particular geographic region.

And here’s John Brumby’s vision:

“This new think-tank will be non-partisan, it’ll be broadly based. It’ll look at all of the big issues of our times, things like energy policy, things like climate change, things like Australia’s role in the region,” he said.

My own view is that this is the wrong space for AIPP to be occupying - they’d do better to carve out a domestic policy niche, looking at urban policy, crime policy, health policy, schools policy, innovation policy, IT policy, etc.

Last week, I wrote up the 2020 summit idea of providing a HECS discount in exchange for volunteering in a disadvantaged community. In today’s Higher Ed section of the Australian, Andrew Darbyshire claims credit for the notion. I don’t doubt that his idea was original, but I’m not so sure it was the first. The AmeriCorps program (which sounds a lot like the Australian proposals) was created by President Clinton in 1993. Since at least 2002, people have been suggesting that Australia might adopt it.

In his column today, Canberra Times journalist Peter Martin draws attention (with a HT to the SMH’s Jessica Irvine) to the soon-to-be-announced government’s first home saver accounts. Here’s how they work.

The redesigned scheme, due to come into effect on July 1, works like this: Every dollar that first home savers put into an account - up to a maximum of $5,000 - will be matched by a government contribution of 15 cents.

Except for Australians earning more than $80,000 per annum. They will get a government co-contribution of 25 cents for every dollar they invest. Really. …

Unless they earn more than $180,000 per annum in which case they will be blessed with a government contribution of 30 cents per dollar they invest.

That’s right.

The Labor government has come up with a scheme that would grant Lauchlan Murdoch – the richest young person at last week’s 2020 Summit – twice as much as the ACT’s Sid Chakrabarti, one of the poorest.

Wayne Swan’s announcement, in February this year, included a table to make the disparity clear. It says that a low to middle income earner putting aside $5,000 each year would get $750 from the government; a high income earner $1,500.

I’ve long argued that the government would do well to take the axe to much of the middle-class welfare that grew up during the Howard years. If I had my way, I’d happily scrap the Baby Bonus, First Homeowners’s Grant, and Private Healthcare Rebate for dental expenses.* But even if that’s political unfeasible, let’s not put in place upper-class welfare programs.

* While we’re in the world of “I’d like a pony, please”, let’s put the GST on food, and compensate low-income earners through a refundable tax offset.

Harry Clarke, the only economist in the country who consistently blogs on drugs (sorry Harry, couldn’t resist) posts on Australian drug use trends. It’s a fascinating read. Frankly, I’m a little surprised that usage of most drugs seems to be falling. Despite rising incomes and (in most cases) declining drug prices, consumption is falling. Perhaps those information/scare campaigns actually work after all?

[I suggested in an earlier draft of this post that we should credit law enforcement; but as commenter Andrew pointed out, this isn’t consistent with falling prices.]

Economics RSSS will be hosting our first video seminar tomorrow (Tue 29th), featuring John Quiggin. It will take place in the Baume Theatre in ANU’s Peter Baume Building, from 1-2pm. Frustratingly, the seminar clashes with a prior engagement of mine (I’m speaking at the Melbourne Institute’s quarterly luncheon in the Hyatt), but you are encouraged to attend if you would like to see (a) Quiggin, and/or (b) your first videoseminar. John’s topic is “Discounting and Intergenerational Equity”.

Like John, I have high hopes for this technology helping to reduce the time cost and environmental impact of academic travel. We’ll never eliminate face-to-face conferences (nor would we want to). But I could easily imagine that in five years’ time, half our seminar presentations might be via videoconference, many of those by overseas presenters.

Update: JQ posts on the experience, and puts up his slides.

My economics group - in the Research School of Social Sciences at the Australian National University - is seeking PhD students. Here’s a one-page flyer, and a more detailed document about our program.

My co-author Bruce Chapman has substantial administrative responsibilities, which are invariably urgent, and therefore tend to crowd out research. Our paper requires some relatively minor edits before going out to a journal, and the necessary changes are up his alley. So he emails me the following request:

Impose on me a strict deadline in the very short run to do the revision, and somehow manage to publicly humiliate me if I don’t make it.

