Truck and Barter

Gone In a Flash

USB flash drives are one of the great inventions of our times. Who wants to carry around a floppy disk that while not so floppy had limited capacity. USB are easy to use and highly convenient. However, after loading a bunch of data for my discertation on one at school that took a few hours, I can no longer locate my USB drive. I can only blame myself since this the fourth one I've had over the past few years. I guess I'm just a sucker for them.

On another note about the data I'm working with, check out this description of how political parties are classified. From the Database of Political Institutions:

Right (R); Left (L); Center (C); Not applicable (0)

Our sources had little detail on party platforms and agendas with respect to economic policy. Therefore, to identify party orientation with respect to economic policy, we used the following criteria:

1) In the Handbooks, we first considered the party name, and used the following rules:

Right: for parties that are defined as conservative, Christian democratic, or right-wing.

Left: for parties that are defined as communist, socialist, social democratic, or left-wing.

Center: for parties that are defined as centrist or when party position can best be described as centrist (e.g. party advocates strengthening private enterprise in a social-liberal context). Not described as centrist if competing factions “average out” to a centrist position (e.g. a party of “right-wing Muslims and Beijing-oriented Marxists”).

0: for all those cases which do not fit into the above-mentioned category (i.e. party’s platform does not focus on economic issues, or there are competing wings).

Blank: for those cases where orientation is unknown.

2) If the orientation of a party was not immediately obvious from its name or description in the handbooks, we consulted the website: http://www.agora.stm.it/elections/parties.htm. This site provides one-word descriptions of party orientation which could be fit into the above framework. Cross-checks on parties listed in both sources showed a high degree of agreement. As this source provided no historical information, we assumed that party location on the left - right spectrum remained unchanged over time, and we recorded this party orientation for all years.

Terms on the website such as “liberal”, “progressive”, “authoritarian” or “xenophobic” were dealt with in the following way: For “liberal” we went with the European definition (right), since the website is based in Europe. We classified “progressive”, “authoritarian”, “xenophobic” as “0” (none of the above) unless we had additional information that allowed us to position the party on the left - right - spectrum (see 2).

UPDATE (KB): Bob, I feel your pain, and suggest getting one of these to hang around your neck:

Sure, it would even make a supermodel look like a dork, but most of us working in sensitive environments must wear a cow-bell ID anyway. I guess it all comes down to the marginal amount of dorkiness involved

Reputation Effects in Driving

I'm not sure what overall effect it might have, since the punishment mechanism seems a bit nonexistant -- save for being able to send a postcard indicating the recipient has been "wired" -- but if you run across a bad driver and have chance to record the license plate, try feeding it to PlateWire. In their own words:

PlateWire is a public repository and electronic forum of drivers by drivers. Using a drivers license plate, commuters can communicate their thoughts and feelings in regards to driving on today's roadways. Report and flag bad drivers, award good drivers, and even flirt with cute drivers.

Ok, so that last bit strikes me as a bit cloying (and ripe with potential for abuse), but I like the idea of a user-generated driving quality database. While the level of frustration (rage? of each driver is completely subjective, it might help to know not only where the most frustrating drivers are, but where you would find the most frustrated ones as well.

Pretty Pictures

I'm pretty sure Bred DeLong never called me the stupidest person on earth like he has others (or whatever he refers to people whom he disagrees with). I am pretty sure he would though if he only knew me. With that in mind, I have decided to post graphs of data because being a literal imbecile makes it difficult for me to understand anything unless it's presented as a pretty picture. I was reading this so I thought I would mention some of the tidbits it contains. Here's the first:

A proposal to make Sunni Arabs happy

Two Princeton professors Shivaji Sondhi and Michael Cook, have a guest column at Econbrowser on a suggestion to improve the stake of the Sunnis in Iraq;

“The problem from the start has been the stake of the Sunni Arabs. This was entirely predictable, as no minority used to a disproportionate share of power gives up this privilege easily-- the relative deprivation simply excites too many fears. One only has to look at nearby Lebanon for an example…

To this end we propose that the United States make a financial commitment to Iraq which takes the form of ensuring that its Sunni provinces get oil revenues proportional to their share of the population over the next decade or possibly more. Initially, it should take the form of simply funneling an amount equal to the Sunni share directly to these provinces. This would at the same time increase the size of the national pie, which would help to appease the Shia and the Kurds, and might also reduce the tension over Kirkuk. In later years the commitment would transition into an insurance policy.

What would be a rough upper bound on such a commitment? To date Iraq has produced a maximum of 3.7 million barrels per day (bpd) of oil. This was back in 1979, and the country hasn't actually produced more than 3.5 million bpd since 1990. It is quite unlikely that either figure will be exceeded anytime soon. Taking the 1979 figure and a profit of $50 per barrel, we are talking about revenues of approximately $67 billion a year. Of this we may estimate the share of the Sunni majority provinces at about 20 per cent, or $14 billion. Today their share of the 2 million bpd production is closer to $7 billion."

Related;
Iraq's white-collar crime by Juan Cole
Iraq Force Shift Studied
Don't Punt on The Troops Issue by Fareed Zakaria
Iraq: over 3,700 civilians killed in October
Iraq snapshot
Violence in Iraq: A Data-Driven Approach
Iraq Kurdistan Book Drive

Iraq: Dujail Trial Fundamentally Flawed
“The proceedings in the Dujail trial were fundamentally unfair. The tribunal squandered an important opportunity to deliver credible justice to the people of Iraq. And its imposition of the death penalty after an unfair trial is indefensible”
(Human Rights Watch Report)

Tracing a Statistic: Teen Suicide

Two-thirds the way down on page 15 of Alexandra Robbins' The Overachievers, I come across this statistic:

[Overachiever culture] has diminished leisure time for all ages. It is believed to be a major factor in the 114 percent spike in suicide rates among fifteen-to-nineteen-year-olds between 1980 and 2002.

I'm not an expert on these types of important social issues, but that number didn't look quite right to me, so I flipped to the endnotes, and found:

15.114 percent spike: The important article by Stepp, Laura Sessions. "Perfect Problems/" Washington Post, May 5, 2002.

Unfortunately, that article is not online (for free), but using my local library's electronic database, I found it:

"I've seen a dramatic change in the stress level of these kids," says Carolyn Callahan, who has worked with high achievers for 30 years, currently at the National Research Center on the Gifted and Talented at the University of Virginia. "They're going through the motions and not enjoying what they're doing." The perfection machine, what she calls a treadmill, "has created a situation where they don't feel they have a choice to get off."

One report in a newsletter by Callahan's center worries that the characteristics of these students, including "perfectionism" and "supersensitivity," put them at risk for suicide, and notes that the proportion of young people ages 15 to 19 who have taken their own lives has jumped 114 percent since 1980.

We're getting warmer. A simple Google search revealed the report in the newsletter. It starts off like this:

The rate of suicide among children 10 to 14 years of age increased 100% between 1980-1996. Among youngsters 15-19 years of age, the rate of increase was 114%, making suicide the fourth leading cause of death for this age group (U.S. Department of Health & Human Services, 1999).

So it is not true that the suicide rate for 15-19 year olds increased by 114% from 1980 to 2002 -- 2002 being when the WaPo article was written --, but from 1980 to 1996.

But I had to keep going. Is that just as depressing statistic even true? We're still not sure how this data was created and validated. According to the footnote, the HHS report is actually the Surgeon General's Call to Action to Prevent Suicide 1999. Another Google search reveals the SG report, in which we find.:

From 1980 to 1996, the rate of suicide among persons aged 15-19 years increased by 14% and among persons aged 10-14 years by 100%

Umm.... It's 14%, not 114% percent!?! Let's go to the source of those statistics! I would, but those aren't sourced at all in the SG document!

Fortunately, hard data do exist, but I found it difficult to source the original CDC table ("Death rates for 72 selected
causes by 5-year age groups, race, and sex: United States, 1979–1997. Worktable GMWK 291 Trend B"). These folks do cite the data, and do me one better by graphing it:

We're interested in the white squares. So the real growth in the 15 to 19 year old suicide rate is 14%, not 114%. The red line shows where a constant suicide rate would have ended up in 1996. The blue line shows where the alleged 114% increase would have left us in 1996.

What an utter refusal to check sources and validate simple statistics! THIS IS NOT MY JOB, nor the job of any of Ms. Robbins' readers. It's the job of the author and editors. I don't know if I should even bother continuing to read the book at all, as I've spent 1/2 hour tracking down just one horrendously wrong data point. How many more will be this wrong???

-----

I'm not saying teen suicide isn't a problem, or that we should pretend that overachievers don't have problems. I am saying that understanding the actual scope of the problem is vital in arranging our political priorities. And for that we need solid data, not this crappy series of citations of tertiary sources.

Moral: Next time you hear a politician say we need a "national discussion" on an issue, realize that the type of "facts" they want to talk about are frequently no better sourced than the example cited here.

Chart of the Day- Deaths of poor in rich neighborhoods

“By living in a well-to-do neighborhood, poor people increase their risk of death, according to a new study by School of Medicine researchers to be published in the December issue of the American Journal of Public Health.”
- Death rates for poor higher in rich neighborhoods

Via Columbia Sat Blog and Michael Stastny

Here is the abstract of the paper;

Low Individual Socioeconomic Status, Neighborhood Socioeconomic Status, and Adult Mortality;
Objective; We examined whether the influence of neighborhood-level socioeconomic status (SES) on mortality differed by individual-level SES.
Methods. We used a population-based, mortality follow-up study of 4476 women and 3721 men, aged 25-74 years at baseline, from 82 neighborhoods in 4 California cities. Participants were surveyed between 1979 and 1990, and were followed until December 31, 2002 (1148 deaths; mean follow-up time 17.4 years). Neighborhood SES was defined by 5 census variables and was divided into 3 levels. Individual SES was defined by a composite of educational level and household income and was divided into tertiles.
Results. Death rates among women of low SES were highest in high-SES neighborhoods (1907/100000 person-years), lower in moderate-SES neighborhoods (1323), and lowest in low-SES neighborhoods (1128). Similar to women, rates among men of low SES were 1928, 1646, and 1590 in high-, moderate-, and low-SES neighborhoods, respectively. Differences were not explained by individual-level baseline risk factors.
Conclusion. The disparities in mortality by neighborhood of residence among women and men of low SES demonstrate that they do not benefit from the higher quality of resources and knowledge generally associated with neighborhoods that have higher SES.

How many civilians have died in Iraq?

According to Iraqi government official;

"Iraqi Health Minister Ali al-Shemari estimated Thursday that 150,000 Iraqi civilians have died in the war as he spoke to reporters in Vienna. He later said he based the figure on an estimate of 100 bodies per day brought to morgues and hospitals--though such a calculation would come out closer to 130,000. However, the head of Baghdad's central morgue said his facility alone was receiving about 60 bodies a day as a result of violence."

Related;
Good News for Bush- from The Economist blog- also have a look at their spreadsheet
On Whose Authority
Can we accept Lancet’s result without accepting their number
The cost of Chaos
Drowning by Numbers
Estimating Iraq deaths using survey sampling

Reality checks: some responses to the latest Lancet estimates
Tyler Cowen on the Lancet study
Daniel Drezner on the study

Further readings on the Iraqi excess deaths study
Dangerous Statistics: Estimating Civilian Losses in Afghanistan
Iraqi Death Toll Exceeds 600,000, Study Estimates

Home Fronts: Iraq (podcast)
Terry Lane talks to Patrick Cockburn and Zaki Chehab, two journalists who have recently published books about Iraq-Patrick Cockburn,Middle East correspondent for The Independent and Zaki Chehab, London Bureau Chief, Al Hayat-LBC TV

Iraq’s healthcare system rapidly deteriorating
Sex traffickers target women in war-torn Iraq
Paintings of Abu Ghraib shunned in US

*FERNANDO BOTERO painting on Abu Ghuraib above

Natural Disasters & GDP

Marginal Revolution has a point / counterpoint regarding whether measured real GDP increases or decreases in response to natural disasters.

My summary answer: with high confidence, we know that real measured GDP decreases in the disaster area in the immediate quarter. With less confidence, huge government borrowing to aid victims in the next several quarters does increase local and national measured real GDP, but disruptions in local markets cause increases in national prices that will have a negative impact more than offsetting the short-term gains from borrowing; llocal gains in the quarters following a disaster are paid at large national expense. Even the gains are transitory, since they are spent largely on non-investment goods, and repayment will lower measured GDP. GDP growth will be low in the disaster area for several years. National growth will be largely unaffected.

There are several ways to go about measuring the impact of an event on a metric. Since this is a lunchtime analysis, why not look at the aggregate data of Katrina's impact? Hurricaine Katrina hit Louisiana (and Mississippi) during the middle of 2005Q3, so we should see some effects in the 2005 advance annual estimates. And we do. In 2005, Louisiana was the ONLY STATE in the nation to have negative GDP growth, -1.6% year over year, compared to 2004.

So in the short term, in the area of disaster, measured GDP decreases. Still unanswered: did the rest of US have higher GDP growth because of this? I don't know. (We do know that energy prices and other materials went up, lowering real measured GDP elsewhere, but that some manufacturing production shifted quickly, while Wal-Mart re-opened pretty quickly).

What happens after the short term? We can look inside Louisiana, quarter by quarter in 2005 and 2006 using personal income estimates, not GDP. According to these data, Louisiana personal income decreased by (a seasonally adjusted annual rate of) -49.5% in 2005Q3 and increased by 106.7% in 2005Q4, with tepid increases of 0.2% and 0.8% in 2006Q1 and 2006Q6 -- the worst 2006 performances of any state in the country for both quarters. But that's income (including transfers), NOT production.

So the only hard evidence we have is that, in one disaster area, measured GDP halved in the immediate short term, and doubled in the following quarter. What happens elsewhere, we'll leave to theory. After the initial hit, personal income in the disaster area increases in response to outside aid and rebuilding efforts. Given the personal income reported, it is likely that Louisiana's measured GDP growth will be very low in the medium term -- even with aid. Now, do we expect outside aid to increase measured GDP outside of Louisiana? No.

Another way of thinking about this is where the aid is coming from. Basically, the U.S. Federal government has and will borrow around $100-$200 Billion, mostly from overseas, to give to Katrina's victims and to rebuild. The average maturity of governement debt is what, five years? So this borrowing, tranferred to consumers, ups income and product sides of NIPA right away, and lowers it when the government repays -- or so says Joe Stiglitz.

Well, time's up.

The Cost of Living Extremely Well

“Over the past 12 months, our Cost of Living Extremely Well Index (CLEWI) climbed 7%, keeping pace with the Consumer Price Index's 4%”
-Forbes magazine

Related;
Zero Sum Economics
Who Suffers From Inflation?

Free the World

Related;
Read My Lips

A Concept Map of Microsoft Office 2007

A cool concept map of MS Office 2007 resources by MS Office evangelist, Don Campbell.

Thought of the Day- Political Dresses

“In the 2006 midterms, Senators Hillary Clinton (D-NY) and Rick Santorum (R-PA), both running for re-election, have raised the most money of any candidate in their respective parties. Here are the NASCAR-style uniforms they would wear if companies were proud of their political donations, and if running for senate required a flame-retardant suit.”

