Friday, October 27, 2006

Refereeing tips

If the first thought that come to mind was football, then this post will not be helpful. It provides advice to academic economists on how to write critiques of other economists' research.

From Tyler Cowen of Marginal Revolution:

Here are my tips:

1. Assume that no referee reports are truly anonymous. It is fine to be critical but always be polite.

2. Unless it is immediate junk, read the paper once and return to it a week later with deeper thoughts and a fresh mind.

3. Your report should not assume that the editor has a working knowledge of the paper in his mind.

4. Respond within a month. First it is considerate to the author. Second, the less "fresh" the task is, the more painful it will be.

5. A properly critical and useful "accept" report is harder to write. Don't look for excuses to quickly reject a potentially good paper.

6. The editor might have chosen you as referee for a reason. You need not go along with the editor's grand plan or desired outcome, but be aware it may exist.

7. Don't check the references to see if you are cited.

Here is a short article full of good advice. Here is the longer piece (which I have not read) on how to publish in top journals. Thanks to Elaine Hawley for the pointer.

Wednesday, October 25, 2006

Hiatus until January

Due to a major uptick in work and travel obligations, a singapore economist will be on hiatus, probably until January. Thanks for taking the time to visit.

Sunday, October 22, 2006

What not to do around a $139 million asset

From Slate:

Casino mogul Steve Wynn ripped a hole through his $139 million Picasso painting while gesticulating at a cocktail party, reports the New York Post. Nora Ephron gave her own first-person account of the damage: It was "a black hole the size of a silver dollar … with two three-inch long rips coming off it in either direction." Wynn had just agreed to sell the painting; now, the deal is off.

Thursday, October 19, 2006

Ranking MBA programmes

I recently posted on a study by the Economist that ranked NTU's MBA programme 77th best worldwide and NUS's MBA programme 99th best worldwide (4th and 11th best in Asia, respectively). In response, a reader commented: “Frankly speaking, to someone who's aiming for a top-10 MBA program in the US, who cares?”

Who cares indeed. A glib but nonetheless truthful response is that there must be some people who find the rankings informative/interesting/entertaining or why would the Economist spend the time and effort to produce the list in the first place? After all, people do apply to NUS and NTU and many don’t get accepted.

Nonetheless, I suspect that the commenter was trying to make the following point: only the “top-10” schools are worth attending in terms of financial rewards, making NUS and NTU irrelevant. Ok, that is a valid opinion and perhaps a predictable one for an ambitious MBA student. Still I wonder why the reader thinks that only the very "best" schools will provide the proper rewards. Is it true that lesser ranked schools don’t deliver a financial payoff? There is also a more fundamental question: what are the top-ten schools? There are several rankings that differ significantly because each is constructed with different criteria such as interviewing CEOs, deans, recruiters, business school graduates, and/or weighing admissions and placement data. So which rankings are the "right" ones?

Fortunately, I came across a paper that has already done the heavy lifting on this topic: The Best Business Schools: A Market-Base Approach by Joseph Tracy and Joel Waldfolgel, published in The Journal of Business in 1997.

From the article:
This article introduces a market-based methodology for evaluating the performance of MBA programs. We seek to distinguish the quality of a program from the quality of its students. We judge a program’s performance by its value added, measured by the graduates’ salaries, after accounting for student characteristics and job attributes.
The crux of their research is: which MBA programmes best increase your earning potential? This is a different question than the one implicitly or explicitly answered by other ranking methods: which programmes have the highest paid graduates? We all know that Harvard MBA graduates earn a lot of money. But is the Harvard MBA programme the primary reason? Or do people with high earning power choose to attend Harvard?

Article continued:

...we focus on the degree to which business programs are successful in producing high-salary jobs for their graduates. Given the competitive labor market for MBAs, salaries will reflect the willingness of employers to pay for the attributes embodied in a program's graduates. A program which attracts high-quality students may generate high salaries for its graduates without adding value to them.
Here is the bottom line. Using statistical techniques, they find programmes that are either "undervalued" or even unranked by the other ranking methods:
While four of our top five programs have been highly ranked elsewhere, 10 of our top 20 programs are unranked elsewhere. Like many other rankings, we place Stanford, Harvard, Chicago, Virginia, Pennsylvania, Northwestern, and Michigan in the top 10. In contrast to other rankings, we also place Oklahoma State, New Mexico, and Wake Forest in the top 10. By emphasizing program value added, our procedure identifies several programs that have been overlooked by other rankings because they do not recruit the very top students.
The authors use their procedure to rank 63 American MBA programmes.

Finally, some advice to students on how to use their rankings to choose a programme (however, note that this study was conducted with data from the early 1990s):

It is important to recognize that the value-added estimates, and associated rankings, are based on the current allocation of students to programs. Thus, our rankings should be understood to reflect the value added currently conveyed to the students at each of the programs, not the value added that would unconditionally be transmitted to any students at these programs. For example, while our results indicate that Oklahoma State has higher value added than, say, Dartmouth, students at Oklahoma State have, on average, lower GMATs and less work experience. Our evidence does not indicate whether Dartmouth students would fare better at Oklahoma State. Because different programs attract students of systematically different quality, a potential student interested in choosing a program with the most value added should compare value across programs with students of roughly his or her quality.