Bruce, I expect the changes by Friday. Compliance will be monitored via the blog.

Update 1: Joshua Gans doesn’t think my proposed punishment is sufficient, so helpfully weighs in with a few veiled threats of his own.

Update 2: Bruce made the deadline with hours to spare.

My friend and coauthor Joshua Gans has two blogs. When he’s not blogging about new innovations in economics on Core Econ, he’s offering new insights on parenting at Game Theorist (which has led to a book, Parentonomics, forthcoming in August 2008).

One of my favourite of Joshua’s parenting suggestions is this one:

A few years ago, while trying to teach my then 3 year-old daughter some mathematics, I hopped on a similar Why Not? moment in reversal. She had always been pretty quick with numbers and could easily count to 20 and beyond. So I set about teaching her how to add. Now the way to do this is to make liberal use of fingers. This is all very well when the numbers you are adding are less than 10 but is a problem after that. Then it requires breaking up the problem; a conceptual advance that is pretty daunting for a child. Of course, you could move on to toes as my son is want to do but that involves taking off shoes.

So I thought, stuff this! How about we start with subtraction first? The idea there was that you could take any number up to ten and subtract any smaller number and still not exhaust your finger options. That dramatically opened up the possibilities and, what is more, I noticed how damn easy it was for a child. They were used to having and then not having and seeing what was left. It was a natural part of their day. When they eat, the food on the plate shrinks. When they paint, the clear bits of the canvas get smaller. Subtraction was a far more natural part of everyday life for children.

But how would we know if Joshua’s observations are applicable only to his children; or if they would benefit all children? A new article in Science suggests one way we could test the competing theories. Here’s the NYT writeup:

[M]any educators in recent years have incorporated more and more examples from the real world to teach abstract concepts. The idea is that making math more relevant makes it easier to learn.

That idea may be wrong, if researchers at Ohio State University are correct. An experiment by the researchers suggests that it might be better to let the apples, oranges and locomotives stay in the real world and, in the classroom, to focus on abstract equations …

“The motivation behind this research was to examine a very widespread belief about the teaching of mathematics, namely that teaching students multiple concrete examples will benefit learning,” said Jennifer A. Kaminski, a research scientist at the Center for Cognitive Science at Ohio State. “It was really just that, a belief.”

Dr. Kaminski and her colleagues Vladimir M. Sloutsky and Andrew F. Heckler did something relatively rare in education research: they performed a randomized, controlled experiment. Their results appear in Friday’s issue of the journal Science.

The advantage of this approach is that it used a gold-standard evaluation approach (a randomised trial). The disadvantage is that although the main policy question is about how best to teach school students, the experiment was based on university students. Clearly if we’re going to test Joshua’s theory, we would need to try it on younger children. But the experiment need not last years - a few months would be enough. For my own part, I would be quite happy to have my own son as part of the experiment, knowing that he would be randomised to either the treatment group (learning subtraction then addition) or the control group (learning addition then subtraction).

I’ve spent the last couple of days at the Australasian Labour Econometrics Workshop, which I co-organised with my ANU colleague Bob Breunig. Here’s the program, if anyone is interested. We don’t have the papers up on a website, but you can email authors and see if they’ll share drafts with you (my paper is still under wraps, but will be out in the next couple of months).

Passing from one blogger to another, LEW 2009 will be held in April next year at the Queensland University of Technology, in the capable hands of Paul Frijters. If you’re a policy wonk or labour economist who would like to be on the email list, drop me a line at andrew.leigh asperand anu.edu.au.

Marianne Bertrand, Rema Hanna, Sendhil Mullainathan present new evidence on the impact of affirmative action in university admissions - this time not from racial AA in the US, but caste AA in India. They find a neat equity-efficiency tradeoff, illustrating the political complexity of such programs.