Source- The Good magazine
Related;
Open Secrets- your guide to money in politics
Decision '06

Google News Corporation

Google has started a new feature- News Archive Search. I tried searching for Maldives news items- some interesting things came up (slight spelling corrections made below);

“Holland Evening Sentinel - NewspaperArchive - Jul 7, 1952, THE BENIGHTED MALDIVES LACK CIVILIZED WOES; Now that the Maldive islands, in the Indian ocean, have adopted a republican form of government, it is obvious that something ought to be done to bring the benefits twentieth century civilization to the inhabitants. The MALDIVES, known chiefly to stamp collectors, seem to be singularly backward. They have no relations to speak of with other nations, and hence no cold war tensions. They have no television, and only a few automobiles, limited to one' of the inhabited islands. They have no crime and no jails. The islanders never need aspirin or pheno-barbital. The people, it seems, spend most of their time fishing, fashoning lacquer work, making rope and collecting. They've never learned to get stirred up over things. When the time comes to change their government, they don't make a lot of fuss and speeches; they simply tell some- ody to sit under a palm tree and up a constitution. It's something of a mystery why these benighted people have not tried before this to improve their sorry lot and learn how to enjoy he boons we civilized people take or granted. There's a possible answer which we hate to consider, .faybe they're smarter than we.”

Native Revolt In Maldives Is Disclosed; LONDON, Jan. 8 1959 (AP)--Angry mobs swarming from a canoe armada have wrecked and burned offices of the native Government on a remote ...

Reno Evening Gazette - NewspaperArchive - Dec 7, 1934, Maldive Islands lack a sultan Until recently this Indian ocean archipelago had a ruler, Sultan Shamsudeen Iskander, who paid tribute to the British government of Ceylon. Caught trying to substitute an absolute monarchy for the established representative government of the MALDIVES, he has just been dethroned by King George V. "Dreamers who long for an Idyllic Island existence would find their dreams punctured by a visit to the Maldive Islands says a bulletin from the Washington, D C headquarters of the NATIONAL Geogiaphic Society.

…Tourists are warned against sleeping on the islands, as they, even more than natives, fall prey to strange complaints…; climate more than anything else, has hindered the development of these islands, especially their foreign intercom se "Only seventeen of the two thousand Islands are inhabitable, …But even agriculture In the MALDIVES has its drawbacks. Natives have to fight armies of rats which menace their cocoanut crops. All the rice consumed must be imported, and is so expensive that only the wealthy can afloid It …..So frequent are wrecks on this and other Maldive Islands that the governor of Ceylon, in granting Ceylon's, and therefore Britain's protection to the MALDIVES, stipulated that, In return, the islanders must aid all Europeans wrecked on their atolls. "In spite of bad climate, bad water, and other obstacles that would discourage most people, the eighty thousand Maldive Islanders live fairly comfortably. Most of them are short, dark copper in color, Intelligent and Industrious They weave their own cloth, and their own boats and nautical Instruments They are skilled navigators and spend much time on the water fishing for bonito. Several of the islands maintain training schools for sailors Maldivans are Mohammedans and occasionally make pilgrim voyages to the Red Sea …

"Native products are peddled among the Islands in native boats, but all trading with foreign countries is done from Male Island, capital of the group. Male, or Sultan’s Island, Is one of the nine inhabited islands ol a group of fifty which compiise Male atoll. On its small surface, less than one square mile In extent, aie crowded trees, houses along sandy streets, foits, the Sultans tomb, and the dethroned sultan's wall-enclosed palace One thousand of Its approximate five thousand Inhabitants are soldiers. "Coral patches and tide lips make one side of Male Island inaccessible, but the harbor on Its east side, protected by a rough breakwater is good. Once a month, two-masted sailing vessels leave for Colombo, Ceylon, with mail, reaching there in three days If the monsoon winds are favorable, sometimes not for thirty days, If they are unfavorable. In August 01 September boats leave for Ceylon, and Calcutta India, carrying principally coir yarn Male Island reaches its peak of activity and excitement when the annual foreign tiaclers call in March. Natives who have brought their product from other atolls gather on the shore to hall ijith delight ships from Ceylon, Sumatia, and Chittagong, India. Duty, consisting of bags of rice, red handkerchiefs, and other commodities such as onions coriander seed and cummin seed, was formerly presented to the Sultan and his government officials "To watch Maldivians do their equivalent of Christmas shopping is to witness a colorful sight. Foreign traders purchase from them large quantities of bonito, which is in great demand in Sumatra and Ceylon. They also buy tortoise shells, coconuts, coir yam, woven glass mats, and cowrie shells used as currency by some Asiatics. In return, the islanders receive rice, dates, salt, curry- stuff, leaf tobacco and betel nuts. They prize red and white checkered handkerchiefs, coarse white cloth, and colored waist cloths. Chinaware and Indian pottery go over big. Although they make a kind of sugar from cocoanuts, they are glad to get coarse brown sugar. They will also trade their cowrie shells for small quantities of steel, thread and brass."

Mean Republicans and Median Democrats

The latest column of John Allen Paulos’, “Who’s Counting:It's Mean to Ignore the Median”;

“Believe it or not, the difference in the way the Democrats and Republicans react to the performance of the U.S. economy is clarified by a mathematical distinction studied in elementary school. The distinction is between the mean, which the Republicans emphasize, while the Democrats prefer the median. Before turning to the economy, let me review a little fourth-grade arithmetic….

The relevance of this distinction is apparent in the just-released figures on the U.S. economy for 2004, the latest year for which there is complete data. The Republicans chortle that the economy grew at a healthy rate of 4.2 percent. (It's slowed since then.) The Democrats point to data from the Census Bureau for the same year (and earlier as well), indicating that the real median family income fell and that poverty increased…

Still, this lopsidedness is neither necessary nor inevitable, and it bodes ill for civil society. Almost 2,400 years ago Aristotle, seeing the discord between ancient Greece's rich and poor, applied his idea of the golden mean to call for an equitable (but not equal) income distribution. For purposes of stability, he favored establishing a strong middle class and government policies to assist in this establishment.

A little game from the field of behavioral finance illustrates the class resentment Aristotle described. The so-called "ultimatum game" generally involves two players: One is given a certain amount of money, say $100, by an experimenter, and the other is given a kind of veto. The first player may offer any nonzero fraction of the $100 to the second player, who can either accept or reject it. If he accepts it, he is given whatever amount the first player has offered, and the first player keeps the balance. If he rejects it, the experimenter takes the money back…”

Hail the Google Books!

“In the 1970s, the Khmer Rouge regime in Cambodia decimated cultural institutions throughout the country. Khmer Rouge fighters took over the National Library, throwing books into the street and burning them, while using the empty stacks as a pigsty. Less than 20 percent of the library-home for Cambodia’s rich cultural heritage- survived.”
- University of Michigan President Mary Sue Coleman

A new feature of the Google’s Book Search makes out-of-copyright works available for downloading and printing.

Juan Cole raises a couple of problems with Google Book project;

“One problem: I am already finding poorly done books, where every other page is blurred beyond reading. This is very bad because I don't know when it would ever be corrected, and no one would have an incentive to carry out this sort of project once Google has…

A second, general problem with Google is that on the whole it is no good at searching by date. Why is that so hard to put in a search engine? Is it that programmers just don't appreciate the desirability of being able to study instances of the word "liberte" in France, 1700-1789? You can put dates in the searches, but in my experience that doesn't return satisfactory results. If Google wants the project to have maximum impact, they need to address this problem. (It would be nice to address it in their general web search engine, too. Have you ever tried to find a document put up on the Web in 1998, where you don't remember whole search strings?) Otherwise, I see a business opportunity for a historian who has good programming skills…”

Related;

Google, the Khmer Rouge and the Public Good; Mary Sue Coleman’s speech- highly recommended, gives also a history of JSTORE.

Making of America Books

Wikimania Conference

Overselling the Web: Development and the Internet- a new book that is coming up, published by a World Bank economist, Charles Kenny.

Podcast of the Day- Gene Sperling’s Labor Market

Gene Sperling, senior fellow at the Center for American Progress talks with Bloomberg's Tom Keene from Washington about his approach to analyzing the strength of the labor market and the outlook for the midterm elections. Listen to the podcast.

Related;
Pro-Growth Progressive-book presentation at Google
Sperling interview with Charlie Rose
Could I ever become a Democrat?-Tyler Cowen
A article on the book by Sperling

Traffic Fatalities and Corruption

An interesting paper- Traffic Fatalities and Public Sector Corruption by Nejat Anbarci, Monica Escaleras, and Charles Register. Abstract;

“Traffic accidents result in 1 million deaths annually worldwide, though the burden is disproportionately felt in poorer countries. Typically, fatality rates from disease and accidents fall as countries develop. Traffic deaths, however, regularly increase with income, at least up to a threshold level, before declining. While we confirm this by analyzing 1,356 country-year observations between 1982 and 2000, our purpose is to consider the role played by public sector corruption in determining traffic fatalities. We find that such corruption, independent of income, plays a significant role in the epidemics of traffic fatalities that are common in relatively poor countries.”

Related;
World report on road traffic injury prevention;"Every day around the world, more than 3000 people die from road traffic injury. Low-income and middle-income countries account for about 85% of the deaths and for 90% of the annual disability adjusted life years (DALYs) lost because of road traffic injury. Projections show that, between 2000 and 2020, road traffic deaths will decline by about 30% in high-income countries but increase substantially in low-income and middle-income countries. Without appropriate action, by 2020, road traffic injuries are predicted to be the third leading contributor to the global burden of disease and injury."

Multi-country study on helmet wearing

Ten Leading Causes of Death- US

'Psychological' traffic calming

International Road Traffic and Accident Database (IRTAD)

Worldmapper

Territory size shows the relative tourist profits made, in US dollars;

"The seven highest earning territories (per person) are islands: Bahamas, Palau, Barbados, Seychelles, Cyprus, Malta and Hong Kong. The highest net earnings are made in Spain where a profit of US$33 billion was made in 2003 which is more than twice the profit made by the second highest tourist earner: the United States."

From Worldmapper – a cool set of maps via Thoughts about K4D-they also have the data files in EXCEL.

Competition and Pandemic Control

Recently I watched the TED speech of Larry Brilliant where he talked about the importance of ‘early detection and early response’ as key for any pandemic control plan. He also talked about the role of public databases like GPHIN in early detection of pandemics and competition it brought to reporting of pandemics. The following article from The Economist summarises some of current data sharing efforts on pandemic diseases;

“The Global Pandemic Initiative, formed in May, is a collaboration between the WHO and the CDC, together with IBM, a large computer firm, and over a dozen other groups. It is intended to develop “the use of advanced analytical and computer technology as part of a global preparedness programme for responding to potential infectious disease outbreaks.” One approach IBM hopes to take is to develop software that will help predict how diseases might spread.

Another new group wants to turn the entire process of identifying outbreaks on its head. Larry Brilliant, a former WHO official who helped to eradicate smallpox in India, dreams of an open-source, non-governmental, public-access network that would help the world move quickly whenever potential pandemics start brewing. He looks for inspiration to the Global Public Health Intelligence Network (GPHIN), an obscure programme run by the Canadian government that searches public databases in seven languages looking for early signs of disease outbreak.

Dr Brilliant, who is now the head of Google's philanthropy arm, made his wish known at the Technology Entertainment Design conference, an annual gathering in California of leading entrepreneurs and thinkers from the information-technology and entertainment industries. His speech so galvanised the gathered titans that he now has the backing of Sun Microsystems, Google and several big Silicon Valley venture-capital funds and investors. They are helping to develop a new “web crawler” that will expand GPHIN to track newspapers and internet blogs in 40 to 100 languages.

A reasonable objection to such a system is that it is based on press reports, not verified scientific data. Even so, its supporters argue that it could prove valuable. Press reports have the virtue of immediacy, and its results will always be subject to verification by the WHO and government authorities, of course. But its very existence might persuade them to act more promptly. After all, that is what GPHIN did a few years ago during the SARS outbreak, when it sounded the alarm and forced the authorities to respond. The direct result, in Dr Brilliant's words: “SARS is the pandemic that did not occur.”

Related;
A Summary of Larry Brilliant’s speech

My avian flu policy paper- Tyler Cowen

Avian Influence information; from CDC, WHO, World Bank, Wikipedia, Fluwiki, Pandemic News, BBC, National Geographic Multimedia, InterAction, US Government, FAO

Data sharing; GISAID, International HapMap Project

Support Builds For Pre-Pandemic Vaccination

Warnings of a Flu Pandemic-Web Focus from Nature

Bird flu data liberated

WHO changes H5N1 strains for pandemic vaccines

Pandemic flu: fighting an enemy that is yet to exist

Pandemic Influenza Plans- US, US States Plans, UK, Canada, New Zealand, Australia, Singapore, links to other National Influenza Pandemic Plans

Blogs; H5N1, Ethics of Vaccines

BirdLife Statement on Avian Influenza; 'Globalisation has turned the chicken into the world’s number one migratory bird species'

Analysing the Avian Flu Threat- Charlie Rose

Poverty’s Effect on the Brain

An interesting paper on the effects of childhood poverty; Childhood poverty: Specific associations with neurocognitive development- abstract;

“Growing up in poverty is associated with reduced cognitive achievement as measured by standardized intelligence tests, but little is known about the underlying neurocognitive systems responsible for this effect. We administered a battery of tasks designed to tax-specific neurocognitive systems to healthy low and middle SES children screened for medical history and matched for age, gender and ethnicity. Higher SES was associated with better performance on the tasks, as expected, but the SES disparity was significantly nonuniform across neurocognitive systems. Pronounced differences were found in Left perisylvian/Language and Medial temporal/Memory systems, along with significant differences in Lateral/Prefrontal/Working memory and Anterior cingulate/Cognitive control and smaller, nonsignificant differences in Occipitotemporal/Pattern vision and Parietal/Spatial cognition.”

Via Neurocritic.

Related;

Rushton, J. P., & Jensen, A. R. (2005). Thirty years of research on race differences in cognitive ability

In the mind of the child soldier; Northern Uganda, Democratic Republic of Congo, Liberia, Sri Lanka, Columbia. Some of the world's conflicted countries where young children are recruited, or violently abducted, to serve as soldiers. Two psychologists at the coalface, and a teenage abductee, join Natasha Mitchell to discuss the complex psychology of child recruitment, reintegration and repatriation. Little innocents or self-aware agents? A confronting issue that's not straightforward. Stories of hope prevail too. Listen to podcast.

False memories and young minds; Your memory is your personal archive. But it can trick you too - sometimes with serious consequences. Are children more susceptible to false memories, or adults? Striking new research has important implications for how we handle children in courts and therapy, and for our understanding of this fallible human talent. Here is the podcast.