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Wednesday, October 18, 2006

How to Write Well

Greg Mankiw's advice to economists on how to write for a general audience:

When I was CEA chair, I sent the following guidelines to my staff as they started drafting the Economic Report of the President. A friend recently emailed me a copy, and I thought I would share them with blog readers. They are good rules of thumb, especially for economists writing for a general audience.

ERP Writing Guidelines

  • Stay focused. Remember the take-away points you want the reader to remember. If some material is irrelevant to these points, it should probably be cut.
  • Keep sentences short. Short words are better than long words. Monosyllabic words are best.
  • The passive voice is avoided by good writers.
  • Positive statements are more persuasive than normative statements.
  • Use adverbs sparingly.
  • Avoid jargon. Any word you don’t read regularly in a newspaper is suspect.
  • Never make up your own acronyms.
  • Avoid unnecessary words. For instance, in most cases, change
    o “in order to” to “to”
    o “whether or not” to “whether”
    o “is equal to” to “equals”
  • Avoid “of course, “clearly,” and “obviously.” Clearly, if something is obvious, that fact will, of course, be obvious to the reader.
  • The word “very” is very often very unnecessary.
  • Keep your writing self-contained. Frequent references to other works, or to things that have come before or will come later, can be distracting.
  • Put details and digressions in footnotes. Then delete the footnotes.
  • To mere mortals, a graphic metaphor, a compelling anecdote, or a striking fact is worth a thousand articles in Econometrica.
  • Keep your writing personal. Remind readers how economics affects their lives.
  • Remember two basic rules of economic usage:
    o “Long run” (without a hyphen) is a noun. “Long-run” (with a hyphen) is an adjective. Same with “short(-)run.”
    o “Saving” (without a terminal s) is a flow. “Savings” (with a terminal s) is a stock.
  • Buy a copy of Strunk and White’s Elements of Style. Also, William Zinsser’s On Writing Well. Read them—again and again and again.
  • Keep it simple. Think of your reader as being your college roommate who majored in English literature. Assume he has never taken an economics course, or if he did, he used the wrong textbook.

Tuesday, October 17, 2006

Disappointing Results from Deregulation

From Economist's View:

Disappointing Results from Deregulation

The deregulation of electricity generation has been problematic:

Competitive Era Fails to Shrink Electric Bills
by David Cay Johnston, NY Times

A decade after competition was introduced in their industries, long-distance phone rates had fallen by half, air fares by more than a fourth and trucking rates by a fourth. But a decade after the federal government opened the business of generating electricity to competition, the market has produced no such decline. Instead, more rate increase requests are pending now than ever before...

Article continued:

The disappointing results stem in good part from the fact that a genuinely competitive market for electricity production has not developed. ... The Federal Energy Regulatory Commission and five other agencies, in the draft of the report to Congress, are unable to specify any overall savings. “It has been difficult,” the report states, “to determine whether retail prices” in the states that opened to competition “are higher or lower than they otherwise would have been” under the old system. ...

Under the old system, regulated utilities generated electricity and distributed it to customers. Under the new system, many regulated utilities only deliver power, which they buy from competing producers whose prices are not regulated. For example, Consolidated Edison, which serves the New York City area, once produced almost all the power it delivered; now it must buy virtually all its electricity from companies that bought its power plants and from other independent generators. The goal is for producers to compete to offer electricity at the lowest price, savings customers money.

Independent power producers, free-market economists and the Clinton Administration cheered in 1996 when the federal government allowed states to adopt the new system. ... But ... A truly competitive market has never developed, and, in most areas, the number of power producers is small. ...

[C]ritics say that, as in California five years ago in a scandal that enveloped Enron, the auction system can be manipulated to drive up prices, with the increases passed on to customers. What is more, companies that produce electricity can withhold it or limit production even when demand is at its highest, lifting prices. This happened in California, and the federal commission has found that it occurred in a few more instances since then. Critics say that more subtle techniques to reduce the supply of power are common ...

Richard Blumenthal, the Connecticut attorney general, said the supposedly competitive market has been “a complete failure and colossal waste of time and money.” He asked the federal commission to revoke competitive pricing in his state, but the commission dismissed the complaint last Wednesday, saying the state had not proved its case.

Advocates of moving to the new system say that, in time, the discipline of the competitive market will mean the best possible prices for customers. Alfred E. Kahn, the Cornell University economist who led the fight to deregulate airlines and who, as New York’s chief utility regulator in the 1970’s, nudged electric utilities toward the new system, said that he was not troubled by the uneven results so far.

“Change,” Professor Kahn said, “is always messy.” ...
Stubborn adherence to a policy that isn't working can be even messier. Free, unregulated markets are best when it results in an efficient outcome, but the necessary conditions for competition are not met in these markets and oversight is needed to prevent and penalize price manipulation.
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Saturday, October 14, 2006

Milton Friedman argues for drug legalization

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