Affirmative Action in Education: Evidence From Engineering College Admissions in India
by Marianne Bertrand, Rema Hanna, Sendhil Mullainathan
Many countries mandate affirmative action in university admissions for traditionally disadvantaged groups. Little is known about either the efficacy or costs of these programs. This paper examines affirmative action in engineering colleges in India for “lower-caste” groups. We find that it successfully targets the financially disadvantaged: the marginal upper-caste applicant comes from a more advantaged background than the marginal lower-caste applicant who displaces him. Despite much lower entrance exam scores, the marginal lower-caste entrant does benefit: we find a strong, positive economic return to admission. These findings contradict common arguments against affirmative action: that it is only relevant for richer lower-caste members, or that those who are admitted are too unprepared to benefit from the education. However, these benefits come at a cost. Our point estimates suggest that the marginal upper-caste entrant enjoys nearly twice the earnings level gain as the marginal lower-caste entrant. This finding illustrates the program’s redistributive nature: it benefits the poor, but costs resources in absolute terms. One reason for this lower level gain is that a smaller fraction of lower-caste admits end up employed in engineering or advanced technical jobs. Finally, we find no evidence that the marginal upper-caste applicant who is rejected due to the policy ends up with more negative attitudes towards lower castes or towards affirmative action programs. On the other hand, there is some weak evidence that the marginal lower-caste admits become stronger supporters of affirmative action programs.

One of my backburner projects is to look at the impact of affirmative action for Indigenous students at Australian universities. Watch this space.

Writing today in Eureka Street, Daniel Donahoo makes a key point about the difference between universal and targeted early childhood intervention. Key quote:

At the centre of the discussion is the name Dr James Heckman. Heckman was the Nobel Laureate for Economics in 2000. His work extends across human capital and productivity. He is interested in lifelong learning and this led him to research early childhood development.

It is his research into investment into early childhood development that has produced the paraphrase, ‘for every dollar invested into the early years of a child’s life, we save up to ‘x’ dollars in the long run’.

This is one of the most misunderstood and misused quotes I have come across in my time as a researcher. It is littered through the ALP’s child and family policy documents. It is used by a vast number of early childhood professionals and advocates and used as a sound byte regularly by the media.

But it is being used incorrectly. No one appears to recognise the context in which Heckman made that statement.

The claim is based on an intensive research project and longitudinal studies from the United States. These studies, such as the Perry School Study, take young disadvantaged children and put them in early childhood development programs run by tertiary educated professionals at low child-teacher ratios for up to 40 hours a week until they start school.

The studies demonstrated that children in the intensive early childhood programs had substantially improved their opportunities and outcomes in later life. They were less likely to commit crime, more likely to finish high school, would earn more and so on.

In fact, for each dollar invested in those children, Heckman has established the government saves seven to nine dollars by the time they reach adulthood. In the Perry School Study, most of these returns came from reduced crime — a factor that won’t apply to middle class Australian children.

Heckman’s research targets children living in significant disadvantage. As a result, his conclusions are only relevant for children in similar target groups.

Even recently, in his 2007 paper titled ‘The Productivity Argument for Investing in Young Children’, Heckman and co-author Dimitriy V. Masterov conclude that while the research highlights a need for greater investment in disadvantaged children, ‘none of this evidence supports universal preschool programs’.

[Emphasis added.]

 On the same theme, see this policy report by Sara Mead, and an oped of mine in the AFR.

My economics group (the Economics Program in the Research School of Social Sciences at the ANU) has a story up on the website this week, on the share of professors who are women. The good news is that the answer is 3/7 (43%), which is higher than any other economics group in Australia. The bad news is that even the most feminised economics group in the country has more men than women.

(Note: I don’t have a stable URL for this, so the story will probably be gone by early-May.)

My AFR oped today is on the 2020 summit. Full text below (and remember - contributors don’t write their own headlines).

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I just recovered a dozen non-spam comments from Akismet. Apologies to those whose comments were caught, and thanks to Matt C for alerting me to the problem. If it recurs, please drop me an email.

The latest issue of the Journal of the American Medical Association (JAMA) carries some extraordinary stories of drug companies writing research papers, and then offering to add academics as coauthors - without requiring the academics to do any work on the articles. From the editorial:

The study by Ross et al illustrates that clinical trial articles and review articles related to rofecoxib frequently were written by unacknowledged authors who were employees of for-profit information industries, and often attributed first (or primary) authorship to academically affiliated investigators who either had little to do with the study or review or who did not disclose financial support from the company. It is important to note that for some of the referenced publications listed in the Table of the article by Ross et al, some of the authors either did not actually receive financial support from the company; were not required by the journal in which the study was published to disclose their financial support or relationship with the sponsor; did report their financial support or relationship with the sponsor, but the journal chose not to publish those author disclosures; or did disclose their financial support, and those disclosures were published.