One Percent Doctrine in Real Life

John Allen Paulos column on the One Percent Doctrine;

“…Suskind describes the Cheney doctrine as follows: "Even if there's just a 1 percent chance of the unimaginable coming due, act as if it is a certainty. It's not about 'our analysis,' as Cheney said. It's about 'our response.' … Justified or not, fact-based or not, 'our response' is what matters. As to 'evidence,' the bar was set so low that the word itself almost didn't apply."…

Imagine what would happen in various everyday situations were the Cheney doctrine to be applied. A young man is in a bar and another man gives him a hard stare. If the young Cheneyite feels threatened and believes the probability to be at least 1 percent that the other man will shoot him, then he has a right to preemptively shoot him in "self-defense."

Or an older woman visits her Cheneyite doctor who, finding that the woman has suffered from a sore throat and fatigue for months, orders that she be put on chemotherapy since the likelihood of cancer is in his opinion at least 1 percent. Further tests, he might argue, would take too long.

A Cheneyite gambler would be a casino's dream. The chance of rolling a 12 with a pair of dice, for example, is 1/36, almost 3 percent, and hence would justify the gambler betting his house on rolling a 12.

And what about a Cheneyite scientist, hard as that may be to conceive? If this scientist decided that the "evidence" for some crackpot scientific theory suggested to him that its probability were at least 1 percent, the scientist would feel comfortable touting it as a reasonable alternative to established theory."

"Needless to say, standards for action or decision are generally far more stringent. For a conventional scientist running a statistical test of a hypothesis the threshold is usually 95 percent, not 1 percent. More precisely, if the scientist runs the test, and obtains, based on the tentative assumption of the hypothesis, an outcome having a probability of less than 5 percent, then he or she generally rejects the hypothesis.

And certainly in criminal trials the statistical burden is much greater; it's beyond a reasonable doubt (that is, an indeterminate, but very high probability), not 1 percent. In civil cases the probability standard is lower, but still nowhere near 1 percent….

Nor do they need consistency. A companion to the Cheney 1 percent action doctrine (if the probability is at least 1 percent, act) is the administration's non-action doctrine (if the probability is less than 99 percent, then don't act). This latter doctrine is generally invoked in discussions of global warming, where it seems absolute certainty is required to justify any significant action. Ideology determines which of these two inconsistent doctrines to invoke...”

Related;
Blogs discussing the book; Brad De Long, Kevin Drum, Mathew Yglesias, Tom Tomorrow, Radio Free Newport, Sunstein, Jon Swift
Compare with Robert Rubin’s style of thinking

Multimedia
Suskind with Charlie Rose, Colbert, Democracy Now, CNN
Podcast of the pressentation at the University of Virginia, Miller Center of Public Affairs

Trade and CGE Models

The Economist a couple of weeks back had a good article on economic models;

“Economic models fall into two broad genres. Macroeconomic models, the distant descendants of Phillips's machine, belong mostly in central banks. They capture the economy's ups and downs, providing a compass for the folks with their hands on the monetary tiller. The second species, known as computable general equilibrium (CGE) models, largely ignore the vagaries of the business cycle. They concentrate instead on the underlying structure of production, shedding light on the long-term repercussions of such things as the Doha trade round, a big tax reform or climate change…

Trade's virtuous effects are of two distinct kinds. First, trade helps countries make the most of what they already have. It frees countries to allocate their resources—whether they be cheap labour, fertile land or educated minds—as efficiently as possible. But, secondly, trade can also allow countries to accumulate resources more quickly. Indeed, the biggest prizes lie in faster growth, not heightened efficiency; in accumulation and innovation, not allocation.

By their nature, CGE models are better suited to capturing the first effect than the second. They provide “before and after” snapshots of the economy at two points in time. They are therefore good at capturing the one-off gains that might arrive from a redeployment of the economy's resources. They are much less good at capturing the continuing gains that result from a faster accumulation of capital, or a quickened pace of productivity growth. Most trade models, indeed, hold productivity fixed…”

Oxfam recently had a new paper up critiquing the CGE modelling in trade- Modelling the Impact of Trade Liberalisation; A Critique of Computable General Equilibrium Models, by Lance Taylor and Rudiger von Arnim, New School for Social Research;

The paper presents a review and critique of the most widely used trade models based on computable general equilibrium (or CGE) models. The emphasis throughout is on methodology. The paper provides concise analytical arguments explaining the fundamental weaknesses of CGE models, paying particular attention to the way that CGE models conceptualise and measure welfare. The authors also show that the manner in which the World Bank uses CGE modelling is highly problematic, making implausible assumptions about elasticities, the exchange rate, and macro causality. World Bank models assume that the most central macro-economic indicators do not change in response to any liberalisation scenario. The authors argue that this is negligent, especially in developing countries with historically large trade deficits, significant debt problems, and a large informal economy with underemployment in modern sectors. The authors also identify a particular inconsistency inherent in the use of ‘Armington’ specifications of elasticities in CGE models. They show that, even if the Bank’s welfare measures and macro causal scheme are accepted, the welfare gains that liberalisation is supposed to induce are estimated incorrectly in LINKAGE, GTAP, and other trade models that adopt the popular Armington specification of imperfect competition between trading partners…

CGE models can be useful quantitative supplements to experimental thinking about the importance of different potential causal linkages among economic variables at the country or world level. However, mechanically churning out ‘projections’ of welfare gains or any other indicator subject to one single set of causal assumptions and parameter values is a fundamental misuse of a sometimes helpful tool.”

Related;

Economic modeling and trade negotiations

World trade; In the twilight of Doha

Weighed in the balance; The Doha round of world trade negotiations was supposed to lift many millions out of poverty. It looks unlikely to do so

F&D edition focusesd on Trade

Demystifying Modelling Methods for Trade Policy

Assessing World Bank Support for Trade 1987-2004: An IEG Evaluation

The Future of Trade after Doha: What’s in It for Developing Countries?- video presentation

EcoMod has short training courses on CGE

Inauthentic Paper Detector

Can’t guarantee the authenticity of the following Inauthentic Paper Detector from Indiana University School of Informatics. According to the site;

“This web site is intended for detecting whether a technical document is human written and authentic or not. Predictions may work for documents intended for entertainment (novels, news articles etc.). The main purpose of this software is to detect whether a technical document conforms to the statistical standards of an expository text. You can easily take a human written technical document and add some nonsense text somewhere in the middle, or paste a document generated by an automatic paper generator. We are trying to detect new, machine written texts that are simply generated not to have any meaning, yet appear to have meaning on the surface.”

I tested George Orwell’s essay Politics and the English Language; the result “This text had been classified as INAUTHENTIC with a 17.7% chance of being authentic text”.

(via Improbable Research)

Why Mentors are Important

Even criminals need mentors!

"Our analysis," write Morselli, Tremblay and McCarthy, "focuses on the effects of mentors on two aspects of criminal achievement: illegal earnings and incarceration experiences ... Proteges with lower self-control attract the attention of some criminal mentors, who provide the structure and restraint that lead to a more prudent approach to crime. This approach involves fewer and more profitable offences that lower the risks of apprehension and, perhaps, promote long-term horizons in crime."

The researchers used a painstaking protocol: "We collected information on monthly illegal earnings and on the number of days that respondents were incarcerated. After calculating the total for criminal earnings and incapacitation experiences for the period, we applied logarithmic transformations to create our dependant variables."

Their calculation resulted in a big payoff. As they put it: "Our findings suggest that strong foundations in crime offer an advantageous position for continuous achievement and the presence of a criminal mentor is pivotal for achievement over one's criminal career."

- Dastardly development; Mentors are crucial - for a career in crime (Improbable research column)

Related; Incentives for Delinquency

Worth Reading… It’s All Numbers

Links to a couple of articles and blog posts that discusses mathematics and statistics in the news;

Putting a Number on Happiness- The Numbers Guy.
More on the Happy Planet Index.

"The 200,000 people of Vanuatu -- a South Pacific nation composed of 83 islands, with an agricultural economy and corporate headquarters of file-sharing service Kazaa -- are the happiest on earth, according to a wave of recent articles….

The problem is, no one has asked Vanuatuans how happy they are. The ranking was based on extrapolating happiness levels from other countries."

I'm told that in Bhutan for the census they include a question on happiness. From a small sample of people I've met Bhutanese seem more happy than the one Vanuatuan I've met.

Cheney's One Percent Doctrine- John Allen Paulos

"Suskind describes the Cheney doctrine as follows: "Even if there's just a 1 percent chance of the unimaginable coming due, act as if it is a certainty. It's not about 'our analysis,' as Cheney said. It's about 'our response.' … Justified or not, fact-based or not, 'our response' is what matters. As to 'evidence,' the bar was set so low that the word itself almost didn't apply."

How a statistical formula won the war (via The Amateur Economist)

Lying with Statistics: Today's Example

Three Surveys; Iran, US religiosity and expensive cities

The American Religious Identification Survey of 51,000 adult Americans last month found some of the secularizing trends seen in Europe;

“Unchurched increase: 14% claimed no religious affiliation. That number was 8% in a similar study from 1990.”

What do the Iranians think;

“The poll revealed a country divided on many issues, although united on the role that Iran should play in the region. Iranians said they believe their country should lead the region “diplomatically and militarily” – 56% supported this view, and only 12% said their country should not be the dominant regional power. Nearly equal percentages of respondents want Iran to become more secular and liberal (31%) as want the country to become more religious and conservative (36%)….

Despite tensions between the United States and Iran, most Iranians – nearly two thirds – said they don’t believe that the two countries will go to war in the next decade.

Iranian men were more interested than women in making the economy work better. Among men, 47% said the economy should be a top government priority, while just 33% of women agreed. The older the respondent, the less important they considered development of a nuclear arsenal.

A majority said they would be willing to suffer through a bad economy if that were the price the country had to pay to develop its nuclear program. Also, 25% said they would blame the United States if the United Nations imposed nuclear-related sanctions, although nearly 40% said they were not sure whom to blame. Only one in six would blame Iran’s own government. If their country were to develop nuclear weapons, 25% said it would make the Middle East a safer place, but 35% disagreed with that statement.”

World most expensive cities;

"Moscow is the most expensive city in Europe and in the rest of the world, with a score of 123.9. "Steep accommodation costs have contributed to the city's high ranking, as the recent property boom has driven up rental prices for expatriates," said Anna Krotova, Senior Researcher at Mercer.

London is the second most expensive city in Europe and ranks in 5th position (score 110.6). "While prices have actually increased slightly over the last year, the strengthening of the dollar against the pound means London has dropped two places since last year," said Ms. Krotova.

Other costly European cities include Geneva in 7th place (103), Copenhagen in 8th (101.1) and Zurich in 9th (100.8) - all have been pushed down one place this year. Oslo remains in 10th place with a score of 100 while St. Petersburg is in 12th position (99.7).

Ms Krotova commented: "The Euro has weakened against a number of currencies, for example the Canadian and US dollars, reducing the cost of living for expatriates in many European countries."

Related;

At Cato Unbound debate on What to do about Iran

The Mother of All Flow-Charts

Integrated Defense Acquisition, Technology, & Logistics Life Cycle Management Framework (via FP blog)

Related; Hammer Time; Two decades later, perhaps the most enduring example of government waste is the $436 Pentagon hammer

More on Survey Design

Andrew gives some advice on question-wording effects of survey design and avoiding double-barreled questions- issue mentioned talks about a CBS News poll on Iraq.

Earlier I commented about a useful book on the topic Survey Design and a review of the book.

If You Had One Day to Live

My high school teacher used to tell of the joke that if you had one day to live you would want to spend the day in the statistics class- it would seem so much longer.

I wish he had shown this video – Statz 4 Life. (via SSS blog)

Related;

Statistics 101, Como se dice "I hate statistics"?, The Law of One Price

The scholars behind the stout; That fundamental ideas in applied mathematics would be developed in a brewery sounds sufficiently improbable, but the story is true and intriguing. The statistical technique most often used to study events of low probability was discovered by a Polish mathematician and an employee of the Guinness brewery.

History of Monte Carlo

Fact Attack on World Development and Water

UN has published a World Water Development Report- some statistics;

1 billion people lack access to improved water supply

2.4 billion people lack access to improved sanitation

Access to piped water through household connections
- Latin America and the Caribbean: 66%
- Asia: 49%
- Africa: 24%

Access to sanitation linked to a sewage system:
- Latin America and the Caribbean: 66%
- Asia: 18%
- Africa: 13%

Over 1 million people die from malaria every year.

Every day, diarrhoeal diseases cause some 6,000 deaths, mostly among children under five.

777 million people in developing countries do not have access to sufficient and adequate food.

Approximately 70% of all available water is used for irrigation.

Some 300-500 million tons of heavy metals, solvents, toxic sludge, and other wastes accumulate each year from industry.

Water withdrawals for industry
- World: 22% of total water use.
- High-income countries: 59% of total water use.
- Low-income countries: 8% of total water use.

Some 2 billion people have no access to electricity at all.

Hydropower plays a major role in reducing greenhouse gas emissions: developing ½ of the world's economically feasible hydropower potential could reduce greenhouse gases emissions by about 13%.

Natural disasters cost a total of US$70 billion in 1999, compared to US$30 billion in 1990.

From 1992 to 2001, developing countries accounted for 20% of the total number of disasters, and over 50% of all disaster fatalities.

Approximately 13 times more people die per reported disaster in developing countries than in developed countries.

Approximately 66 million people suffered flood damage from 1973 to 1997.

Number of children of primary-school age who do not have access to education: 113 million

The average size of the world's 100 largest cities grew from around 0.2 million in 1800 to 0.7 million in 1900 to 6.2 million in 2000.

Sixteen cities became 'mega-cities' (10 or more million inhabitants) in 2000, comprising 4% of the population.

In the urban areas of low-income countries, 1 child in 6 dies before the age of five.
In areas poorly served with water and sanitation, the child mortality rate is multiplied by 10 or 20 compared to areas with adequate water and sanitation services.

Every day, 2 million tons of human waste are disposed of in water courses.

The chart above shows price of water in some developed countries.

The Most Courteous City in the World – New York?

It’s difficult to believe the results of the following survey from Readers Digest- New York the most polite city in world! Simon World thinks the survey is very much culturally biased.

Or could it have to do with Rudolph Giuliani’s "politeness" by-laws in the which was passed in the 1990s, such as a $50 fine for putting feet on subway seats ( or another example of Malcolm Gladwell's suggestion of the success of broken windows policying)

Let us know your views on the issue;

“We sent out undercover reporters—half of them men, half women—from Reader’s Digest editions in 35 countries to assess the citizens of their biggest cities. (In Canada, we tested the people of our two largest population centres, Toronto and Montreal.) In each location we conducted three tests:

• We walked into public buildings 20 times behind people to see if they would hold the door open for us.
• We bought small items from 20 stores and recorded whether the sales assistants said thank you.
• We dropped a folder full of papers in 20 busy locations to see if anyone would help pick them up.

To allow us to compare cities, we awarded one point for each positive outcome and nothing for a negative one, giving each city a maximum score of 60. We did not attempt a strict scientific survey; it was the world’s biggest real-life test of common courtesy, with more than 2,000 tests of actual behaviour.”

