Tyler Cowen's Blog, page 500

Cheating and Signaling

The Chronicle of Higher Education has an article on cheating in online courses and some of the high-tech measures being used to detect such cheating:

As the students proceeded, they were told whether each answer was right or wrong.

Mr. Smith figured out that the actual number of possible questions in the test bank was pretty small. If he and his friends got together to take the test jointly, they could paste the questions they saw into the shared Google Doc, along with the right or wrong answers. The schemers would go through the test quickly, one at a time, logging their work as they went. The first student often did poorly, since he had never seen the material before…The next student did significantly better, thanks to the cheat sheet, and subsequent test-takers upped their scores even further. They took turns going first.

…”So the grades are bouncing back and forth, but we’re all guaranteed an A in the end,” Mr. Smith told me. “We’re playing the system, and we’re playing the system pretty well.”

…A method under consideration at MIT would analyze each user’s typing style to help verify identity, Mr. Agarwal told me in a recent interview. Such electronic fingerprinting could be combined with face-recognition software to ensure accuracy, he says. Since most laptops now have Webcams built in, future online students might have to smile for the camera to sign on.

Some colleges already require identity-verification techniques that seem out of a movie. They’re using products such as the Securexam Remote Proctor, which scans fingerprints and captures a 360-degree view around students, and Kryterion’s Webassessor, which lets human proctors watch students remotely on Web cameras and listen to their keystrokes.

The cheater-detector arms-race is interesting but also makes me think about the signaling theory of education. Cheating works best if the signaling model is true. If education were all about increasing productivity and if employers could measure productivity then cheating would be a waste of time. As illustrated by Mr. Smith, however, at least some students care about the A that cheating produces more than the knowledge that learning produces. Mr. Smith must believe either that education (in at least this class) doesn’t increase productivity or that employers don’t learn about productivity. Employers have big incentives to learn about productivity so my bet is on the former.

If students perceive the situation correctly we also have an interesting hypothesis: students should cheat more in those courses that offer the least productivity gains. Studies on cheating find mixed results across major, with some finding that business majors cheat more and others not, but these studies are cross sectional, i.e. across individuals. A better test of the theory that I propose would look at cheating by the same individuals across courses. Absences should also be higher in courses with lower productivity gains.

Gallego travel notes

The ATM gives you a choice of eight languages, including Catalan, Gallego, Valencia, and Euskara.  At first the street signs appear to be in Portuguese, but that is a trick.  Other times the dual Spanish and Gallego phrases on the signs are exactly the same.

Gallego as a province [Galicia] reminds some of Nantes, France, and the surrounding area, or of parts of southern Chile.

If you put together Keynesian economics and public choice theory, you get a very nice and indeed downright spacious airport in Santiago de Compostela.  More infrastructure here will not jump start growth.

Counterintuitively, Santiago avoids the destruction of its authenticity by relying on tourism.  The city has been a major tourist destination since at least the 9th century A.D., so the arrival of tourists — many of them have religious motives — is how the city’s past is preserved.  It is the people who stay at home who are ruining the place.

Vigo, the largest city in Gallego, has lovely sea views, lots of refrigeration facilities in its port, and superb seafood.  It is slow on a Sunday, especially for its size.  Percebes looks like this, and it is a must-try.

“A Coruña is one of only eight pairs of cities in the world that has a near-exact antipodal city.”  That would be Christchurch, New Zealand.  A Coruña is supposed to be the most prosperous city in Gallego, yet it is scary how many abandoned or boarded up buildings are in the heart of downtown.

The city’s Roman lighthouse is still in use, and it is the world’s oldest active lighthouse.

It is very green in Gallego and it rains a lot, though not as much as in Bergen, Norway.

I strongly recommend a trip to Gallego.  There are numerous reasons to go, and few reasons not to go, the only really good one being that you may wish to go somewhere else.

Steven Pearlstein on the United Kingdom

Indeed, there is a suspicion that at least some of the downturn here is a statistical mirage caused by the necessary adjustment to wages and prices following the bursting of that financial bubble. If the financial sector never really added as much genuine value to the economy as was indicated from all those inflated salaries and bonuses, then at least some of the decline in GDP since then may merely reflect a healthy repricing of labor, financial assets and goods across the economy rather than a worrisome loss of output. Low inflation, slowly rising employment, little or no growth in measured productivity, household incomes and GDP — these are all consistent with that story of statistical mirage.

Here is much more.  And there is this:

Other than Labor Party politicians, nobody seriously doubts the wisdom of cutting back on the number of public employees or the size of their pensions, or capping welfare payments to any household at the median income, or bringing more efficiency to public education or the public health service through greater competition. The idea that these will be done once the economy returns to normal growth is a political fantasy.

From JohnLeemk

It’s incredibly frustrating. The political and policy world falls into two camps:

Those who believe no stimulus is necessary, everything is supply-side.

Those who believe stimulus is necessary but only fiscal stimulus can or should supply it.

It’s like people completely forgot the existence of Milton Friedman, and decided to revert to the stupidest possible version of New Keynesianism, where interest rates are the only lever of monetary policy and the printing press is something that only functions when rates are above zero.

I feel like to both the centre left and the right, Milton Friedman is too heretical now — too right-wing for the left obviously and too left-wing for the right. Consequently, everything about monetarism has been stripped out of the public consciousness and we are left with vulgar Keynesianism and vulgar Austrianism.

We truly live in a Dark Age of economics.

That was a comment from Scott Sumner’s blog, passed along to me by David Levey.

Why has Foreign Aid Been Untied?

