Michael Kevane

We had a great informal seminar by Noam Yuchtman of UC Berkeley yesterday, talking about a paper he is completing on the effects of medieval universities in acting as a “supply shock” to economic growth by providing more of the legal infrastructure that lowers transactions costs.  it turns out that the Papal Schism of 1378 of Avignon/Rome meant that many German students and teachers returned to Germany and set up three universities starting in 1386.  Yuchtman argues that their establishment was a natural experiment, and that cities closer to the universities subsequently received more “royal” charters to hold markets (he takes as index of economic activity) in subsequent 20 years (i.e. a break in trend towards more rapid growth).

I wasn’t sure how he distinguished the supply side from the demand side (if they had been large amusement parks with no production of knowledge, might the agglomeration have been enough to produce the effect?) but I had to leave early due to office hours, and I haven’t had time to look at the paper.  But he was a great presenter with infectious enthusiasm, and made great links to general questions of historical underpinnings of economic growth of Europe.  It does make me wonder though about how the research agenda gets driven, in the sense that you never see this current crop of economic historians looking for natural experiments that explain the decline of Europe from 400-1000.  It’s taken for granted that growth was complex and decline simple (Goths!).  But maybe decline happened in part because of the rise of the Catholic Church, the same way growth happened in part because of the rise of universities.  Gotta go read my Goody.

From an article Robinson and Acemoglu posted to their blog, hopefully just a typo:

In this essay we provide an interpretation of why Africa is poor.  Our basic approach is, institutional.

My basic reaction is, ugh.

An excellent summary by Tim Taylor….

Back in the Paleolithic era when I was learning economics, Germany’s hyperinflation of the 1920s was the classic example of hyperinflation. When I was teaching intro economics classes in the late 1980s, I would use hyperinflation examples from Latin America, and by the mid-1990s, I could use examples from eastern Europe after the collapse of the Soviet Union. But for the next few years, I suspect, the canonical example of hyperinflation will be what has happened in Zimbabwe from 2007-2009, which has the dubious distinction of being the only hyperinflation of the still-young 21st century. Janet Koech of the Federal Reserve Bank of Dallas offers a nice overview of “Hyperinflation in Zimbabwe,” which appears in the Annual Report of the Globalization and Monetary Policy Institute.

Read his full post here.

Apparently the advocacy advertising agency Invisible Children has used Facebook to go viral with a video about Joseph Kony of the Lords Resistance Army, the same week as yours truly watched the really bad TV show about “how to tell if people are lying”that  had as central story a beautiful model “exposed” as spokesperson for an anti-Kony campaign.  The practical ethics issues are wonderful for debate.  Most academics (including Blattman) have a serious distaste for agitprop, especially of the very distant Mrs. Jellyby kind.

So the panic attack was by two students at Santa Clara University, who had invited Invisible Children to come to campus and present the video, and this week as it went viral, they started reading all the nuance, and more and more decided they didn’t want to host the Invisible Children group… so they rushed in for advice… can you guess what I said?  Lots of sympathy, and “teachable moment/debate is good” stuff.  So I am looking forward in April to see what happens.  And of course to seeing Kony handed over to ICC.

I went up to Stanford African Studies Center last Thursday for a talk by Matthew Jukes on a paper he is working on with data from The Gambia (where he taught in a school in the 1990s apparently, fun picture in his slide show). He and co-author are trying to measure and correlate (causality is hard here) what gets lost in schooling. There is a literature, for example, on decline in what is often called “indigenous technical knowledge” (i.e. plants and craft stuff) that one might expect. But less clear is “social responsibility” and “respect for parents.” The correlations Jukes presented (based on a neat method of asking adults to rate the relative respectfulness of groups of three kids) suggest that schooling is pretty strongly negatively associated with these values. And parents think these values are very important and should be learned and deepened in school. (i.e. parents apparently did not highly rank “getting smarter” as the thing that should be happening in school!).  Lots of food for thought!