Related;

Cussin' Russian MPs to bleep out swearing

Singapore Kindness Movement

Terrorism Index

The latest Foreign Policy Magazine has summary of a survey related to security issues called Terrorism Index. I don’t know whether it qualifies to be referred to as an index. For more see their resources section.

The Power of Survey Design

In a previous post I mentioned about the book by Giuseppe Iarossi on survey design. Here is a link to the video and a podcast of the book presentation.

Related;
Did you see the broken light?
Two posts from Junk Charts; When nothing works and Glass Half Full

The Hedonic Treadmill

A positive correlation between subjective well-being and GDP per capita at a point in time, and a tendency for gains in subjective well-being to decline when GDP capita exceeds US$ 10 000.

I wonder why Mexico seems to be an outlier.

Related;

Gross Domestic Happiness (via Mankiw blog)

Subjective Well-Being Research

Prosperity Brings Satisfaction - and Hope

An earlier post about GDP and Wellbeing and An Overdose of Happiness

See also New Economist’s posts on Happiness

The Chinese Exception

The latest Pew survey of world opinion is out. With regard to national conditions most publics surveyed are dissatisfied with national conditions. But China is a notable exception - 81% of Chinese say they are satisfied with the way things are going in their country, up from 72% in 2005. Only about three-in-ten Americans (29%) say they are satisfied with the way things are going in the U.S., down from 39% last year and 50% in 2003. Levels of national satisfaction in France have followed a similar downward trajectory - from 44% in 2003 to just 20% today.

Earlier we reported on the Chinese views on free markets.

China has also the largest number of infrastructure projects with private participation.

What does this all mean?

Related; War Bedevils American Image

Demand and Supply of Nurses

Source; U.S. Plan to Lure Nurses May Hurt Poor Nations (via Poverty & Growth blog)

Better than Trial and Error

A recent article in the Forbes magazine on randomized trials of development projects (via PSD blog);

“The Indian antipoverty group Seva Mandir runs an educational program that teaches 4,000 kids ages 7 to 10 math and reading and writing in Hindi. Seva Mandir had a problem: The teachers, recruited from the villages, often with only a tenth-grade education, would show up at the school only 60% of the time. While a teacher could be fired for excessive absenteeism, the remote locations throughout the impoverished state of Rajasthan ruled out regular monitoring.

A classic way of dealing with this problem is to throw money at it--which is what officials at Seva Mandir proposed to do. They would hire an additional teacher for each classroom, doubling the cost. But in stepped a group of development economists from the Massachusetts Institute of Technology. For a few years now the group has been testing antipoverty programs using the same scientific technique pharmaceutical researchers use to evaluate new drugs: the comparison of a randomized test group with a control group.

The idea is to divide a targeted population into two groups, then give the aid--microcredit, computers, textbooks, teacher incentives, health care programs--to one group but not the other and compare the results. "We aren't really interested in the more-aid-less-aid debate. We're interested in seeing what works, and what doesn't," says Abhijit Banerjee, a development economist at MIT who (with Esther Duflo of MIT and Sendhil Mullainathan of Harvard) helped found MIT's Poverty Action Lab.”

Abhijit himself was an ‘activist’as a student in India. There course on Evaluating Social Programs is also conducted at Centre for Micro-Finance in Chennai as well.

Jesus' Descendants and Probability

John Allen Paulos’ latest column is up and talks about the "The Da Vinci Code" amongst others;

“Probability theory tells us, however, that if Jesus had any children, his biological line would almost certainly have either died out after relatively few generations, or else would have grown exponentially so that many millions of people alive today would be direct descendants of Jesus.

Of course, this is not a special trait of Jesus' descendants. If Julius Caesar's children and their descendants had not died out, then many millions of people alive today could claim themselves Caesar's descendants. The same can be said of the evil Caligula and of countless anonymous people living 2000 years ago. It is not impossible to have just a few descendants after 2000 years, but the likelihood is less than minuscule.

The research behind these conclusions, growing out of a subdiscipline of probability theory known as branching theory, is part of the work of Joseph Chang, a Yale statistician, and Steve Olson, author of "Mapping Human History: Genes, Race, and Our Common Origins."

Going back another millennium, we can state something even more astonishing. If anyone alive in 1000 B.C. has any present day descendants, then we would all be among them. That is, we are descended from all the Europeans, Asians, Africans and others who lived 3,000 years ago and have descendants living today.

Consider the implications for future generations. If you have children and if your biological line doesn't die out, then every human being on earth 2,000 or 3,000 years from now would be your direct descendant.

Getting back to "The Da Vinci Code," we can conclude that if the heroine of the book were indeed descended from Jesus, then she would share that status with many millions if not billions of other people as well. This makes the book's plot even harder to swallow, but then probability was never much of a match for fiction or Hollywood.”

Related Podcasts;
Who’s Who in the Time of Christ
Chinese Brother of Christ
The Da Vinci Code Controversies

Poverty Rate in Iraq

“Any discussion of poverty in Iraq must contend with the security situation that has prevailed in the country over the past few years. It is hard to collect truly representative data on poverty when some parts of the country are difficult to visit and when there is substantial ongoing movement of internally displaced people, refugees, and returnees. The best available evidence suggests that Iraq has an incidence of absolute poverty that is between 8 and 10 percent, and an additional 12–15 percent of the population appears to be close enough to the $1 poverty line to be considered vulnerable (World Bank 2005). This puts Iraq at the high end of the range for countries in the Middle East and North Africa. Two notable features of the poverty profile in Iraq are a distinct regional pattern, with the northern Kurdish areas being relatively better off and the southern governorates having much higher poverty incidence rates; and a distinct gender pattern, with female-headed households having median incomes that are 15 –25 percent below comparable male-headed households.”

- Sustaining Gains in Poverty Reduction and Human Development in the Middle East and North Africa

More on the World Bank Report at Poverty and Growth Blog

The Big Bang to MS Office

PC Magazine has a review of the Microsoft Office 2007 Beta 2 version, one of features being a blogging tool for MS Word;

“Like Google's free Blogger for Word add-in, Office's equivalent new feature works with Blogger, but it also works, of course, with Microsoft's own blogging services. You use the File/New menu to open a new blog entry; specify your blog service, username, and password, and then create a new entry or download existing ones for editing.”

Edward Tufte might faint after seeing the chart in the figure as an example of good graphing feature of the Excel 2007.

Related Links;

- Go for a video tour of the new interface. Some ‘official’ blogs covering it; Jense Harris and Microsoft Excel 2007. The talk is more about focusing on results.

- Junk Chart have more some of the new graph features in Excel.

- J-Walk Blog; Those who will have the most difficulty adapting are the great masses of office workers who have learned how to perform a dozen or so common tasks in Excel or Word, and they do them day after day. These people, for the most part, will experience serious frustration. In many cases, these workers don't even look at the "big picture." Rather, their task is broken down into a series of very specific steps that they've learned over the years. What happens when those steps no longer work? …There are millions of customized Office apps in use that use toolbars and/or custom menus. If you load such a file in Office 2007, your familiar menu modifications and toolbars do not appear. Well, they are still there, but the user must know to click the Add-Ins tab. Then, all of the toolbars and menu modifications are visible, stuffed into a single unorganized chunk. Toolbars are no longer free-floating, and you may need to do some serious scrolling to even find the toolbar button you're looking for. And once a toolbar is displayed, there's no way to hide it.

Which Econometrics textbook did Robert Engle use?

Nobel laureate Robert Engle, talks about his analysis of equity market volatility, quantitative finance and more in this podcast.

In an earlier interview Engle says;

“Well, it was very interesting, because Ta Chung was a real dynamo. The year when I was taking econometrics he was in Taiwan helping reform the tax system, and so I took my first econometrics class with Berndt Stigum. It was a very small class, and we went at a high level using Malinvaud’s text, which had just appeared in English. The following year when T.C. came back from Taiwan I took the course again, and that time we used Goldberger. Those two books back to back provided a great econometrics background.”

Related Link;

A profile in the Economist; Mr Engle's approach, ARCH (for autoregressive conditional heteroscedasticity, should you insist on knowing) gave researchers the power to test whether and how volatility in one period is related to volatility in earlier times. There often is a link, as casual observation suggests. After several days of stockmarket upheaval, there may be several days of calm. A 3% rise or fall in shares is often heralded by increasing volatility, much as an earthquake is preceded by tremors. Mr Engle's high-powered maths has made market risk easier to forecast. Thus banks and investors who use “value at risk” techniques to analyse their portfolios owe much to Mr Engle. So does the Basel committee which is drawing up new rules for banks' capital requirements.

Not Your Father's Nobel Prize

Risk and Volatility: Econometric Models and Financial Practice (Nobel Lecture of Engle)

GARCH 101: The Use of ARCH/GARCH Models in Applied Econometrics

What Good is a Volatility Model

Managing Volatility and Crises: A Practitioner's Guide

Team ARCH Weblog

GDP and Wellbeing

"Work may drive growth, but for most people, more free time contributes to well-being, as long as it is not accompanied by lower income. Still, one often-heard remark about the gap in economic performance between OECD countries is that US workers may earn more money but they work longer hours, whereas Europeans prefer more leisure to more work, or indeed, more money, and so are better off. But would ascribing monetary values to leisure time, however arbitrarily, alter GDP per head rankings in favour of European countries? Not by much, according to the latest Going for Growth report. By estimating workers’ time devoted to personal (unpaid) activities, it reports that leisure-adjusted GDP per capita relative to the US is higher for most countries than for the normal measure. But the ranking of OECD countries stays broadly unchanged, with the US still in the top five.

Separately, the OECD Factbook 2006 reports that US household spending on leisure has risen faster than the OECD average over the last decade. It measures spending on recreation and culture by households and government on a range of items from music, show business and sport to pets and photography. Gardening and gambling are also included, but restaurants, hotels and most travel are not. By this measure, the US spends more than France, but less than Spain or the UK."
-OECD Observer

Why is GDP not the best possible indicator of well-being?

- GDP is a production concept, whereas well-being depends more on income and
consumption of individuals and households.

- GDP is a “gross” concept: It makes no allowance for the using-up of capital equipment in
the production of goods and services, and the corresponding need to re-invest part of the
output to maintain production capacity unchanged.

- GDP makes no allowance for the using-up of non-renewable resources, which will
impact on the well-being of future generations.

- GDP excludes leisure, which is clearly of value to society and contributes to well-being.

- GDP does not distinguish between different varieties of income distribution. A society in
which there were a few colossally wealthy families, but the bulk of the population lived
in abject poverty, would presumably enjoy a lower level of “general well-being” than one
with the same GDP but where there was no acute poverty.

- Production might entail the co-production of “bads” (e.g. pollution and deterioration of
the environment). These are rarely taken account of in the GDP accounts.

Doha Round, Subsidies and Opium

Some statistics and figures from the latest Foreign Exchange show;

- The developed world spends nearly $1 billion a day in subsidies to its farmers.

- A “typical cow” in the European Union receives a government subsidy equivalent to $2.20 a day. That’s more than what 1.2 billion of the world’s poorest people live on every day.

- Afghanistan; Last year farmers in Afghanistan harvested more than 4,500 tons of opium, nearly 90-percent of the world’s market. According to the United Nations, 87-percent of the world’s heroin comes from poppies grown in Afghanistan. In 2005 the UN warned that Afghanistan is in danger of becoming a narco-state, controlled by drug traffickers. In response, the United States put $780 million into Afghanistan’s anti-narcotic efforts for the 2005 harvest season.

A lesson in opportunity cost; more than $7,000 if opium gorwn . If only cotton, could get 320 kilograms (120 dollars); a field of poppies earned 60-times more than a field of cotton. While 7,000-dollars is a huge income for an Afghan farmer, the heroin made from this crop will bring about 4,000,000-dollars in the streets of London.

UN peace keeping costs $5 billion a year for about 90,000 personnel deployed around the world and UN wants more. Currently there are 17 UN peacekeeping operations worldwide. The largest mission is in The Democratic Republic of Congo, with 17,000 UN personnel from 48 countries. The US provides no troops, but 1/3 of the operation’s $746 million annual budget.

Related:

Ben Muse on the Doha Round.

Controversy over World Bank trade & poverty estimates; Three years ago the World Bank said that freeing international trade of all barriers and subsidies would lift 320 million people above the $2 a day poverty line by 2015. But new World Bank projections emphasizing $1 a day poverty and based on new data and methods put the number at just 32 million people.

The Land of War and Opium

"I like growing eggplants because it is not against Islam and it means I don't have to depend on those people," one farmer said. "But to be honest, I do not have much hope that things will change. This little field is the only place you see vegetables. If you go a little farther, you will see that all the other villages are nothing but poppy."
- In Afghan Poppy Heartland, New Crops, Growing Danger

Last year, farmers in Afghanistan harvested more than 4500 tons of opium -- nearly 90-percent of the world's market. For more see the latest edition of Foreign Exchange show.

Jeffrey Alan Miron talks about lessons from Afghanistan for the war on drugs

Some Facts on Iraqi Debt

From the Global Development Finance report;

- In November 2004, the Paris Club agreement with Iraq considered $37 billion in debt, canceling $30 billion (80 percent) and rescheduling the rest.

- Aid to Iraq rose from an average of only $90 million in 2000–2 to $3.2 billion in 2003–4, making it the largest recipient of ODA.

- Commercial Debt Restructuring in Iraq; In October 2005, Iraq concluded a two phase commercial debt restructuring with small creditors holding $35 million or less of debt incurred under Saddam Hussein’s reign. Of about $1.6 billion in eligible claims, it is estimated that 71 percent of creditors accepted the deal and only 8 percent of creditors elected to reject. In January 2006, the government of Iraq completed a debt exchange operation with commercial creditors holding more than $35 million of debt incurred under Saddam Hussein’s reign, swapping about $14 billion in defaulted debt for a new Eurobond issue worth bout $2.7 billion. In accordance with a December 2005 agreement, the holder of each $100 of tendered claims received a new bond with a $20 face value, carrying a coupon of 5.8 percent and amortizing between 2020 and 2028. Some creditors received a floating rate note paying 50 basis points over Libor in lieu of the new bond. Further notes up to an additional $800 million may be issued for other eligible outstanding claims on the same terms.

Did you see the broken light?

“Three decades ago, a group of students were shown a short movie in which two cars were in an accident. Then the students were divided into two groups where the first group was asked "Did you see the broken light?" and the second was asked "Did you see a broken light?" Switching one single word, the or a, in the otherwise identical question changed responses by an astonishing 31 percent.

A body of literature has shown that there are many ways to influence respondents, too often too subtle to be recognized. You can probably guess that using the word "financial incentives" or "subsidies" will elicit different results. But would you think that the order in which different alternatives are presented to the respondent might influence his or her response? Probably not, but in reality it does.

Irrespective of how the question is worded, survey methods that could influence the data collected, such as using or not a public official as interviewer or reading the questions to the respondents instead of showing them written questions are known as survey fixed effects. Not taking such effects into account can bias the results, says Iarossi.”

- A review of the book, The Power of Survey Design: A User's Guide for Managing Surveys, Interpreting Results, and Influencing Respondents by by Giuseppe Iarossi

The book is a must read for anyone interested in anything to do with surveys.