The more cynical among us have sometimes thought that rather than recipient welfare the purpose of “foreign” aid is to provide a cover for domestic aid. Foreign aid pork, i.e. using foreign aid to subsidize special interests in the donor country has certainly been common. Historically, most foreign aid has been tied; that is, the recipient was required to spend the money on the donor country’s exports. Relative to cash, tying raises prices and reduces choice and recipient welfare–the deadweight loss of Christmas problem.

US food aid is a classic example. US food aid tends to peak after a glut. It’s cheaper for us to give food away when we have lots and not coincidentally giving food away after a glut helps to keep prices higher, benefiting US farmers. It’s precisely when food is plenty, however, that prices are low and aid is less needed. When food is scarce, prices are high and aid is more needed but then we would rather sell our food than give it away. In addition, we typically require food aid to be transported on US ships which raises costs. Finally, the food we give away is not always best suited to the recipient’s preferences or needs.

For a public choice theorist the fact that foreign aid benefits domestic special interests is not at all surprising. What is surprising is that tied aid is way down. Great Britain banned most tied aid in 2002 and indeed tied aid is down across all of the major OECD donor countries. Food aid and technical assistance are still tied but these aid categories are down and untied grants and loans are up. In 1984-1986, for example, about 60% of aid was tied and today only 10-25% of aid is tied (depending on source).

Why has aid become untied? Could this be a case of improved public policy due to lobbying from the aid industry? It is interesting to note that although tied aid is down in the US, the US continues to tie a lot of aid, considerably more than the Europeans. One explanation may be that the decentralized US political system gives more weight to local domestic interests so tied aid continues to sell here despite opposition from most aid groups.

Special interests are also not the only explanation for tied aid. Tied aid can reduce corruption in the recipient country. If donors have become less worried about corruption, perhaps because governance has improved in the developing world, this could offer a public interest explain for an increase in untied aid.

Overall, I find it puzzling that foreign aid has become untied as the major beneficiaries appear to be poor foreigners with little political power.

*The Ocean of Life*

The author is Callum Roberts and the subtitle is The Fate of Man and the Sea.  It is an excellent look at the environmental problems associated with oceans.  Here is one bit:

European seas are far less productive than they once were.  The fact that the UK bottom trawl fleet lands only half the fish today that it did when records began in 1889, despite a massive increase in fishing power, says all we need to know about how we have squandered natural capital.

…In 1889, there were ten to fifteen times as many large bottom-living fish like cod, haddock, and halibut in the seas around the UK as there are today.

The book is interesting throughout and very readable, without losing its fundamental seriousness.

The globalization of the food truck?

Among young Parisians, there is currently no greater praise for cuisine than “très Brooklyn,” a term that signifies a particularly cool combination of informality, creativity and quality.

And this:

An artisanal taco truck has come to Paris. The Cantine California started parking here in April, the latest in a recent American culinary invasion that includes chefs at top restaurants; trendy menu items like cheesecake, bagels and bloody Marys; and notions like chalking the names of farmers on the walls of restaurants.

The full story is here.  And if you were wondering, and I hope you were:

Ms. Frederick waded through the thick red tape of four separate Paris bureaucracies: the business licensing commissariat; the mairie de Paris, or the local municipal office; the prefecture of police; and the authority that oversees the markets. Unlike some food trucks in the United States, the ones here are not allowed to troll for parking spots, or roam from neighborhood to neighborhood. They are assigned to certain markets and days.

Doller Otaku, or the culture that is you-know-where

It is hard to pull out just one paragraph from this gem of an article, but here goes:

I like to think myself as a kigurumist [from kigurumi, costume] because I don’t only dress up as two-dimensional beautiful girls. I also dress up as fairies, furry animals and monsters too. I think that dollers dress up as dolls as an extension of cosplay and I don’t want to be categorized as a doller or a cosplayer because I don’t put on an act. I don’t change my character or personality to match my kigurumi as others do.

And:

What’s important is I can become something on the borderline between human beings and dolls. I like the idea of existing somewhere between the 2-D and 3-D worlds.

Why wear a mask when you’re so pretty?

I must admit, I think I’m the cutest girl in the world. But I want to keep on pursuing beauty.

The article is here, with photos, via a loyal MR reader.

Spoons and the social discount rate

Its hard to imagine spoons will exist in their current form in 30 years. What does this tell us about the social discount rate?

That is from the ModeledBehavior hive mind.

Let’s assume an intertemporal equilibrium.  The rate of return on buying consumer durables ought to equal (risk-adjusted) the rate of return on capital.  Spoon improvement means a lower rate of return on holding spoons, which means a lower return on durables, which in turn means a lower rate of return on capital investment.  For a given set of interest rates, that implies a higher rate of social discount.

That said, I find it easy to imagine spoons will exist in their current form in 30 years.  What if I were wrong?  I would be overestimating the MU of money in future periods and thus saving too much.  I ought to buy more non-spoon items, renting my current spoons, knowing that spoon improvements will glide me into a cushy retirement.

Assorted links

1. Review of the new Chris Hayes book.

2. Garett Jones on speed bankruptcy (pdf).

3. The politics of Obama vs. Romney; politics isn’t about policy!

4. NYT presents 32 innovations that will change our world; are you impressed by their list?  I like this one:

A team of Dutch and Italian researchers has found that the way you move your phone to your ear while answering a call is as distinct as a fingerprint. You take it up at a speed and angle that’s almost impossible for others to replicate. Which makes it a more reliable password than anything you’d come up with yourself. (The most common iPhone password is “1234.”) Down the line, simple movements, like the way you shift in your chair, might also replace passwords on your computer. It could also be the master key to the seven million passwords you set up all over the Internet but keep forgetting.

5. Are economics Ph.D programs teaching the right material?

6. More Paul Krugman on science fiction.