Cheating in College

Trip Gabriel of the NYT writes about the formidable crisis facing colleges and universities in the form of plagiarism and cheating at tests and exams. Unsurprisingly, as the sources of and ease of acquiring information has expanded, the temptation and ability to cheat at tests has grown as well. Most colleges are now adopting almost draconian surveillance methods to keep students from gaining unfair advantage at tests and assignments.

While it is beyond doubt that the colleges bear responsibility to remind students that they ought to study and to make attribution for information that they use, I am sure that this is case where a new approach to the meaning of results is due. For instance, colleges can neither control nor prevent students from finding access to sites that provide answers to assignments, the mechanism for determining the level of understanding and mastery of the subjects should be tried.  While the college professors quoted seem to be questioning the integrity of pupils, perhaps they ought to spend time questioning the exam-driven college courses.

So while I find the claim that only the less-capable students cheat in higher numbers, my suggestion is that colleges should provide students with an exam free option. This will then leave it to whoever cares about the diploma's to interpret the student's ability as they wish. College students may also choose the courses for which they consider themselves sufficiently prepared to face the tests.    

Tools of Judgement

"When people learn no tools of judgement and merely follow their hopes, the seeds of political manipulation are sown". Stephen Jay Gould.

Disease to Intelligence to Poverty?

A study that has been discussed by the Economist Magazine here established that the prevalence of infectious disease correlates highly with intelligence and a society's development. As expected the study by scholars from the University of New Mexico confirmed that tropical countries and Africa in particular has a high burden of infectious disease and that this is related to the level of intelligence measured by Intelligence Quotient (IQ).

The exact findings of the study is that a huge disease burden affects the intelligence of people within that geographical area and in turn undermines economic development. Taken ahead, this view suggests that geography has substantial implications for economic development. As explained, this inverse relationship between the disease burden and the average IQ. infectious pathogens that cause malaria for instance, affects cognitive development of children.

The place of IQ in economic development has separately been explored by Garett Jones and W Joel Schneider in the paper with the title: Intelligence, Human Capital and Economic Growth. In it Garett and Joel find that a 1% increase in average IQ increases a nation's GDP per capita by 0.11%. That led me to think that its all about education and yet this paper introduces public health questions in it. Two papers worthy of sending to Minister of health, education and finance for holiday reading.

Microsoft's Struggle With Smartphones

Commentators on technology today are suggesting that the initiative for innovation has shifted decisively from Microsoft Corporation towards Apple and Google. And my view is that the technology industry does not easily lend itself to very specific forecasting about outcomes and market dominance. Consider that a decade ago, many of the same pundits were convinced that Microsoft was almost secure in its dominance and that this could be extended from PCs towards other market segments.  Ashlee Vance of NYT confirms that Microsoft seems to be having a problem with getting a foothold with younger consumers to whom its smart phones were directed.  

What nobody would have been able to foretell is that at the time, one of Microsoft's perceived strengths may have contributed towards undermining its strength in smart phone technology leadership. This is because the insistence on keeping a closed platform for its products means that new programmers used the more open platforms that have come to dominate. It appears that this has almost made Microsoft absent as a platform for innovation and creativity for this market segment. and the moral of the story is that there is no perfect strategy n business and a strategy that leads to success may be the very Achilles Heel of a corporation. Is Apple taking note?  

President Fires Soccer Team

Needless to say, only deep disappointment has met many people who banked heavily on outstanding performance from African teams during the World Cup 2010. Putting aside the fact that Ghana qualified for the quarter finals by beating team USA, the rest of Africa is disappointed that the teams performed too poorly. To my mind, it appears that the expectation was far too high given the basic organizational and structural issues that produce consistently good performance on soccer pitches. In truth, virtually all African teams are lacking in that.

The disappointment in the performance of the Nigerian team was too much for its politicians to take. As a result, the delightfully named president Jonathan Goodluck of Nigeria unilaterally suspended the national team by announcing that soccer activity at the international level will remain in abeyance for two years. While that is laughable in the main and is bound to lead to conflict with FIFA as stated here, I see a positive side to all this.

To begin with, my libertarian view is that the Nigerian people would have much more to gain from a diversion of taxes away from funding private activity as soccer and into more public goods and services. Bearing in mind that Nigeria is a country of more than 100 million people, it is not useful to spend public money on financing sports played by rich professionals employed by clubs in Europe and Asia. So the president should not have suspended the Nigerian Football Federation's activities but merely withheld state subvention for all time. in this way, soccer organization in Nigeria would remain a matter for private organization.

Update: President J. Goodluck rescinded the decision after two days. He has no libertarian instincts after all.