Some other book reviews in the latest F&D.

Why we Misestimate Probabilities

Professor Simon Gandevia, a neurologist from the Prince of Wales Medical Research Institute explains in this podcast why we often literally 'jump' to the wrong conclusion;

“Suppose there was a stabbing outside a nightclub. In court, the one eyewitness testifies that the assailant fled in a silver-coloured taxi. On the night of the offence, it is known that only 15% of taxis on the road were silver. Furthermore, when the crime scene is recreated, it is established that the witness is 80% accurate at picking silver from non-silver taxis. You are the judge. What is the probability that the taxi involved in the crime was silver? Initially, it might seem, given the eyewitness is 80% accurate, that the probability the taxi was silver, as claimed, is also 80%. But this ignores the error the witness makes when observing the much more common, non-silver taxis. In fact, to work out the correct probability, we need to invoke a theorem devised by the Reverend Thomas Bayes, published in 1763, two years after his death. This theorem allows probabilities to be calculated accurately on the basis of full knowledge of all initial possibilities. When this non-intuitive, but mathematically simple, theorem is applied, the true probability that the taxi at the crime was silver is found to be only 41%; less than a one in two chance. In the Australian tradition, you should therefore bet that the taxi at the crime was actually not silver. We jump to the wrong conclusion unless the Reverend Bayes’ approach is applied.

What is happening here? The fact is that we are all victims of cognitive illusions. They are potent and almost impossible to ‘unlearn’, just like visual illusions, such as the ones in which two parallel lines with different cross hatchings seem not to be parallel, or two identical parallel lines with differently pointing arrowheads suddenly seem different in length. Just as these sensor y illusions expose the unconscious brain processes involved in perception, so cognitive illusions reveal the brain processes involved in thinking.

Why do these illusions exist? In the evolutionary world of predator and prey, snap decisions are quite literally vital. It has been argued that because we need time to evaluate probabilities before making a decision, a default system has evolved that rapidly evaluates choices. The Nobel laureate, Francis Crick, is well known for his discoveries about the double helix of our genes, but he later worked in the field of neuroscience. He and his colleagues postulated that humans needed to develop what he termed ‘zombie thinking’ in order to deal efficiently with the massive sensory input we continuously receive about the external world. This mode of thinking is thus necessary to allow us to react rapidly to external events, so that these cognitive illusions are ‘built in’ to us, almost certainly for evolutionary reasons. None of us is immune to them, not even those trained as scientists or judges. Our capacity for rational thinking is limited. Propagandists and advertisers are all too well aware of this.”

Related Podcasts;

Sigmund Freud - doctor, philosopher, therapist and writer was born 150 years ago near Vienna in the Austro-Hungarian Empire. His ideas on the significance of dreams, childhood sexuality and female libido had a profound impact on 20th Century intellectual life. Yet Freud was a hugely controversial figure, admired, idolised and vilified. Even today, his name still raises passions. Sharon Carleton takes a look at the legacy of this remarkable physician

Terrorism: What's Morality Got To Do With It? Recent terrorist acts such as 9/11 and the Bali bombing have been justified using moral and religious language, as has the West's response through its 'war on terror'. Political moral philosopher Thomas Pogge examines these justifications and whether they represent a moral framework that either side genuinely holds to.

The latest 4 shows from the Radio National’s Philosopher’s Zone; What is Enlightenment?, The question of consciousness, Do Animals Think?, Philosophy 101.

These podcasts are available for only limited time, so download now.

Evolution of a Fuzzy Statistic

How many Chinese engineers are there? It depends on who you ask.

"Last year more than 600,000 engineers graduated from institutions of higher education in China," the report stated. "In India the figure was 350,000. In America, it was about 70,000." To dramatize the seriousness of the issue, the academies titled the 543-page report "Rising Above the Gathering Storm," an allusion to Winston Churchill's book "The Gathering Storm," about events leading up to World War II.”

As Gerald W. Bracey continues in a recent column in the Washington Post;

“Statistics that end up as conventional wisdom even when they're wrong usually become popular by being presented as fact in a highly visible and respected source -- such as a cover story in Fortune or a National Academies report.

Once a statistic has attained the status of something we all "know," it takes on a charmed life. It is hardly surprising that the National Academies report gave rise to many citations…”

Even when they are proved wrong, they’re unrepentant. That's why bloggers are important to spread the word for we cannot rely on Thomas Friedmans of the world to tell us the truth.

Related Links:

Outsourcing Report from the Duke University

Rising Above The Gathering Storm: Energizing and Employing America for a Brighter Economic Future

Top Advisory Panel Warns of an Erosion of the U.S. Competitive Edge in Science

Sounding the Alarm With a Fuzzy Stat

Lies, Damn Lies and Statistics

Russia’s Baby Bust

"I want to talk about the family, about the most acute problem facing our country today – the demographic problem.
The economic and social development issues our country faces today are closely interlinked to one simple question: who we are doing this all for? You know that our country’s population is declining by an average of almost 700,000 people a year. We have raised this issue on many occasions but have for the most part done very little to address it. Resolving this problem requires us to take the following steps.

First, we need to lower the death rate. Second, we need an effective migration policy. And third, we need to increase the birth rate."

-President Putin, 10 May 2006

The latest edition of the Foreign Exchange show is focused on Russia; it’s politics, Putin, demography and economic prospects.

Several incentives are being considered to increase the birth rate;

- increasing government subsidies for children up to 18 months of age to about $53 a month for a first child and about $107 for a second child. Mothers currently receive about $25 per month for a child up to 18 months old.
- maternity leaves as long as 18 months that would pay a mother at least 40 percent of her salary, and compensation for part of the average cost of day care, worth 20 percent of that cost for a first child, 50 percent for a second child and 70 percent for a third.
- For mothers of at least two children who opt not to return to work, an one-time subsidy of about $8,900 upon the birth of a second child and subsidies for adoptive parents as well.

According to this economist, there's another health issue that Russia should be worried about;

"By 2050, said Feshbach, Russia's current population of 144 million could fall to 101 million or as low as 77 million if factoring in the AIDS epidemic. If current trends continue, by 2020, 5-14 million Russians will be living with HIV and 250,000-650,000 will die from AIDS annually."

The average life expectancy of a Russian male has also dropped to just 59 years--compared with 74 in the United States.

Related Links;

Islam in Russia: Evolution in action?

Putin Addresses Shrinking Russia

Democracy and Growth Reconsidered: Why Economic Performance of New Democracies Is Not Encouraging, Vladimir Popov, Academy of the National Economy, Moscow (webcast)

Putin's Russia – 2005; podcasts from BBC, Part 1 and Part 2

A cool tool from Census Bureau which shows dynamic change of population pyramids across time.

China overtakes US in Book Production

Bowker (the world’s leading provider of bibliographic information) is projecting that U.S. title output in 2005 decreased by more than 18,000 to 172,000 new titles and editions. This is the first decline in U.S. title output since 1999, and only the 10th downturn recorded in the last 50 years. It follows the record increase of more than 19,000 new books in 2004. Great Britain, long the world’s per capita leader in the publication of new books in any language, now replaces the United States as the publisher of most new books in English. 206,000 new books were published in the U.K. in 2005, representing an increase of some 45,000 (28%) over 2004.

Prices; In 2005, the average suggested retail price for adult hardcovers released by the largest general trade houses increased 3 cents to $27.55; adult fiction hardcovers decreased 7 cents to $25.01; and adult non-fiction hardcovers increased 3 cents to $28.52. Adult trade paperbacks increased 1 cent to $15.77; adult fiction trade paperbacks decreased 2 cents to $14.76; adult non- fiction trade paperbacks increased 10 cents to $16.26; and adult mass-market paperbacks increased 7 cents to $7.42. The average list price for juvenile hardcovers decreased 1 cent to $16.08. In all, the largest general trade publishers released 345 more titles as adult trade paperbacks and 301 fewer as adult hardcovers.

The latest Foreign Policy magazine ($ required) notes that China is the world’s top publisher, where textbooks account for nearly 1 in 5 books published and almost half of all purchases at the country’s 72,000 bookshops. In per capita, Britain is on top. Though overall more books are being written than ever before, people are spending more time watching television or surfing the web.

See what the world is watching

Google has started a new feature- Google Trends;

Sex; top 4 regions, Pakistan, Egypt, Vietnam, Iran, top city is Cairo

Money Supply; top 4 regions, Pakistan, Malaysia, Philippines, Hong Kong

Milton Friedman; top 4 regions, Colombia, Mexico, Peru, Hong Kong

Bin Laden- Why’s Norway and Argentina on top.

Have fun with it.

Fact Attack on Globalization

Scientific American has overview article on ‘Does Globalization Help or Hurt the World's Poor’ by Pranab Bardhan. Some statistics from the article are summarized below.

- Between 1980 and 2000, trade in goods and services expanded from 23 to 46 percent of gross domestic product (GDP) in China and from 19 to 30 percent in India.

- Between 1981 and 2001 the percentage of rural people living on less than $1 a day decreased from 79 to 27 percent in China, 63 to 42 percent in India, and 55 to 11 percent in Indonesia.

- Of the more than 400 million Chinese lifted above the international poverty line between 1981 and 2001, three fourths got there by 1987.

- Between 1981 and 2001 the fraction of Africans living below the international poverty line increased from 42 to 47 percent.

- A recent study by Gordon H. Hanson of the University of California, San Diego, which took into account only people born in a particular region (thus leaving out migrants), found that during the 1990s average incomes in the Mexican states most affected by globalization increased 10 percent more than those least affected.

- In 2001 Naila Kabeer of the University of Sussex in England and Simeen Mahmud of the Bangladesh Institute of Development Studies did a survey of 1,322 women workers in Dhaka. They discovered that the average monthly income of workers in garment-export factories was 86 percent above that of other wage workers living in the same slum neighborhoods.

- In 1993, anticipating a U.S. ban on imports of products made using child labor, the garment industry in Bangladesh dismissed an estimated 50,000 children. Wages and conditions in garment factories are poor by world standards but better than those in alternative occupations such as domestic service or street prostitution.

- South Korea and the Philippines had similar per capita incomes in the early 1960s, but the Philippines languished in terms of political and economic institutions (especially because power and wealth were concentrated in a few hands), so it remains a developing country, while South Korea has joined the ranks of the developed.

- The international coffee market, for example, is dominated by four companies. In the early 1990s the coffee earnings of exporting countries were about $12 billion, and retail sales were $30 billion. By 2002 retail sales had more than doubled, yet coffee-producing countries received about half their earnings of a decade earlier.

- The Asian financial crisis of 1997 –following speculators' run on the Thai currency, the baht, the poverty rate in rural Thailand jumped 50 percent in just one year. In Indonesia, a mass withdrawal of short-term capital caused real wages in manufacturing to drop 44 percent.

- The annual loss to developing countries as a group from agricultural tariffs and subsidies in rich countries is estimated to be $45 billion; their annual loss from trade barriers on textile and clothing is estimated to be $24 billion. The toll exceeds rich countries' foreign aid to poor countries.

- Globalization does not explain the differing fates of Botswana and Angola, both diamond exporters, one democratic, the other ravaged by civil war.

A Growth Curve for the 21st century

WHO recently released new international Child Growth Standards for infants and young children which would provide evidence and guidance about how every child in the world should grow. For all these years WHO has been recommending the Child Growth Charts of US National Center for Health Statistics which now seems to have had some issues. The WHO Multicentre Growth Reference Study (MGRS) was undertaken between 1997 and 2003 and establish the breastfed infant as the normative model for growth and development. The video documentary on the study represents a good case study for statistics teachers (hat tip; UN Pulse).

For more on development milestones see this blog by a Maldivian pediatrician based in Australia.

Labour Disputes and other Free Reads from the latest Economist

- China and the internet

- Rex Tillerson, the new head of Exxon Mobil

- Goldman Sachs

- Los Angeles schools

- The Brazilian Amazon

- India; Caste and cash

- America's National Football League - a business lesson to other sports

- Economics focus- Would a second Plaza agreement make sense?

- Medical marijuana

- Shin Sang-Ok, film director and abductee

- China is a big economy, but still a poor one

For Comment: How Does Magazines decide which articles to give away freely?

IMF Data Standards Initiatives – Lessons to Others

IMF has a new working paper evaluating their initiative to urge countries to standardize macroeconomic data and enhance greater transparency.

“Since the IMF launched the data standards initiatives a decade ago, 145 of its 184 member countries have participated. This 80 percent participation rate reaffirms the importance countries place on data transparency in the globalized economy, which the initiatives promote. The wide participation can be attributed to the consultative process that has allowed for the development of a coherent program that takes account of countries’ capabilities, delineates clear responsibilities between the IMF and participating countries, and establishes effective monitoring procedures to ensure the credibility of the standards for policymakers, capital markets, and the general public. The approach has also provided checks and balances and fostered accountability. The initiatives may provide insights for the promotion of similar international standards”

Adhering to the standards have had financial benefits as well.

“Empirical studies suggest that adhering to the SDDS or the GDDS, to varying extents, helps improve a country’s access to international capital markets. For instance, an STA econometric study on the borrowing costs of emerging market and developing countries over the past decade and a half found strong and consistent evidence of discounts for sovereign bond issuers participating in the GDDS, as well as for countries subscribing to the SDDS. The discounts amounted to about 8 percent for GDDS participants and 20 percent for SDDS subscribers, or the equivalent of about 20 and 50 basis points, respectively.”

Related Links:

- Dissemination Standards Bulletin Board

- Does SDDS Subscription Reduce Borrowing Costs for Emerging Market Economies

- An earlier post on IMF’s Disclosure Policy

Where to go to find lowest gas prices and other interesting links

- FuelGo and GasBuddy; and how high could the price of oil get?

- Gootodo is a Web-based todo list that can radically boost your productivity.

- FlySpy

- LibraryThing- Catalog your books online or keep a reading list

- The 20 Most Important Tools Ever

- Sarajevo Survival Map 92-96 is the ultimate visual document, a Topography of Life and Death. It is the only Map in the world that has made a visual reference to the tragedy of a besieged European city at the end of 20th century

- StateMaster; a unique statistical database which allows you to research and compare a multitude of different data on US states

- Random.org offers true random numbers to anyone on the internet

- Blue Ball Machine

- Castle Coalition; map plots instances of eminent domain abuse across the United States

- Map Gallery of Religion in the United States

- Worldmapper is a collection of world maps, where territories are re-sized on each map according to the subject of interest.

- Num Sum; Sharable Spread Sheets. See the World Cup 2006 spreadsheet

- Strategic Board is a Web 2.0 search engine that aggregates IT related RSS feeds, automatically monitor and identify new IT related blogs, currently
track 36,570 technology blogs with 1,421,066 technology related posts indexed

- ClearWriter

- Tyler Cowen's Ethnic Dining Guide

The Variability of Organ Weights

Not about economics, but interesting nonetheless to those who think economic data are too variable to be of much use: Weights of Human Organs at Autopsy in Chandigarh Zone of North-West India. A selection from the table:

The abstract:

Mean organ weights in 2025 subjects who died and autopsied at Postgraduate Institute of Medical Education and Research, Chandigarh revealed that they in general were heavier than reported from otherparts of India. Various organs continued to attain their maximum weight up to 40-50 years of age.