However, it is clear that at least some of the authors played little direct roles in the study or review, yet still allowed themselves to be named as authors.

My favourite quote:

Documents were found demonstrating that medical publishing companies provided near complete drafts of review manuscripts to authors for editing, in addition to managing submissions and revisions. For instance, in preparing one manuscript, representatives from Scientific Therapeutics Information indicate in a publications status report that the first draft was sent to Merck and the company was awaiting comments, but an author needed to be invited. In another e-mail that discusses an article with which the company was involved, a Scientific Therapeutics Information representative states:

“The .1439 journal article that was submitted to Pharmacotherapy by Dr. William Garnett has been accepted (I believe) with revisions. He has faxed me only the reviewers’ comments, but is mailing me the entire packet that they sent to him. He would like us to make the revisions, as he is too busy at the moment to make them himself. According to the proposal (Doc # 66468) there is no mention of whether revisions are included, or can be done for an additional fee.”

Documents also were found demonstrating that medical publishing companies played critical roles in overseeing the development, organization, and manuscript drafting of supplemental issues focused on rofecoxib for journals.

Documents were found describing Merck compensating investigators with honoraria for agreeing to serve as authors on review manuscripts ghostwritten on their behalf by medical publishing companies. Honoraria varied, ranging from $750 to $2500. One author refused his honorarium from Scientific Therapeutics Information stating, “I really do not feel it is appropriate to be paid for this type of effort.”

(Note: The title of this post was ghostauthored by Joshua Gans.)

Just to echo what other economists have already said, the mooted cuts to the Australian Bureau of Statistics budget seem to me a false economy. As economist Barry Hughes told SMH journalist Jessica Irvine:

This is a very bizarre time to be cutting back your statistical indicators at a time when, if we’re not sailing through a fog, we’re certainly sailing through a period of reduced visibility

I’m informed that one of the ways the ABS plans to get $20 million in savings is by scrapping the Employee Earnings and Hours Survey, which has been running since 1976. If true, the 5-yearly census will be the only source of information on union membership and earnings by occupation. Want to know how the gender pay gap has changed? Or how teacher earnings compare with other professions? Under the new regime, the ABS won’t be able to tell you until the next census, due in 2011.

If anyone is putting up a petition, just let me know where to sign.

In the weekend AFR, Dierdre Macken has an article on the steady expansion of economic research into non-traditional areas (or as she calls the phenomenon, ’Everythingonomics’). The article profiles Justin Wolfers, Tim Harford, and yours truly; and also has some commentary from Australian Sociological Association president Michael Gilding.

My AFR oped tomorrow is on the summit. I’ll post it in the morning, but here are a few quick observations.

• A little to my surprise, I found talkfest 2008 to be a very worthwhile exercise. An exercise like this is never going to be able to contribute much to the most complex policy debates (climate change, defence strategy, macroeconomic policy), but its benefits came in the form of lots of nuggety little ideas, and bringing a new group of people inside the tent. Hopefully the community cabinets will continue to play a similar role in the future.
• I was in the productivity stream, about which Andrew Norton and Joshua Gans have already blogged. Within that, I was in the ‘early childhood and schooling’ sub-stream. I had hoped that we would get stuck into some of the issues about how to make schools work better, but the pervading mood of ‘don’t forget the role that parents play’ and ‘early childhood is critical’ made this difficult to achieve. My view about this is that yes, parents and the early years are critical, but that doesn’t mean that government policy can make a difference. But I’m yet to find a persuasive way of making this argument (for the long version, see this writeup of a policy paper by Sara Mead). If I were to go back in time and make one change to the way the summit was structured, it would be to keep early childhood and schools separate from one another.
• From a purely selfish perspective, the great benefit of the summit was having the chance to yarn with people like Indigenous leader Tania Major, AEU head Angelo Gavrielatos, early childhood research Frank Oberklaid, and school principal Chris Sarra – as well as to catch up with old friends like Bryan Gaensler, Andrew Norton, Bill Frewen, Raja Junankar, Elena Douglas, Joshua Gans, Jen Buckingham, Macgregor Duncan and Amy King. With folks like those in the room, it was hard to see it as anything other than a weekend well spent.