Clip Art: http://www.cksinfo.com/sports/soccer/index.html

Charity Boxes in Competition

I sometimes think that having read Freakonomics, its sequel Superfreakonomics, together with a whole lot of books that apply economics in non-conventional ways, I have become aware of anything that may present a natural experiment. Last week, I was attending a week-long meeting in the Cambodian city of Siem Reap and stayed at the comfortable Apsara Angkor Hotel. While there, I saw in the lobby this interesting set up which led me to question whether the size and setting of the charity boxes affects donations.

As evident in the picture, there are two boxes for two separate charities in the lobby of this hotel.The transparent box is marked with the name of a charity committed to correcting reducing child labour in urban tourism. Bear in mind that Siem Reap is a small city but has huge tourist attraction on account of the Angkor Wat complex. The second box is set up to collect money for the Cambodian Red Cross Society and is made of solid wood.

Quite aside from the fact that one of the boxes is transparent and the other opaque, there is very little difference between them as they are right next to one another. Notice that they both have the slot for enabling contribution at the top and are of roughly the same height. It therefore unlikely that one would be able to make a contribution to one purely because the other is beyond reach.

Now to the question that made me take the picture. Given that the only difference between the boxes is that one is transparent and the other opaque, is this material for the contributions received by either charity? It is clear to me that the managers at the  Apsara Angkor Hotel have unknowingly set up a fascinating experiment. With their permission, it would be interesting to compare the total contributions that the two charities receive over time in order to know whether the transparency of the box affects contributions. Of course, I make the big assumption that guests are likely to contribute to these charities equally.

An Economist Faces Price Controls

I need to take a break from writing on soccer and try to speak about applied economics for a while. A few days ago, the legislature in Kenya passed a bill that is intended to introduce price controls on a number of essential goods. With tremendous support in the Kenyan parliament, the argument was that traders charge high prices for essential commodities such as sugar, wheat, corn and cooking oil and therefore intervention through price controls would ensure that these prices remain affordable to a number of Kenyan citizens.

To start with, it is true that a majority of Kenyan citizens are extremely poor and it is understandable that legislators in Kenya who earn some of the highest wages in PPP terms should be concerned for their welfare. What worries me is whether a legislature comprised of some professionals are unable to read either history or the most basic texts in economics. Kenya has had a two decade experience with price controls that were suspended in the early 1990s and yet the country's citizens were none the richer for that. In fact, the general shortages of those same essential goods was pervasive and drove corruption and black markets in those goods.  

So i wonder why the Kenyan legislature assumes that new rice controls will yield better results today and in the future. It is just clear that this new law will be subverted both by traders and the bureaucrats who are being asked to enforce it because the Treasury is reluctant to perform that role. A second factor that offers some hope is that Kenya's president, Mwai Kibaki, is a student of economics and should proceed to  veto that bill without apologies.  I am sure that he is quite familiar with the arguments cogently presented by Lawrence Reed here.  

Why It's Time for England's FA Bosses to Read

Punditry and excuses aside, Germany completed a devastating demolition job on the English soccer team sometime yesterday. As usual, this is a traditional and emotion-laden rivalry for which newspapers and fans from both nations have gone overdrive with explanations for why one side lost and the other lost  won. Unfortunately, most of the purported explanations from the pundits and sports journalists tell make no revelations for anyone with even the simplest and objective view of the facts.

Among the explanations are a summary posited by Stephen Dubner on the Freakonomics Blog and another on the Daily Telegraph site here. And to my mind, it is understandable that English angst against foreign players is now on show on account of the fact that a number of Premier League clubs are predominantly served by non-English players.

While I do not expect that the loose punditry will lead to a firm solution, I think that many of the ideas posited are at best guesses and at worst diversions. In an earlier blog post here, i was completely skeptical that England was capable of winning the World Cup 2010. And my views were not formed out of strong conviction as much as having read through this book. It states as clearly as can be stated about England's performance in international soccer and what changes the football association would have to make to deepen the ranks from which players are recruited in addition to the scope for England's improvements. Without being a spoiler spoiling, the protectionist backlash against foreign players is not part of the solution.

I would recommend that the Football Association buy a copy for each manager, the players but that the Chairman and the board should read through it in whole. Or perhaps hire someone to present pithy summaries of its main messages to them. the tone of recriminations that i hear are proof that England will blame foreigners, the managers (especially the foreign ones) and cry for more chances for local lads. The authors, Simon Kuper and Stefan Szymanski show with data that this is unlikely to work.