For men over 20 years, the coefficient of variation seems to much lower for the brain than for the heart, lungs, etc. However, the size of the prostate is measured at more than 60 grams for adults, when Merck tells me it should be about 20 and other information tells me it should max out at a little over 30. There's a confounding element at work here, somewhere -- especially since the accuracy of these data points are supposed to be pretty solid:

After removing the extraneous tissues and draining of the blood, each organ was weighed on electronic weighing machine having the accuracy of ± 0.1gram.

What am I missing here?

Weekend Economics Puzzle 2, The Feckless Forecast

British economist John Kay reminds us that half and hour before Bureau of Economic Analysis issued its official estimate of US GDP growth in the third quarter of last year, the Bloomberg financial information service carried 67 different predictions of US gross domestic product.

Though such forecasts are frequently wrong, they are regularly made in the media by economists. They tend to overstate the extent of knowledge we have about the economy which leads to undermining the credibility of economists. Why does it persist?

John Kay thinks it’s useless form of economic research;

“Correctly predicting the official estimate 30 minutes before its release may be profitable but contributes nothing to our understanding of the economy. The private value of such information is large but its social utility is zero, which is why procuring it is at once the best-paid and most futile form of economic research.

Keynes likened professional investment to a beauty contest, in which “it is not a case of choosing those which are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be”.

Business of estimation could even be a very dangerous business if you happen to be in wrong place. Stalin had the organizers of first post-war Soviet census shot for ‘violation of elementary statistical principles’. Their figures revealed the full extent of the Soviet war dead plus the famines and terror of the 1930s.

Now economists are venturing into predicting other areas as well; an economist at Dartmouth predicted Olympic medals and Oscar nominees.

Relate Links:

- Welcome to the World of Bloomberg TV, by John Kay (video)
- Misuse of Economic Data by Government Officials
- When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein
-The Death of Economics, Paul Ormerod
- Irrational Exuberance, Robert Schiller
- The Economics of Fickleness and How We Guess What Others Will Do by John Allen Paulos
- Morgan Stanley economics commentary and Bloomberg Podcasts
- Regressions: Why Are Economists Obsessed with Them?

Journal Ranking By Google?

A new method for ranking science journals is being proposed. What's it based on? Google, of course.

The most popular index of a journal's status is the ISI Impact Factor (IF), produced by Thomson Scientific. It counts the total number of citations a journal's papers receive, and divides it by the number of papers the journal publishes. But the rise of online journals, coupled with sophisticated search engines that permit rankings of web resources, is triggering a wave of other measures. Last year, for example, physicist Jorge Hirsch of the University of California, San Diego, proposed a metric called the h-index for assessing the quality of researchers' publications (see Nature 436, 900; 2005).

Now Johan Bollen and his colleagues at the Research Library of Los Alamos National Laboratory in New Mexico are focusing on Google's PageRank (PR) algorithm. The algorithm provides a kind of peer assessment of the value of a web page, by counting not just the number of pages linking to it, but also the number of pages pointing to those links, and so on. So a link from a popular page is given a higher weighting than one from an unpopular page.

Only hearing second-hand information about the way tenure review goes for academics, I was under the impression that the relative "importance" of the journals in which one might publish also has a big impact on tenure decisions. Ranking systems then seem to be deeply involved in the way research occurs if it impacts who gets financial support either throught grants or university support.

My question is whether the "PageRank" metric might be highly vulnerable to information cascades and manipulation in much the same way as Google's process for ranking sites.

R.A. Fisher on Significance

Apropos Kevin's previous post about Hoover and Siegler, I thought I'd just offer a couple of quick quotes from R.A. Fisher on significance testing:

It is a common practice to judge a result significant, if it is of such a magnitude that it would have been produced by chance not more frequently than once in twenty trials. This is an arbitrary, but convenient, level of significance for the practical investigator, but it does not mean that he allows himself to be deceived one in every twenty experiments. The test of significance only tells him what to ignore, namely all experiments in which significant results are not obtained. He should only claim that a phenomenon is experimentally demonstrable when he knows how to design an experiment so that it will rarely fail to give a significant result. Consequently, isolated significant results which he does not know how to reproduce are left in suspense pending further investigation." [Emphasis added.] In the Proceedings of the Society for Physical Research, 1929.

And this:

For the logical fallacy of believing that a hypothesis test has been proved to be true, merely because it is not contradicted by available facts, has no more right to insinuate itself in statistical than in other kinds of scientific reasoning.... It would, therefore, add greatly to the clarity with which the tests of significance are regarded if it were generally understood that tests of significance, when used accurately, are capable of rejecting or invalidating hypotheses, in so far as they are contradicted by the data: but they are never capable of establishing them as certainly true..."

[Note: Quotes taken from the text provided in The Lady Tasting Tea, by David Salsburg, pp. 99-108.]

Of course, statistical significance doesn't start or end with Fisher. Just wanted to provide the quotes for something to chew on.

Dirty, until proven clean

Much has been posted about the DOJ's demand for Google search data. (Which is why I won't bother to link to more than the story. The blog references are too numerous, and I would certainly leave out plenty that are more deserving of links than those I might include.)

I do want to add one thought to the mix. It's the end of this paragraph that confounds me most:

The government, which says its request will not result in identifying individual computer users, wants to use the information to resurrect an online pornography law shot down last year by the U.S. Supreme Court. It wants to search Google queries to see how often users inadvertently run across sexual material.

The DOJ says it has no interest in personal data, simply in those otherwise innocuous searches that result in links to adult sites. Pardon me, but isn't this starting from the wrong end of the problem?

The original law (the Child Online Protection Act) was shot down largely because in casting so wide a net, it would limit access to valuable information. Honestly, pick one biological word for a body part associated with sexual acts and see what happens on ANY search engine. It would need to be incredibly sophisticated filtering software that could distinguish well between, say, instructions on checking for breast or testicular cancer and the sites hawked by the flood of spam we all receive.

Wouldn't it make more sense to go the other direction? Why doesn't the DOJ set a few of its interns to listing and then searching for porn, and then track the non-porn sites that are part of the search results. I can imagine a number of search terms that might prompt hits on pages for sexual reassignment surgery. (Plus, this would give me great amusement at the thought that DOJ would have rooms of people surfing for XXX-rated websites. Let's face it: the government does far less productive things with our money on an hourly basis.)

Taking a step back from my abhorrence to any sort of filtering via fiat, if I have to accept that my tax dollars are going to rich congressmen and women who pretend to know the best way to raise your children, the least I would hope for is some attempt to make the blocking of adult material as unobtrusive as possible. The presumption in the current method (looking at searches and see what "nefarious" things turn up) is that all search terms are potentially dangerous things, resulting in a flood of porn, until they can be satisfactorily (according to whom?) listed as clean of "filth".

Of course, in terms of effort expended by the government, this kind of rediculous intrusion is far less expensive than finding ways of improving enforcement of already existing laws.

Hoover & Siegler: McCloskey is Oh So Wrong About Statistical Significance (UPDATED)

In a November 2005 working paper, Sound and Fury: McCloskey and Significance Testing in Economics, Kevin Hoover and Mark Siegler inform us that because Deidre McCloskey still hasn't done her homework right, she continues to misrepresent the median economist as a statistical dummy. Part of the abstract:

That statistical significance is not economic significance is a jejune and uncontroversial claim, and there is no convincing evidence that economists systematically mistake the two. Other elements of McCloskey’s analysis of statistical significance are shown to be ill-founded, and her criticisms of practices of economists are found to be based in inaccurate readings and tendentious interpretations of their work. Properly used, significance tests are a valuable tool for assessing signal strength, for assisting in model specification, and for determining causal structure.

Here's a more extensive earlier draft, and a list of the full-length AER papers McCloskey and Ziliak failed to include in previous analyses.

That's all in section 5.1, starting at page 31 (37) of the working paper. I was with H&S much of the way in that section-- especially about the subjectivity required to construct the evaluations, and the inconsistency across the two reviews -- until they conflate the refusal of M&Z to re-produce a representative sample of the now lost paper-to-dataset mappings with a refusal to "share" them. This serves to imply that the mappings are hidden in Ziliak's sock drawer, or thereabouts.... and the authors lose my respect with what I fear is not just poor word choice. Still, the paper is as interesting as it is fierce.

From page 34 (40):

Unfortunately, Ziliak has informed us that such records ["that indicate precisely which passages in the text warrant particular judgments with respect to each question."] do not exist. And McCloskey and Ziliak declined our requests to reconstruct these mappings retrospectively for a random selection of the articles (e-mail McCloskey to Hoover 11 February 2005). Absent such information, including any description of procedures for calibrating and maintaining consistency of scoring between the two surveys, we cannot assess the quality of the scoring or the comparability between the surveys.

McCloskey’s reason for not sharing the mappings appears to be, first, that they are utterly transparent and, second, that the relevant information is contained in the scores themselves:

Think of astronomers disagreeing. We have supplied you with the photographic plates with which we arrived at our conclusions [i.e., the question-by-question scores for the 1990 survey]. . . The stars [i.e., the articles in the American Economic Review] are still there, too, for you to observe independently. [e-mail McCloskey to Hoover 19 February 2005]

[Emphasis added]

UPDATE 1/25: After reading Dr. Ziliak's comment, and carefully reading the sections of their paper dealing with M&Z's AER work, I must say that I'm disappointed in H&S. I don't think H&S have much new to say other than the problem is not as bad as M&Z claim. However, this is an empirical question, that in my mind, H&S fail to address thoroughly -- in fact, not even in a cursory fashion.

H&S caught my attention by insisting their data were better than the original. So I figured they would try to reproduce results -- which granted, is pretty hard and thankless work! What I really wanted to know from their paper were the results of a sensitivity analysis that should have been performed: given a) the expanded and more comprehensive dataset (allegedly 20% larger over the original), and b) a revised protocol (they didn't seem to like the multi-faceted M&Z questionnaire), how often do the M&Z results still hold? How frequently do published papers focus on measuring and sizing up economic impact? H&S didn't answer these questions. Hence, I found the paper of Hoover and Siegler pointless from the standpoint of my interests. And their selective detailed review of several papers in section 5 demonstrates nothing to me.

In Size Matters, M&Z found that the percent of full-length AER papers that didn't distinguish economic from statistical significance grew from 70% in the 1980's to 82% in the 1990's.

But H&S claim to have found new data: 15 papers in the 80's and 56 papers in the 90's that M&Z failed to include in their previous analyses. Since H&S don't perform one, let me create my own sensitivity analysis, measuring the potential impact of new data (though not the impact of a revised questionnaire).

First, the original M&Z data, percent of papers not distinguishing economic from statistical significance:

1980's: 127/182=70%
1990's: 112/137=82%

Second, I'm looking to make a lower bound: assume previous identifications of M&Z are correct, but that every single paper H&S have discovered does measure oomph:

1980's: 127/197=64%
1990's: 112/193=58%

In other words, under the extremely unlikely scenario that every single paper H&S have identified distinguishes economic from statistical significance, a majority of top AER papers STILL don't! And that 6% drop over the period, by itself, is not important to the profession.

For a more likely (though not most likely), mid-range estimate, assume half of all newly discovered papers measure oomph:

1980's: 135/197=69%
1990's: 140/193=73%

And finally, what if none of the new papers measure oomph:

1980's: 142/197=72%
1990's: 168/193=87%

In interval form, the new estimates for the share of papers not distinguishing economic from statistical significance range from 64%-72% for the 1980's and 58%-87% for the 1990's.

In sum: A majority of papers in the AER in the 1980's and 1990's did not distinguish economic and statistical significance, although trends in the share are not yet determinable.

(Of course, what is really called for is another observer to categorize the raw data using a different protocol, but that will have to wait for somebody without a blog).

Prediction Markets in Everything

Here's an interesting new online market: S M A R K E T S :: Product Trading Market. You can buy and sell shares in products that are being sold on Amazon, much like you can trade shares on the future of innumerable things at TradeSports.

It's probably not all that interesting to suggest that the iPod Nano is going to be a stong seller. But if I were a book publisher I'd be keeping regular tabs on this page.

Of course, the lack of real money trading throws in some difficulties, but I think the experiment is fascinating. Since more people trading in these things always help make the experiment a little more robust, why not head over and make a few bets on the next big Amazon product sales.

(Side questions: does it make sense to allow users to write in product reviews before a product is even released? And if you're a seller, or an interested party (an author), would you want to allow or restrict reviews prior to official release? What signal do you send if you don't allow prior review?)

Much, Much Higher

The author of this article is completely oblivious to the requisite conditions for accurate survey sampling:

And whether they are strict scriptural literalists or not, a huge supermajority of Americans believe in—what else to call it?—magic: 61 percent think the world was created in six days, 70 to 78 percent say that hell and the Devil and angels exist, 81 to 85 percent believe in Heaven. If opinion polling had existed in the Middle Ages, it’s hard to imagine that the numbers would have been much higher.

Really? I think it's hard to imagine three out of ten peasants telling an unknown stranger asking questions with, to them obviously-correct answers, that devils aren't real. In fact, I gather that a man would have been mortified to clearly and openly state to a stranger that he did not believe in God. The numbers would indeed be much, much higher, for the same reason and with the same causes, that the popularity of autocrats is very, very high.

Odd

One reason you should always look at your data rather than mindlessly running regressions is because some point may so far be out of place that it causes your results to be corrupted. A case in point is from the recently released Human Development Report. For people who follow these types of reports know that it is basically skewed towards welfare state governments, in other words, Scandinavian countries do quite well because of their large government spending on a variety of public welfare measures. It's still enjoyable reading through it and looking for those odd pieces of data that jump out at you. On page 258, I found a number which is so obviously out of whack that it should have raised red flags for anybody working with the data.

Did you know that only 92% of children in the U.S. go to primary school? Even worse, this number is down from 97% a decade earlier. Even accounting for 1 or 2 percent that home school, that still leaves over five percent not accounted for. If this was true, it would be a national scnadal. As a footnote says, there are discrepencies between the number of students and the number of school aged children which could account for this difference, but this strikes me as quite large and probably outside of any reasonable error measurement.

Working Poor

Some people hace noted that the latest government report on income and poverty was recently released. It showed a slight uptick in poverty rates. However, I wanted to point out my favorite statistics from the report. This being rates for various levels of employment. If one were to listen to certain politicians, it would appear that there are a significant amount of working poor in this country. That is, there a lot of people working fulltime below the poverty level. Unfortunately for the pols, the stats don't bear this out.

Work Experience % in Poverty
All workers (16 years and older) . . 6.1
Worked full-time, year-round. . . . 2.8
Not full-time, year-round . . . . . . 12.8
Did not work at least one week . . . 21.7

So, for those working fulltime year round, the poverty rate is 2.8% while those who didn't work at all it is 21.7%. Of course, this doesn't include children as this is for individuals only above a certain age, but it strikes me that poverty is largely a jobs problem.