Jeff Williamson, the man who taught me economic history, is 73 and still researching as actively as ever (his CV lists his first published paper as 1957). On Wednesday the 23rd, Jeff is speaking on the topic of ‘the great divergence’. He’s a splendidly enthusiastic speaker - the talk is free and open to the public, so if the topic interests you, do come along.

4.30-6pm, Wednesday 23 April
Innovations Lecture Theatre (Building 124), ANU,
Jeffrey Williamson
Laird Bell Professor of Economics, Harvard University
Globalisation & the Great Divergence
In this lecture Professor Williamson assesses the rising Gross Domestic Product per capita gap over the period 1782 and 1913 between today’s rich countries and developing countries - the great divergence. His lecture offers evidence that from 1870-1939 a faster rise in export prices versus import prices raised long-run growth in rich countries but did not do so in poor countries. Poor countries’ relative economic performance also suffered because the volatility of the index of export to import prices between 1820 and 1870 was greater than for rich countries.

A great oped from Nicholas Kristof talks about the problems of echo-chambers in the blogosphere. 

This resistance to information that doesn’t mesh with our preconceived beliefs afflicts both liberals and conservatives, but a raft of studies shows that it is a particular problem with conservatives. For example, when voters receive mailings offering them free pamphlets on various political topics, liberals show some interest in getting conservative views. In contrast, conservatives seek only those pamphlets that echo their own views.

Likewise, liberal blogs overwhelmingly link to other liberal blogs or news sources. But with conservative blogs, the tendency is much more pronounced; it is almost a sealed universe.

The situation isn’t hopeless. Similar psychological processes govern our perceptions of race, yet we’ve made great progress in revising our views and reducing prejudices. The same is true of attitudes towards gays.

The only solutions I see are personal ones, to work out daily to build our mental muscles. Just as we force ourselves to nibble on greens and decline cheesecake, we should seek an information diet that includes a salad bar of information sources — with a special focus on unpalatable rubbish from fools. The worse it tastes, the better it may be for us.

This is one of my fears about people getting more and more of their information through bespoke online sources, since it may allow both sides to ignore inconvenient facts that don’t fit their worldview.

Former ACER researcher Molly de Lemos just emailed me her 2020 ideas for the education/productivity stream. They’re over the fold. And a regular commenter also drew my attention to the submission from the Catholic Social Service and Justice Agencies, which can be found here. And Miriam Lyons has featured 5 100-word summaries on her blog (3 of which have not previously appeared on this blog).

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I just took a call from an Australian political journalist whose work I’ve admired since the 1980s. The topic of this journalist’s story for tomorrow’s paper: the politics of the 2020 summit. I did something I’ve never done before, and basically said “why on earth are you writing about this?”.

I’m generally an admirer of the Australian media. On a typical day, I’d take 1-2 media calls, and in my own experience, Australian journalists are a bunch of bright, careful, and diligent people. But for reasons I can’t quite fathom, much of the coverage of the 2020 summit has been abysmal. Day after day has seen stories on whether the invitation list is biased, whether the powerpoint backgrounders are sufficiently comprehensive, and when the submissions are going to be released. With a few exceptions, I’ve seen barely any discussion of actual policy issues. Of course the 2020 summit has flaws, but to only focus on the personalities and organisational stuff seems to me a terrible missed opportunity.

As US academic Gary Orren once wrote:

This type of coverage focuses alternately on strategy and tactics (’inside baseball’), the leaders’ missteps (’gotcha journalism’), or what the news ‘really means’. Invariably, though, the interpretation and commentary presumes to lift the curtain on the wizard and reveal the charlatan behind it.

Perhaps the coverage I’m complaining about is a feature of leadup coverage, and we’re about to move from sportsplay journalism into substantive analysis. I don’t mind a bit of discussion of the politics of the summit, but if it entirely crowds out a debate about the country’s future, it would be an opportunity lost.