World Cup 2010: Entry 2

To my mind, the first round of matches at the World Cup 2010 reveled that some teams were obviously better prepared than others and that is unsurprising. The unsurprising part is that the host nation saved its firepower for the last match and ended up with a victory that was of little consequence. So for all the goodwill from many supporters at home and abroad, the home team went out of the tournament at the first round. based on their overall performance over three matches, no sensible person would argue that their exit was unfair because Mexico and Uruguay were demonstrably better teams.  

This brings the discussion to the next "Home Teams", which are the teams from the host continent of Africa. Here too, as the SPI showed, few of them performed in a way that would suggest that African football is on a definitive rise as a force to be reckoned with in international soccer. And yet most African teams won only a single match at best and Cameroon, lost all its matches at the group stage. Apart from falling for cheap baiting by other teams, the African teams showed the inability to stay composed under pressure in addition to woeful finishing by strikers. The redeeming thing about African soccer during this tournament remains the goalkeepers who prevented them from conceding dozens of goals. Otherwise, the objective view must be that African soccer still has to resolve systemic weaknesses in team selection, managing player composure during intense pressure and better command from the skippers. Notwithstanding Ghana's qualification for the round of 16 and subsequent elimination of team USA, I do not think that it redeems the overall poor performance by the five African teams.

Finally, the fact that none of the finalists in the preceding tournament reached the round of 16 shows that four years can alter the dynamics of competition substantially. Tactics aside, I think that both France and Italy had fairly aged players though that alone cannot explain the inability to play decently. Whatever the internal divisions in either squad, they did not deserve to play beyond the first three matches. 

iPad Sales Count Reaches 3 Million Units

The consumer electronics industry has certainly entered a new phase with the announcement of release of Apple's iPad machine in 2010. While I do not make guesses about what the ales for individual items may be, I was skeptical for a while that the iPad would sell very well. Apple confirms in this statement that the iPad has sold 3 million individual units in the first eighty days since it was made available for purchase. This is an impressive sales count bearing in mind that the gadget is initially stocked only in US stores.

To have shipped out 3 million units of a gadget that has multiple purposes and which performs functions already available in other devices is an outstanding achievement. I do not study consumer electronics industry very keenly but think that Apple have managed to sell a gadget which is known for its aesthetic value and which I expected to be a niche product. It is far from a niche product now because everyone with US$ 499 to spare seems to be getting one. And the price tag suggests that nobody is buying the gadget just so they may also have one.  

Competition of the E-book Readers

In the last couple of months, its been clear that Apple has made a success of the  iPad and has exerted pressure on Amazon's Kindle and other e-book reading devices. My original thinking was that given the diverse range of capabilities built into the iPad, it would not be a direct competitor for conventional e-book readers. Added to that is the fact that the iPad was more expensive. In my view, I was partly right in my reasoning because the effect of the iPad has been markedly different from was predicted.

It is clearer now that the iPad has indeed altered the market for e-book readers first by intensifying competition between the readers such as the Kindle and the Nook reading devices. in addition, the arrangement with publishers has placed Amazon under pressure in terms of pricing of electronic versions of the books. As the story by Brad stone confirms, the major sellers of conventional readers Amazon and Barnes and Noble are engaged in competition and have reduced prices by large margins. What this implies is that the cost of the products has not only come down much sooner than was anticipated, but also that the e-reader market is getting consolidated around a recognized number of gadgets.

To my mind, this is all for the good and is a lesson to students of price theory generally and competition in particular on how markets work. What remains unresolved is the degree to which the iPad will then compete more directly with these devices. All in all,  the economics of the market for e-book readers is being driven by competition between firms making independent decisions.    

Quoting William Petty

"That which angers men most is to be taxed above their neighbors." Sir William Petty

Its the season for tax returns in the country where I live and I just encountered William Petty's quote. I feel that he speaks for me today.

World Cup 2010: Preliminary Ideas

This blog has few readers but that does not discourage me from recording that this is blog post number 450 in 3.5 years. Besides congratulating myself for telling stories largely to myself, I think that I should try and make comment on something that is more current and undeniably popular.

The largest sports spectacle in the World is at this time being held in the republic of South Africa and the initial facts show that it will be as good as any other. In the five days since, there have been some surprises, a few good matches, drab draws (like Italy vs Paraguay) and some more. So my main comment relates to the performance of the highest rated teams thus far. The defending champions are not known to start strongly but my judgement from watching Italy's first match suggests that the Azzuri is neither as organized nor as imperious as they were in 2006.