The big news of the primaries, for intellectuals, is that libertarianism as an actionable political philosophy represented by someone with considerable political experience and success (Ron Paul) cannot even attract 10% of the dedicated “base” of Republicans who vote in the primaries, even in an incredibly weak Republican field.  Guess we won’t see a big surge of “Ayn” babies in 2012….

From Deric Bownds’ mindblog…

Jonathan Haidt does a nice job of bringing contemporary relevance to Tomasello and colleagues’ work comparing and contrasting the social behaviors of young humans and chimpanzees. (As these two previous MindBlog posts show (1,2), this laboratory has been carpet bombing the journals with articles in this vein.)

Pretend you’re a three-year-old, exploring an exciting new room full of toys. You and another child come up to a large machine that has some marbles inside, which you can see. There’s a rope running through the machine and the two ends of the rope hang out of the front, five feet apart. If you or your partner pulls on the rope alone, you just get more rope. But if you both pull at the same time, the rope dislodges some marbles, which you each get to keep. The marbles roll down a chute, and then they divide: one rolls into the cup in front of you, three roll into the cup in front of your partner…In this situation, where both kids have to pull for anyone to get marbles, the children equalize the wealth about 75% of the time, with hardly any conflict. Either the “rich” kid hands over one marble spontaneously or else the “poor” kid asks for one and his request is immediately granted. (Chimpanzees doing tasks similar to this one do not share the spoils, in any of the conditions. They just grab what they can, regardless of who did what.)

A slight variation ..reveals a deep truth. Continue reading →

A wonderful Amazon.com review by A.J. Sutter of the now almost 5 years old  Competing on Analytics, of little relevance to African economic development except for the mobile phone companies and Western Union/Moneygram!

A. FALLACY (and related sins): The most obvious ones in the book are: (i) confusing causation with correlation, (ii) attempting to lead the reader into such confusion, and (iii) “post hoc, propter hoc” (if Y comes after X, Y must have been caused by X).

(i): At page 178, the authors discuss “direct discovery technologies” that mine data and would “let managers go directly to the cause of variances in results or performance. This would be a form of predictive analytics, since it would employ a model of how the business is supposed to perform, and would pinpoint factors that are out of range in the causal model of business performance.”

First we need to deal with a textual ambiguity: the meaning of “supposed” in this context. If “supposed to” is normative — i.e. meaning “is desired to” — then to call technology “predictive” when it uses such a model is quite a stretch. So does “supposed to” have a more neutral meaning, like “is anticipated to”? I’ll assume that this fits the context better.

Now let’s get to the real problem: The model is looking at results and performance — i.e., the past. As statistical programs are wont to do, the model can identify correlations; and let’s assume that it will make predictions based on the observed correlations (there are some commercial software packages that promise this). That is quite different from divining causes, which nonetheless is what the authors have twice asserted in this passage. I leave aside the question of predictive value based on past results; read Taleb or your mutual fund prospectus (“Past results are no guarantee of future performance”).

Continue reading →

Despite all the positive growth numbers coming out of Africa, the future looks bleak indeed over the shorter-term horizon.  Lots of autocracies, more and more weapons, porous borders, massive corruption, multinationals very willing to fund private armies, drug cartels discovering Africa as transhipment point, dislocation due to rapid swings in incentives (one estimate that I heard was that 1 out of every 5 young men in Burkina Faso had left their village to try their hand at artisanal gold mining, a horrific way to make a living and pursue l’aventure if there ever was one), the list goes on and on.  These same price and profit changes mean that inequality is growing rapidly, abetted by trade and financial liberalization, and growing emigration, legal and illegal.  Primary schooling is soaring, so there is a whole new generation of youth who have good reason to not “respect” their illiterate elders.  Add to this rapid telcom change as Internet and mobile phones penetrate ever deeper into urban and village societies, and you have a recipe for lots of social instability.  Yikes!

The upside of course is that most African economies are the worst performers in the world, and some of them really in recent human history, so while many will worsen in the coming years, eventually they will be better poised for rapid catch-up.  And also, African societies may be more resilient, because of their informal organization and self-sufficiency, to large-scale global threats that may challenge wealthy economies that rely on massive specialization.

So much for Tuesday philosophizing.