One additional note, for those who are socially conservative among our readers, here are the numbers for families:

Type of Family
Married couple . . . . . . . . . . . . . . . . 5.5
Female householder, no husband
present. . . . . . . . . . . . . . . . . . . . . 28.4
Male householder, no wife
present. . . . . . . . . . . . . . . . . . . . .13.5

Maybe it really just takes a complete family and not a village.

Are bigger planes more deadly?

I have no idea, really, but in the course of some work I ran across the following chart and was instantly fascinated:

Airline Accident Trends 1945-2004

(Source: PDF) Note that these numbers exclude non-accident occurances such as bombing and hijacking.

The left hand ordinate is the number of fatalities, and the right-hand ordinate is the number of accidents. While the trend indicates that the number of accidents has been on quite a descent, what I find more interesting is that the ratio of accidents:fatalities converges, but doesn't (on average) reverse, 1985 and 1997. After an increase in the number of fatalities through to the mid 70s, the number has returned to numbers just below the 40s. But the number of accidents is almost a third of what it was during the same time.

Not being overly familiar with the aviation industry, the only trends I'm familiar with are the growth in plane size, and the alternating shift to, and now more recently from, hub-based route architecture. With larger planes, each accident will claim more lives. (Which is similar to my retort about people who talk incessantly about flying being safer than driving -- I've spent a good portion of my life on a plane and have never had a fear of flying, but when you have a car crash, you don't often lose 280 people at once. In the event of an accident, I'd much rather take my chances in an automobile. I don't think I have the luck to come out this well.) Any ideas?

What is our government reading?

The products of the Congressional Research Service are being made public through the efforts of the Center for Democracy & Technology. They can be found at OpenCRS. Note that some reports can also be found at the site for the National Council for Science and the Environment (I don't know if the two are collaborating on concatenating the collections in any way or not).

Always interesting to see what kinds of information is being sent to our legislators...

MIT Blog Survey

Go take the MIT Blog Survey. I did, and found out that I post much more frequently than many others.

Note that I did have to tinker with the banner so that it would fit my statistical philosophy.

When Statisticians Laugh

So the CDC is sent into WV to analyze an outbreak of obesity. The author of the story goes through the routine, but then asks two statisticians what they think:

Dr. Daniel McGee, a professor of statistics at Florida State University who has analyzed obesity data, burst out laughing when he heard about it. "My God, what a strange thing to do," he said.

"They'll find out what we all know - that the country is no longer set up for physical exercise," Dr. McGee said. And that schoolchildren "don't get a nutritious diet." And that "there is a lot of high-fat food on the shelves of every supermarket."

But, he said, "that doesn't tell you much."

"I'm sure skinny people go to those same restaurants," Dr. McGee said. "Skinny kids go to those same schools."

Dr. David DeMets, a professor of biostatistics at the University of Wisconsin, was also extremely skeptical.

"We get a lot of false positives from that kind of investigation," Dr. DeMets said. "We get people worried," but there is no way to know whether what is found... has anything to do with the obesity epidemic.

"Perhaps it is true, perhaps it is not," Dr. De Mets said.

Priceless.

An Ominous Anecdote about Statistics...

Young German Neo-Nazis think judging the worth of people by ethnicity is a good thing:

To make matters more complicated, crimes committed by foreign-born Germans are not even listed separately in the official crime statistics, because the perpetrators already have German passports.

I hate bigots of all stripes, and requiring statisticians to pander to bigots is a manipulation of the duty of the statistician to report faithfully and objectively the data he has acquired. This addition of ethnicity to the statistical yearbooks happened before. I here cite an older book in my possession, XXXXXXX, one chapter of which describes what happened in the German statistical agency when Hitler rose to power. I've scanned in the chapter, and encourage you to read it at your leisure.

Should GDP Revisions Make a Difference?

Once upon a time, a small revision in the GDP growth rate led to a very different newspaper storyline. Just remember that this is an all-too-real fairy-tale...

One month ago, on April 29, I defended my dissertation about error in GDP. That day the headlines were screaming that the economy was in the tank. The quarterly annualized growth rate of Q1 GDP had come in at 3.1%. Jeannine Aversa of the Associated Press wrote:

[T]he economy grew at an annual rate of just 3.1 percent in the first quarter. The slowest pace of expansion since in two years was evidence of a new "soft patch."

The first-quarter's GDP figure, down from a 3.8 percent pace logged in the final quarter of 2004, represents the economy's most sluggish showing since the first quarter of 2003, when economic activity expanded at an even more mediocre 1.9 percent rate...

The newest snapshot of the economy disappointed economists. Before the report's release, they were forecasting a 3.5 percent growth rate for the first quarter...

["Soft Patch" is] the term Federal Reserve Chairman Alan Greenspan used last spring when economic growth slowed abruptly.

Today, Q1 GDP was revised upward to 3.5%, and Jeannine Aversa has found a new story:

"The 3.5 percent pace is really a safe and solid pace for the economy to grow. By that I mean, it is not so fast that you can have an inflationary accident and not too slow to create new jobs," said Stuart Hoffman, chief economist at PNC Financial Services Group. "It is right on the economy's speed limit."

Folks, 3.1% and 3.5% are economically and statistically indistinguishable. If you don't believe me, ask somebody from the BEA. There is almost no difference in the data, yet the story goes from "soft patch" to "safe and solid". This is not reporting reality; this is from the land of make-believe. Quite simply, GDP data aren't able to tell coherent stories with differences this small, especially when comparing two recent quarters.

Here's more:

The new reading is close to the 3.6 percent growth rate that economists were forecasting before the release of the GDP report.

The 3.5 percent pace clocked in the first quarter of this year _ while better than an initial calculation for the quarter _ still represented some slowing from the 3.8 percent pace seen in the final quarter of 2004.

Economists initially predicted 3.5%, and it came in at 3.1%. The next month, they predict 3.6% and it comes in at 3.5%, and this is slightly lower than the 2004Q4 of 3.8%. A few points are worth noting. First of all, these are very good predictions. Second of all, 2004Q4 growth itself was revised from an "advance" 4.0% to a "preliminary" 3.1% to the "final" 3.8%. Do you really think stories about short-term changes from 4% to 3% growth have any basis in reality? Third, what can stories based on these data possibly mean? Nothing. Absolutely nothing.

I cannot see how anybody's planning decisions have changed because of this revision. As a subjective rule, I cannot see how any revision smaller than +/-1.5% or +/-2% could affect public or private policies at all.

Where Do You Talk Like?

Those of you who click through any number of more "personal" blogs will recognize the concept: a display of results from some internet "survey" or another to figure out which of several "things" (Star Wars character, literary heroine, car, etc.) to which you might be most similar. Along those lines I ran across one (I forget now on which I blog I first saw it) that gave an aswer as to the kinds of English one spoke, giving percentage breakdown of Northern, Southern, Midwestern, Upper Midwestern, and more. Little did I know that this survey was being followed a little more closely than the one that told me that if I were an X-Man I would be Cyclops. (Clearly erroneous. As anyone who knows me would say, I would be a perfect Havok.)

From that survey the results were compiled and then displayed in numerous maps of the US, showing geographic concentrations of response types: Dialect Survey Maps and Results.

One thing I'm grateful for is that this survey finally recognized and demonstrated something I'd noticed while living in Ohio three different times--a very odd use of the word "anymore" that was hard to reconstruct for examples. Here are the results for whether or not people consider either the phrase "I do exclusively figurative paintings anymore", or the phrase "He used to nap on the couch, but he sprawls out in that new lounge chair anymore" to be gramatically correct. (I do not.) Notice the "Eastern Midwest" concentration of those who responded "acceptable". Pennsylvania, Ohio, and Southeast Michigan all seem to consider this linguistically hunkey-dorey hunky-dory (my goodness, what was I thinking?). But then, what can you expect from an area that drops its helping verbs? (To wit, from my Pennsylvanian father: "Why are you just sitting on the couch? The lawn needs mowed and your hair needs cut.")

Had I the time and the data I'd map these results against the spread of ethnic groups over time and the level of economic development in each area. That, and a good GIS program would help. As my grandmother used to say, "If I had some cheese I could have a ham and cheese sandwhich if I had some ham."

Lawmakers to DoD: Give Us the Data We Need to Refute You

I have returned to RAND, so I cannot comment on the substance of the charges that, essentially, DoD wants to close the wrong bases.

WASHINGTON - The entire Missouri delegation to Congress demanded Tuesday in a letter and a press briefing that Defense Secretary Donald Rumsfeld release information explaining his decisions to close dozens of military installations around the country, including the 131st Air National Guard Fighter Wing at Lambert Field....

Pentagon officials said they had posted a large amount of information since the weekend on their base closing Web site and also provided the data to the Base Realignment and Closure Commission....

Spokesmen... said that what's missing are "the underlying empirical data justifying the scores" given military installations, as well as cost-benefit analysis for closing specific bases.

Meanwhile, Illinois Gov. Rod Blagojevich asked that the Pentagon "immediately make all the data materials and computer models ... available for public review."

Let's assume the goal of everyone is to maximize defense capability within a reasonable budget constraint. (Stop laughing). Missouri officials believe that their bases are very important, and add much inframarginal and marginal value to national security, but they don't have independent data to prove it.

Then how exactly did they determine their prior belief that their bases are important? Why can't the public review their data and models and cost-benefit analyses?

-----

I'm getting tired of reading news stories in which X accuses Y of Z, Y denies Z, and the journalist makes little effort to find out if Z is true, or whether X or Y have solid reasoning and evidence behind them, or a huge personal and financial stake in the matter.

Disintermediation in Medical Information

I tend to like pharmaceutical advertising because I have a preference for more information rather than less (even if it is filtered through the lens of the seller). No, it's not an unadulterated good in all situations, but if I'm uncertain about the conditions under which I'm participating, I'll choose to believe that more information could be a help, especially in relation to medicine. All of which makes me appreciate the new patientINFORM service.

Under the patientINFORM web-based pilot project, when patients, their caregivers, or others visit the voluntary health organization websites with general questions and to read news stories and other web content created by the organizations to help interpret the latest research, they will also have the option of being connected directly to the source through links to free full text of the research articles on the journal websites. Healthcare consumers will be able to access selected journal articles as soon as they are published.

This comes via Slashdot, which has a host of interesting links to a number of places bringing more information to the masses.

Interesting Resource

Stumbled across this the other day doing some research: The Directory of Open Access Journals. It lists and links to those journals that offer -- surprise, surprise -- open access to their content.

I'm not convinced this is the best business model for academic journals, but that may be largely beside the point. Of specific interest to this audience, here's the link to Econ journals.

I'm not a Certified Economic Accountant, but I Play One on My Blog

Don Boudreaux insists that the style and attractiveness of modern airports are not included in GDP. This is a debatable point. 30 years ago airports were no-frills affairs, but now have shopping malls, restaurants, cleaner facilities, etc. inside.

Let me answer with another question: Climate controlled luxury shopping malls (some provide free wi-fi) have increased the comfort, pleasure, and style of shopping. Is the increase in their attractiveness accounted for by GDP?

Answer: None of thse "public space" issues are well-reflected in real GDP, although the cost of building them shows up properly in nominal GDP.

You might point out that taxpayers and consumers pay for these amenities, and this should be reflected in GDP. Then I'd reply that just because something is paid for (in nominal GDP) doesn't mean it's properly accounted for in real terms.

If prices increase because airports are masterpieces of design, then the "real" price paid for using an airport might very well be less, because you're now using the building as an airport and as a work of art. The marginally higher price is paying for an additional service: art.

In other words, Grand Central Station is more than a train station; at least, it is to me. Real GDP doesn't reflect this. I doubt that nicer spaces like Grand Central are accounted for in real GDP, as "niceness", like "good art", is not measurable. But I don't think real GDP can or should reflect my view of art. That's not what real GDP is for.

(Btw, Penn Station isn't more than a train station).

In Don's airport case, we have commerce coming to the rescue of dismal airports. Inasmuch as this commerce is done inside of domestic airports, final sales of goods sold there are included in nominal GDP, and the wages of the employees working there are in nominal GDI.

Airport stores and restaurants are not treated any differently than non-airport stores. It doesn't matter to the BEA whether Don purchases a Brooks Brothers suit inside of Reagan airport or inside of a local shopping mall. (I don't know how international airports' "duty-free" shops are handled, though I think no differently). If the BLS adjusts for quality change in the goods sold at these stores nationwide, then that quality change is reflected in real GDP.

Hence, the real question is whether the prices (and taxes) paid for airline tickets and goods in the airport somehow account, in real terms, for the nicer amenities at airports.

Prices serve to co-ordinate activities; they do not serve the purpose of measuring quality-adjusted value to the end consumer. They can be used for the latter only under a narrow set of circumstances. Simply put, the market isn't providing prices to the data agencies that adjust for quality change of public spaces. That's not the job of prices, nor of markets; it's the job of the agencies. And right now they don't do it (it's NOT easy)... I know of no way to verify this conjecture for you other than asking BLS and BEA statisticians if they are manually adjusting for nicer shopping spaces...

In fact, government services, like airports, are valued at COST, and there are horrendous difficulties in measuring the productivity of government enterprises. That airports have become joined with shopping malls makes things interesting.

Back to my question above, if you think nicer shopping malls are not reflected in real GDP, and modern airports have just integrated shopping malls, you might think that nicer airports have not been included in real GDP. If nicer airports have come about through government spending, then nicer amenities haven't been accounted for, since only the small imputed productivity increases in airport building would have marked down the cost of prettying them up.

(Note that V. Postrel recently noted the difficulty of filtering hotel room quality change from price change; Don's question is, in fact harder, since airport amenities are not directly charged for.)

---

Sex and GDP

In my view, the use of aggregate economic data had already gotten out of hand by the 1950's. We have to get back to basics, and understand what the data are actually trying to measure.

What does GDP purport to measure? NOT WELFARE and NOT LIVING STANDARDS. Get over it, folks! As much as some would like it to be, GDP is not a people-experience counter. GDP is ONE account of the value of goods and services produced and exchanged via markets and governments. It does not put a value on most intrafamily exchange and production, although farmers growing food for themselves do have the value imputed. The standard example of non-counting is housekeeping; if it ain't paid for, it ain't counted. If it is paid for, it is. Quality change is not really much of an issue for housekeeping.

But to see in greater detail how arbitrarily some things are counted and others aren't, how about a more controversial example: sex. If it ain't paid for, it ain't counted. In fact, because it is an illegal activity, even paid sex is not included in the U.S. GDP. (Moving to the System of Natonal Accounts will change this, and I'd like to see how the BLS will get its prices!) When counted, I have no personal or academic knowledge of whether quality change will be a "problem" with prostitution.

Don't think paid sex is an important service? Some say sex, drugs, and smuggling would increase Swedish GDP by only 0.2%. Others have noted a much larger figure for elsewhere, "According to Marilyn Waring, the sex industry accounted for about 14 per cent of the GDP of Indonesia, Malaysia, the Philippines, and Thailand in 1998". This puts economic growth in a new perspective, no? Prostitution could also be about 2% of GDP for those countries, it depends who you ask. Poland and the UK both estimate about 0.2% of GDP is prostitution. I get the feeling that 0.2% is just an assumed nuisance value, like "50% unemployment in Iraq".