Of all the top-rated sides that have played at least a match, England were the most underwhelming in my view. Even putting aside the goalkeeping error that led to the equalizer from Clint Dempsey of the US, I think that not many people were impressed with overall performance of individual players and the whole team. Looking also at the Pool A, it is true that in spite of not winning, South Africa had a decent performance in the match against Mexico for a team regarded as the weakest host nation ever. France too seemed to punch well below its weight in terms of the calibre of players in its squad.

So with five matches played so far, the most impressive squad has been Germany. This is a surprise to many because of the substantial overhaul in the team and the absence of its long-term and dependable skipper, Michael Ballack. The self-assured demolition job against Australia a couple of days ago was impressive and may have upset the odds substantially.

In summary, I still think that there is much to go before firm favorites are confirmed and England may still reclaim its consideration by the quants here as potential champs. However, in spite of its high ranking and expectation of triumph, England does not look like champions in 2010. In all, prediction is difficult but the German teams seems to be well-conditioned and will make it to the next round.

Why Tax Policy is Politics

One of the things that I find useful about the experience of the last recession and accompanying economic crisis is the need to re-examine and distinguish between economics and business policy. The reason for stating this is that many people with a successful business background more often than not assume knowledge and competence in matters of economic policy. In addition, the economics crisis has led me to the more critical distinction between what advise a dispassionate economist may give on the one hand and other issues of policy that involve political choices.  This too is an area in which even economists mistake their political opinion for professional views.

An example of such an area of policy involves taxation generally and the application of appropriate tax rates to capital gains. Economists argue rightly that taxation of capital gains amounts to second-round taxation because these gains arise from income that was already subjected to taxation. Often the happy compromise is to subject capital gains to a lower level of taxation in comparison to other income. Sensible as ever, John Kay illustrates why capital gains is difficult to precisely define and therefore to exempt or to subject to taxation in  a rational and consistent way. His main argument is that maintenance of tax compliance requires that some capital gains taxes be levied. In emphatic terms, he states that the issue is "quite properly the subject for political compromise". This is one point that should be borne in mind as taxation policy is discussed. 

Graduates in Debt

Attending college and graduating with a degree is an expectation that many parents rightfully place on their children and many children respond by trying to meet that expectation. Needless to state though, some colleges are far more expensive than others even for the similar courses and yet the prestige of exclusive universities makes many students choose the universities with greater recognition. Ron Lieber of NYT covers in detail, the case of a student who attended the NYU and how she accumulated a large portfolio of loans that she is now struggling to service in full. Her situation reveals the paradox that in her case, her good education has left her with a massive amount of debt which affects her life in many respects.

Besides revealing the interesting paradox where good education becomes a long-standing financial burden for a graduate, the most fascinating part of the story is about the choices and incentives that students, parents and their advisers faced. A journey from the student's family to school advisers and to the financial institutions offering the loans tries to pin the blame. To my mind, Ron gets back to the critical issue towards the end of the story by revealing the inadequate preparation of students to analyze their financial options accurately. In other words, while students are prepared at very prestigious schools to undertake technical work and accomplish tasks, they often leave with very little financial literacy. So students take up loans in order to pay for their education but without an assessment of how these loans compare to the incomes that they should expect once they graduate. So what NYU should take responsibility for is the failure to let students understand how the loans that are available compare to their expected incomes.

Nadal Endorses Mille Watches

One of the marketing ideas that I have found to be based mostly on assumptions is the view that sales for certain products can be raised based on an endorsement from an individual with a high profile. I have questioned the idea that sports stars can endorse products not just out of the required skepticism for all marketing mumbo-jumbo but especially out of the view that the endorsement fees should be derived out of the real rise in sales that come from the endorsement.

Eric Wilson of NYT reports that Richard Mille, a designer of super-exclusive Mille watches brand has concluded an endorsement deal with Rafael Nadal to promote that brand of watches. To see Rafael Nadal as a compelling figure for endorsement of watches may make sense but I still wonder how the contract is structured. To my mind, the fact that the watches under consideration here are priced in the half a million US dollar range lads to the question whether popular sorts figures are able to push sales for such exclusive items.  

Undeniably, more people will be aware of the fact that the brand exists and that Rafael Nadal wears one during tournament play. Whether that drives further sales is another matter because the guys who can afford that much money for a watch may be reached in alternative ways. After all, how many people would leave a tennis match at the French Open and go straight to a dealer and take one home immediately. So I agree that Nadal is one of those who can afford and should have the exclusive time pieces but I am trying to understand how that translates into cash for the watch corporation. Perhaps it is one instance where the distinction between marketing and sales is clear.

