Afghanistan Opium Policy Turnaround

On innumerable occasions, I have mentioned that the US and its allies in Afghanistan have picked the wrong fight by concentrating on opium poppy eradication. This story in slate Magazine states that Richard Holbrooke has clarified that the policy from now will be the quest for an alternative. In truth, that some distance away from the futility of trying to fight Opium and not the Taliban. The same story proves why the economics of growing opium poppy in the region makes it a very attractive activity compared to alternatives. It demonstrably has higher returns for the effort. That should not have taken five years, and more, to figure out.

Netflix Prize is Taken

I have stated on this blog that I am fascinated with the use of competition and prizes to find solutions to technical problems. The one real example that i have observed is the Netflix prize on which I last wrote about here. To recap, the prize of US$ 1 million was offered by a Netflix corporation in 2006 to any team or individuals that would provide a model to improve the predictions of Cinematch by at least 10%. I entered the contest sometime last year not because there was a chance that I could win but merely to get access to that data.

It is now vertain that the prize will be claimed within 30 days because the Netflix Prize Leader Board shows that the Bellkor's Pragmatic Chaos team presented an algorithm that has managed to improve the predictive ability of Cinematch by 10.05%. While I understand that there's a probability that another team could present an alternative that is better, I think that the probability is too low that Netflix should just write the cheque.

That aside, the lesson from this to me is that innovations cares not for recessions but through competition, the learning takes place and real solutions are developed. Secondly, it is important to note that the prize was announced in October 2006 and the teams have worked hard to deliver the prize in less than three years. The third conclusion that I draw is that the similarity of names for a good number of the leading teams suggests that they may be the same teams using different techniques. Since the prize requires that the winning team will not only claim the prize but also explain how this was done, this last point will be proved one way or another.

From Bookish Posts, congratulations to the Bellkor's Pragmatic Chaos team for delivering a lesson in the use of prizes. If only the public sector would follow suit and pay for results and not effort.

Broadway Leaving Money on the Table

Since I read this research paper by Justin Wolfers and Joseph price, I have had a keen interest in the use of formal academic tools to provide irrefutable evidence of biases that are difficult to observe. That paper used the calls by basketball umpires to provide evidence that black players are penalized by umpires more frequently than would be expected if calls were to be distributed randomly.

Now, a new story in the NYT here shows the advancement of this idea into the investigation of the existence or not of gender bias in the theatre industry. Emily Sands, a student at Princeton undertook three interrelated studies to answer the question by reviewing whether there is this bias in the industry. Specifically, she examined the number of scripts submitted by men and women, the returns on plays performed by each sex and the reaction of directors (male or female) to scripts produced b people bearing names that are characteristic of males or females.

Emily's findings are interesting to the extent that they confirm the existence of gender bias but also because they reveal the nature of that bias as expressed by directors of either sex. To start with, using data covering 20,000 playwrights obtained from Doollee.com, the study reveals that i spite of the production of scripts at the same rate, there are twice as many men as women. This proportional difference in the membership yields a higher number of scripts produced by male script writers.

Secondly, the study then conducted an experiment in which the same scripts were sent to artistic directors. The difference was that these scripts were marked with names that would betray the sex of the writers. This experiment revealed that men rated scripts presented by either sex the same way.

Thirdly, Emily turned to the Broadway stage to consider the relative number of plays performed on this stage considered the numbers of plays written by women and men in addition to how these performed. Considering 329 plays performed over a decade, the study finds clear evidence of bias. This bias in the sense that plays by women sold 16% higher tickets per week and delivered 18% greater profitability. To my mind, the curious fact is that while they constituted only one eighth of the total, plays by women earned more money but were not kept on stage for much longer.

Apart from the concerns about data quality, this study shows that biases can not only be demonstrated but that they actually occur in ways that are more complex than is conventionally spoken of. My enduring question though is that perhaps it is possible for rival theatre corporations to choose and screen plays written by women and earn the large profits being left on the floor due to the bias against women in Broadway.