Betsey Stevenson and Justin Wolfers have a new paper out that debunks the Easterlin Paradox. It’s a classic Stevenson-Wolfers style “throw all the data we can find at the problem” paper, and it concludes that (a) rich people are happier than poor people; (b) richer countries are happier than poorer countries; and (c) as countries get richer, their people become happier. Over the next few days, Justin is blogging about the paper at Freakonomics - his first post is here.

ANU has today released the results of our first ‘ANU Governance Poll’. Full results are on the poll website, but here are a few of my favourite facts:

• The environment has shot up the rankings. The graph below shows the share of people rating it as the most important issue facing the country. As recently as 2004, only 6% rated it the top issue. Now, 19% do. When it comes to what Australians say should be discussed at the 2020 summit, the environment trumps all issues. (This is very much an Australian thing – the environment doesn’t make Americans’ top 5 list of important issues.)
• By international standards, Australians are pretty happy with their institutions, and pretty trusting of their politicians. They even trust universities – though not as much as they trust the defence forces.
• The one issue on which Australians are less happy is the government’s handling of health care. This looms as a big issue for lower-income respondents in particular.  12% of those in households with an annual pre-tax income below $40,000 rate it as the top issue for the 2020 summit to discuss, compared with 6% of those in households with an income above $100,000.
• Respondents favour more spending on education, health, and the environment, but few favour more spending on culture.
• When we break down the results by age, the results look almost exactly the same for younger and older respondents. I think this was reflected in the policy proposals of last weekend’s Youth 2020 summit. As a discussion on Peter Martin’s blog showed, most of the proposals were not on ‘yoof issues’, but on mainstream issues such as funding research on vaccines and teacher merit pay.
• When we break down the results by the respondent’s educational attainment, we find that those who think that education is the most important issue facing the country are… those with more education. University graduates (6%) are three times as likely to rate it as the top issue as secondary school graduates (2%).
• Conversely, university graduates are less likely to express a great deal of confidence in universities (20%) than secondary school graduates (27%).
• Perhaps related to this, the rich are much more optimistic about the lives of today’s children than are the poor.

Percentage of respondents who say that the environment is the most important issue facing Australia

The sample is 1000 telephone respondents, surveyed from 16-30 March 2008. The 95% confidence interval on most estimates is about 3%. And stay tuned for the ANU prediction markets…

My wife is American,  and we’ve often commented that we’re glad that she could give birth in Australia (where 1-week hospital stays are quite common) rather than the US (where the norm is more like 2-3 days). But a new NBER working paper suggests that perhaps our concerns are misplaced. I can’t fault the empirical strategy, though in an ideal world I would have liked more fine-grained outcome measures than readmission and infant mortality.

After Midnight: A Regression Discontinuity Design in Length of Postpartum Hospital Stays
Douglas Almond and Joseph Doyle
Patients who receive more hospital treatment tend to have worse underlying health, confounding estimates of the returns to such care. This paper compares the costs and benefits of extending the length of hospital stay following delivery using a discontinuity in stay length for infants born close to midnight. Third-party reimbursement rules in California entitle newborns to a minimum number of hospital “days,” counted as the number of midnights in care. A newborn delivered at 12:05 a.m. will have an extra night of reimbursable care compared to an infant born minutes earlier. We use a dataset of all California births from 1991-2002, including nearly 100,000 births within 20 minutes of midnight, and find that children born just prior to midnight have significantly shorter lengths of stay than those born just after midnight, despite similar observable characteristics. Furthermore, a law change in 1997 entitled newborns to a minimum of 2 days in care. The midnight discontinuity can therefore be used to consider two distinct treatments: increasing stay length from one to two nights (prior to the law change) and from two to three nights (following the law change). On both margins, we find no effect of stay length on readmissions or mortality for either the infant or the mother, and the estimates are precise. The results suggest that for uncomplicated births, longer hospitals stays incur substantial costs without apparent health benefits. 

Can anyone suggest academics who might enjoy speaking to the Australian media about macroeconomics? I tend to decline interviews on this topic, but I’d like to be able to direct journalists to other academic economists. Feel free to nominate others (or yourself) in comments.