Imperfect Competition and Immigrant Labor in Middle East

I found myself taking a very interesting position during a conversation with a Wall Street investment banker sometime last week. During a very open discussion about the nature and state of the economy in Kenya, I mentioned that the most intractable economic problem for that country in particular and a number of African countries generally is that of creating employment. Whereas official employment figures in Kenya suggest an unemployment level in the 19-20% range, my argument was that given the large number of people in seasonal and disguised unemployment, that figure was an understatement by as much as 50%.

Thinking that it was a fairly safe and sensible statement to make given that manifestation of unemployment in Kenya would be easy to demonstrate, I was completely unprepared for the demand for solutions that came from my interlocutor. My view was that increased deregulation and better education would be more effective for raising productivity and wages than would government involvement. In response to this, the Wall Street executive, who is well-travelled, asked me why the government in Kenya or other African countries have not initiated a labor export programme similar to that by south Asian countries including Bangladesh and Nepal.

Now our agreement ended at the point where I mentioned that there is a modest labor export programme but that it is unlikely that a large number of Kenyans would find employment in the Gulf states. Asked why, I stated unequivocally that many Persian Gulf residents and employers are not prepared to live side by side with a huge diaspora of Africans on a permanent basis. Now, that is not to suggest that the main reason is racism (though possibly it could be to an extent) but that culturally, it is unpalatable for many in the Middle East.

Obviously, a business person may be acquainted with Gary Becker's work suggesting that discrimination is not rational because a competitor would take advantage of prejudice to grow a business. For a libertarian, this makes sense from the economic point of view but an empirical test of this fact by two professors from the University of Chicago shows that prejudice may persist in spite of the formal models suggesting that it is not rational for businesses in the long term. Kerwin Kofi Charles and Jonathan Guryan wrote the paper reviewed here showing through an empirical test that wage gaps may persist especially in markets with imperfect competition. I suspect that the cultural issues aside, the imperfect competition for immigrant labour may lead to a disproportionate skew towards Nepali and Bangladeshi workers to the exclusion of identical Africans in manual labour in the Persian Gulf.

Now, how do I find the data to test that? I suspect this may be a good paper for the Journal of Political Economy.

      

Motorized Bikes in China

I still maintain that the world's largest experiment in human and economic development is going on in Asia and squarely involves the Chinese and Indian people. To my mind, these two countries are placed to prove to the rest of the world that large-scale human development is possible. By no means do i think that the success of either is inevitable but China in particular has done much better.

As recorded in this post a long while back, China's main cities have faced the problem of traffic congestion and opted to ban motor bikes and motorized bicycles ostensibly because they encouraged crime. It seems that in spite of the ban, motorized bicycles are still the rage in China and that there is public preference for this mode of transportation in urban areas. To my mind, this story in the Economist magazine demonstrate how difficult it is to completely kill and industry. Chinese firms are not only exporting large sums of bicycles throughout the world but local consumption and preference for them is growing.

Adding to the preference for bikes is the fact that they are perceived to contribute less to pollution in comparison to automobiles. The moral of the story is that controlling congestion requires a far more complex cost-benefit calculation than was envisaged.

Quants Claim England Will be Champs

The use of quantitative techniques in sports has spread from the US and is now employed by leading sports franchises in Europe. With the knowledge that the FIFA Football World Cup tournament is to begin in South Africa in three weeks, I have been on the lookout for any predictions of the performance of various teams. However, I have been completely surprised by the prediction mentioned here by J P Morgan that England would be the world soccer champions at the tournament in South Africa.

The reason for my surprise comes not only from my general distrust of the quant technology that many financial services firms have too much faith in, but more especially because of a book  that I read which shows that England perform in excess of what their fair expectation should be. Apart from this book, I am also skeptical of the prediction because the most persuasive algorithm that I have read about is Nate Silver's  Soccer Power Index developed for ESPN.

In a while rival algorithms will be published and their conclusions stated but I trust the SPI most because while portions of its are not available for public scrutiny, Nate Silver explains the logic behind it elaborately and it suggests that England will do well but is still well behind a number of playing countries. In other words, I like English league soccer but the national team is often overrated and I am unconvinced that the team is good enough to win the cup in July 2010.

iPads Welcome in Israel Now

I stated in this blog post that Israel's government impounded iPads from visitors and its citizens one month ago.To me, that was a totally puzzling thing considering that Israel is the Middle east's most technologically driven country. An article from the Jerusalem Post confirms that the government has reversed that policy and while I do not believe the initial reason behind that temporary ban, I still think that it has made the right decision now. True to my thinking that this is a country whose citizens welcome technology, the story confirms that it prides itself in being slightly ahead of other countries who are also launching the product.