Why Dictatorships Fear Elections

"Recently, many people thought it was clever to say that elections on their own don’t make democracies. But election campaigns stoke the mind and fraudulent elections outrage the soul. The Iranian elections have stirred a whirlwind that will lead, someday, to the regime’s collapse. Hastening that day is now the central goal". David Brooks

ATM Hold Up in Ireland

It is without doubt that banks bear very little risk for robbery relative to the amount of money dispensed by Automated Teller Machines (ATMs). To my mind, the security risks relate to thieves who take advantage of gullible clients and secure their ATM cards before using that to clean up accounts. In addition, my view has been that in less secure places, a person using an ATM in a secluded place may be held up and robbed. As a result, it appeared to me that by transferring cash withdrawal processes towards these machines, the financial institutions have successfully externalized the risk of petty robbery to their clients.

However, I must have misjudged the temerity of thieves and their attraction for cash. According to a story in the Irish Times, an ATM was completely ripped off the walls and carried away in Kildare, Ireland. This turns around my crude theory that the weakness regarding ATMs was actually the human end. There are daring thieves out there who have probably invested in a whole arsenal of drills and impact tools in order to blow apart the machine that they took away.

Turning to the economics of incentives, is it that being unable to hold up people or the banks, the robbers opted to hold up the ATM?

Let the Kids Join the NBA

As a fan of a variety of sports events, I occasionally come across rules and regulations barring either teams or individual sportsmen from action that just makes no sense to me. One of those is the age limit that sports leagues of various kinds place on when entry is allowed. This story in the NYT records the fact that a congressman in the US has decided to question the National Basketball Association for placing an age limit of 18 years and an additional college year on athletes who may be drafted to play for the franchises.

As the story states the congressman's reasonable agreement (I find it convincing) is that this not only disproportionately affects athletes of color, but that it is an arbitrary and preposterous requirement altogether. I am unsure what serious harm would come from suspending college education in order to play for the basketball franchises. In addition, Congressman Steve Cohen notes that a number of current players who were not subjected to this rule have built successful NBA careers.

Thinking about the principles of economics that may apply, I think that the unreasonable nature of these rules come from the fact that successful sports leagues are often outright by monopolies. The NBA insists upon such a rule and is unashamedly considering its extension because there is no real alternative for the potential draftees. Secondly, for a majority of the students, the opportunity costs that attach to being in college for the extra year or so is pretty high. Therefore, these athletes are making rational decisions to forgo college altogether in order to make the best of a sports career. This is especially important when considered against the fact that a sports career usually takes about one and a half decade of high income before its tapers off really quickly. Thus young athletes are calculating that they should join the leagues early in order to establish their credentials and maximize their incomes during the short window of time.

To my mind therefore, the athletes in the league should look at the excellence that has been demonstrated by Le Bron and Kobe among others and raise their voices against this anti-competitive rule. It is possible though that the athletes that have gained entry are also concerned about competition from the youngsters and are therefore bound to accept the poor reasons given for maintaining such rules. If education is so important to David Stern and the NBA, then perhaps they should cut a proportion of their profits and invest that in more education for the larger proportion of youngsters who do not make it to the league. Anyone who makes it to the league will most probably be able to afford that upon retirement should it be necessary. Very few youngsters manage to make it into the league in the first instance hence the possibility that a large proportion of students would forgo college education just does not rise.

Finding the Commercial Value of Gold Medals

To my mind, the Olympics gold medal award for the Decathlon is perhaps one of the most prestigious by virtue of the fact that this athlete has to perform in ten different disciplines over a few days. One would expect that given the technical requirements of that sport, the winner would be a recognized icon for sports promotion and endorsements. And yet, the story of Bryan Clay featured here, who won the gold medal at the Beijing Olympics shows that the endorsement power of decathletes is certainly below that of leading swimmers and sprinters.

It is appreciable that the economic circumstances obviously call for corporate caution in taking out new faces for endorsements, I am perplexed by the differential ability of sports disciplines to attract vastly different commercial interests and endorsements. The economists who study sports are probably able to tell pretty quickly why this is so, but I will try and understand why the gold medal for the Decathlon is much less valuable as compared to that of sprinters.

So which Olympics sports discipline has the least commercial value for an Olympics champion. Is it my favourite shooting, rowing or gymnastics? Whatever it may be, I think that recognition of the intelligence, strain and effort in becoming an Olympics decathlete is undervalued. Why?

Quoting Razeen Sally

"Depending on a crisis for reform is myopic, and ultimately crazy, policy. It is far better to nurture a culture of permanent, incremental and mutually reinforcing reforms". Razeen Sally