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I ain't no Expert

Please note that Don is on my dissertation committee, so he knows that I cannot pass up a chance to discuss error in macroeconomic data.

First of all, no economist can truly be an expert in GDP; the economy is too massive and complex for one person to understand how to make GDP. This is for the same reasons, but with far greater potency, that nobody knows how to make a pencil.

I'll grant that you can understand the outline of all the processes of national accounting. But no man can know what to do with all the prices, quantities, formulae, regressions, guesses, estimates, and the like for a 300 million person strong, complex flux of growth and decay. How do I know this? Because I tried! How they are all these elements put together? How wide in scope is each available data series? What means are used to measure the different goods and services? How do we adjust for the birth and death of firms? How do the scope and quality of estimates differ from last quarter, last year, last decade? What is missing from these estimates?

The matter of economic accounting is so complex that someone just proposed the idea of a "Certified Economic Accountant". Really:

Hence we advocate a Certified Economic Accountant (CEA) degree or diploma program to gain enhanced recognition and greater understanding for national economic accountants and their work.

Yao is Irrelevant

Don Boudreaux links to Bryan Caplan's clear explanation of the danger of misinterpreting averages, and writes about an example he uses in Econ 101:

I use average height to explain to my students the problem with taking averages at face value. Suppose the average height of my class of 200 students is calculated and turns out to be 5�8�. Then let Yao Ming walk into the classroom. Because he is 7�6� tall, he will increase the average height of people in the classroom � but do nothing to the heights of any individual in the classroom.

The logic makes sense to me, and is a good point to make, but adding one person with an extreme attribute to a large group will usually have little effect on the resulting mean value.

I made that point when measuring the average hourly pay of Wal-Mart workers. Adding in the $10 million salary of WM's CEO H. Lee Scott increases the hourly wages of a million Wal-Mart employees by about half a cent an hour. This is irrelvant for almost all purposes. As I wrote, the median and the mean are close enough for all but nit-picking.

I'll make the same point with adding Yao to Econ 101. 7�6� Yao Ming will raise the mean height of Don's 5�8� 200 student class by approximately .11 inches. The new mean is 5�8.1��. All this means is that whether or not Yao is added is irrelevant for almost all purposes of measurement -- but is extremely important for fielding a basketball team from Don's students.

(Here's the arithmetic: 200 students at 5'8'' yields 13600 total inches. Adding in 7'6'' Yao yields 13690 inches. Dividing by 201 yields 68.11 inches on average -- or 5'8.11'')

It's that time of year again...

For those of you who are into the whole b-ball thing this might be of interest: the Dancecard Rankings from Jay Coleman and Allen Lynch (the link for Allen Lynch on the page is his email -- not using it because I don't think we need to increase his chances of receiving spam).

I'm more of a football and lacrosse guy myself, but from this perspective, I can get into just about any sport. I know baseball is usually the sport that attracts people fascinated with data work, but I think that area's pretty well covered. Anyone with good data sets for college lax and can send me a file/link is up for a beer or several if you're ever in the DC area....

my incompetence with Movable Type

I got confused about how Movable Type works, forgetting that "save" by default means "publish". Thus I have now published two copies of an early draft (broken HTML and all) of something I wasn't sure that I wanted to publish anyway.

Argh.

original version: I have spent twenty minutes or so trying to figure out how to make them go away, with no success so far except deleting the "entries" and a correct (I hope) understanding of what happened (and that a published article is evidently a separate copy of the "entry" it was made from). If someone wants to take mercy on me, please feel free to delete the published articles. Meanwhile, I'll probably continue trying on my own for a while.

updated and hopefully-final version: They seem to be gone now, yay. Perhaps someone took mercy on me (but didn't send an email?) or perhaps they were in fact deleted when I deleted the entries, and I was having some sort of (cache?) problem which kept me from seeing the change on the main Truck and Barter page.

More On Randomness

Ehhh...I would say "Deep in the basement..." is about as good a starting line for an article about science as "It was a dark and stormy night..." is for horror.

Nonetheless, this was at least an entertaining article about a number of black boxes generating random numbers that some claim to predict some not-so-random events:

The machine apparently sensed the September 11 attacks on the World Trade Centre four hours before they happened - but in the fevered mood of conspiracy theories of the time, the claims were swiftly knocked back by sceptics. But last December, it also appeared to forewarn of the Asian tsunami just before the deep sea earthquake that precipitated the epic tragedy.

Now, even the doubters are acknowledging that here is a small box with apparently inexplicable powers.

'It's Earth-shattering stuff,' says Dr Roger Nelson, emeritus researcher at Princeton University in the United States, who is heading the research project behind the 'black box' phenomenon.

And, for balance, here's something from a dissenting opinion:

September 11th: A study in wishful thinking.

It was obvious that the terror attacks of that day should make a pretty good case for Global Consciousness (GC). On the surface, it did. There seemed to be a very pronounced effect on that day and in the time right after.

There were, however, several problems. The most obvious was that the changes began at 6:40am ET, when the attacks hadn't started yet. It can of course be argued when the attacks "started", but if the theory is based on a lot of people "focusing" on the same thing, the theory falls flat - at 6:40am, only the attackers knew about the upcoming event. Not even the CIA knew. Hardly enough to justify a "global" consciousness.

Perhaps this is an uneducation question, but wouldn't 30 years of continually generating random numbers result in plenty of oddly large/sustained deviations away from the expected 50/50 distribution of 1s and 0s?

More Reason to Like the WSJ Online: The Numbers Guy

I've been enjoying this series, and forgot to mention it to T&B readers.

The Numbers Guy, over at the Wall Street Journal.

Here's just a quote from the top page I think Kevin, given his recent focus on errors in data, might appreciate:

Jan. 28, 2005 Some 63,135 cellphones were abandoned in the backseats of London taxis over the last six months, according to a quirky survey that made headlines recently. The precision of that number should be your first clue something's amiss.

Quick Book Review: The First 40 Pages of The Secrets of Economic Indicators by Bernard Baumohl

After two hours of reading The Secrets of Economic Indicators, I must regrettably write an excoriating and punishing initial review of this book. But before my tone and goals are misunderstood, you should know that I highly recommend that you read and study this book, at least up to page 40. Dollar for dollar, there is no better introduction to the current beliefs and attitudes about the use and utlity of economic data. If you ever wanted to understand why bond traders rip out limbs out when the jobs report is poor, read this book.

Frankly, it's not Baumohl's fault that his book inspires no confidence in me, and left me baffled about exactly how I should incorporate economic data into my decisions. In many ways, the entire subject of economic indicators is stale and corrupt, almost beyond redemption, built on fundamentals that are shaky, and yielding doubtful nonsense. But that's life, so let's get on with it.

First off, Mr. Baumohl sparkles in prose, with a readability second to none; the man can write. He chucks overboard tons of refuse, but his remaining cargo is infested by rats. He piles through indicator after indicator, talking about importance, construction methods, where to find the important stuff online, revisions, and a release's impacts on bond, stock, and international money markets. And he makes it easy to follow

But for me, the real moral value of Mr. Baumohl's tale is to confirm for the reader that he does not need to bother with data; in fact, instead of worrying about last quarter's GDP of the U.S., Germany, or Japan, the reader should be traveling there to experience those economies first-hand. This is because 1) the data don't actually represent much that is enjoyable about an economy--you don't learn about skyscrapers by looking at construction data--and more importantly 2) other people--investors and economists--are no doubt quicker and better at using this data than you will ever be.

Don't be worried that the book informs its readers about how people use macroeconomic theory to digest macroeconomic data, regardless of the quality of either. That's how it works. Accept it.

Remarkably, Baumohl invites readers to ignore the experts--like those that advised the mal-investments leading to the .com bubble--if they'll do the dirty work themselves. He wants readers to know that out of the seeming infinity of data availale, some indicators "have established a track record for being able to predict how the economy will behave during the next 12 months" (xix). He compiles sources for U.S. and international data, although Statistics Canada might be justifiably annoyed at this judgment that "No country collects and disseminates as much high-quality economic information as the U.S. Its breadth and integrity make it the gold standard in the world." That's true but misleading, as in the judgment of other statisticians, Statistics Canada ranks higher than the U.S. in terms of data quality, and Australia might come in a close second.

The first chapter (available free online, see Mahalanobis) begins with a cute story of the process of data embargo, with journalists given the data at 8AM, and a release to the public at 8:30AM. Traders, who have already in essence, placed bets on the outcome, react to the news. So do policymakers. Sometimes, when the numbers come in far from forecasts, hilarity ensues...

What really got under my skin is that Baumohl conflates the actual history of economic activity with the collection and dissemination of that data:

All will eventually feel the fallout from the news that came from the Labor Department's press room that morning. That fallout will produce a mixture of both favorable and unfavorable developments. (6)

That release was a compression of history into a single figure. Will economic actors in the future be responding to the complexity of activity behind that figure, or to the figure itself? Perhaps it doesn't matter, but I ask what would happen if the BLS and BEA shut down tomorrow? Would economic actors no longer respond to the economy because it wasn't contained in official news reports?

Also, Baumohl notes that the reactions to this single release are not permanent. They will be modified in a fundamental way by future releases. In the story, predictions that a release of X will have some short-run effect are made without reference to tomorrow's release, which will once again change future plans. Hence, all this talk about impact on markets is intended to explain short-run movements, most of which amateurs would lose money on, if they were to try to time their investments.

The book is a solid introduction to domestic and international economic data, though it is an introduction. Most honorable is Baumohl's emphasis on the impact data release have on the interconnection of markets, and the ever rising importance of international trade.

However, the most terrifying aspect of this book is that there are no footnotes, no endnotes, no documentation, and no sources. The index is feeble. I am expected to trust Baumohl that the first of the "economic indicators most sensitive to stocks" is the payroll survey. Sorry, but I like looking at original research...

One paragraph was absolutely infuriating:

Of course, to many investors, it makes little difference whether the intial data is realible. They'll trade on these numbers anyway because the figures represent the very latest information they can get on the economy. Later, though, as more information is received and after statisticians have had a chance to review their computations, the preliminary figures undergo one or more revisions. Though revisions to earlier data are also read by investors, they generally do not spark much trading because by then the information refers to a time period that has long since passed. Investors usually focus on the future, not the past. Economists, however, take revisions more seriously because the new figures can affect their forecasts of economic activity.(21)

OK, let's figure out how bad data are useful to investors, but late data aren't. 1) All data are about the past. Do data about the past matter or not? Of course, but only the really, really recent past??? 2) If the data are not reliable at all, then they do not contain information, they contain misinformation, and should be disregarded. But they are regarded well, so they contain some useful information about the past. But revisions contain even more information about the past. Why is it that a past that is probably an additional month ("long since"???) or so older is no longer relevant. Isn't this quite arbitrary? What would happen if data were revised the next day???


Perhaps investors react because they expect others to.

The Biggest Secret of Economic Indicators

The biggest secret of economic indicators is how to profit by using them. In fact, it's so secret that economists and journalists who write about economic indicators don't tell it to their readers.

This was brought to mind when I saw that Tyler Cowen just linked to a book review of The Secrets of Economic Indicators by Bernard Baumohl.

Although I have not read this book (yet), over the past 6 months I have read a half dozen books about economic indicators, all of which claim that economic data are essential for proper decision-making in the short-run and long-run, and none of which tell the reader how he can use the data profitably.

This book might be different, though I'll reprint an excerpt from the review that leads me to a pessimistic outlook:

But why should anyone other than Alan Greenspan care about economic indicators? "Because these are vital barometers that tell us what the economy is up to and, more importantly, in what direction it is likely to go in the future," Baumohl says. He characterizes them as essential knowledge for investors worried about their portfolios, company chief executives trying to make business decisions they can justify to shareholders, and workers just trying to gauge the health of their industry.

I like the idea of continual interaction between people and data: in one period, everybody's economic activities are recorded, and in the next period, their economic activities are based on knowledge of everyone's past activities as well as future plans. I just don't know how much an improvement would occur if people dropped their apparently puerile attachments to making decisions without reviewing macroeconomic data. As Richard Wagner impressed upon me, just how did smart people make smart decisions before such data were available?

In other words, what is the potential value added of these data--in billions of dollars--if everyone knew their secrets? Is there evidence that macro data have increased macroeconomic coordination, and hence GDP? How much can we gain through the persistent devout following of data releases? I have not seen one good answer to these questions! Perhaps this is all a large waste of time? Given the data, how likely are we to guess CORRECTLY the direction of the economy? Without the data, how likely are we to guess correctly? If I were working with Vernon Smith and the experimental economists at GMU, I would suggest that a large-scale economic experiment be conducted in order to measure how valuable macro data like "retail sales" and "initial unemployment claims" is to micro agents.

All macroeconomic data are vestiges the past, some of a week ago, many from last month, a few from last quarter or last year. If the data indicate small changes have occurred, you need a subtle theory and a calculator to make a conclusion about the likely direction of the economy in the future. If the data indicate large changes have occurred, I think hope most people in an industry will already have spotted the difference in activity and have adjusted...

My advice: you should follow economic indicators if 1) you know how to profit off using them more than you could profit doing something else with your time, or 2) you genuinely enjoy messing around with economic data--making forecasts, and pretending your forecasts are accurate, or 3) you like following the politics of economic data, or 4) just doing something to manage your portfolio makes you feel better.

Christmas Deadweight Loss: Objectively Better Gifts?

Not sure why I didn't bring this up earlier, and now I've decided to make it a whole post rather than just a tack-on to the original post below.

Take a look at SwapAGift.com, and click on a few of the swaps-a-lot merchandisers. You'll see a list of current cards available and at what price they can be purchased.

Could the difference between the value on the card and the price the card finally sells for serve as a measure of approximate loss on this kind of gift? For instance, on a Pottery Barn card, the approximately $8.50 average difference between actual card value and price it can be bought for might be a valuation for the difference between the monetary value laid out by the purchaser and the receiver's value -- a decent portion of the deadweight loss. Further, one might start to strarify this according to merchandiser type: compare a weighted average difference between stored value and buy prices (weighted according to average size of card to account for the kind of goods, like comparing Tiffany's versus Target, as well as the number of cards sold to take some measure of the volume of trade) to see where losses are greater or lesser relative to some standard such as cash. Those closer to cash's value might be the "better" gifts since they tend to exhibit relatively less loss (on this one measure) than others.

Of course, this kind of thing always raises more questions. Is this difference driven by trends, such as higher demands for electronics one year, home furnishings or jewelry the next? Does the distribution of stores impact the desireability of certain categories, as it might be easier to get to stores that are closer by? What about the effect of income levels? Rural vs. urban?

Or maybe I just need to lie down.

2004Q3 GDP Rises from 3.7% to 3.9% to 4.0%

Clockwork.

Last month, I noted a ridiculous AP story trumpeting an economically insignificant increase in 2004Q3 GDP growth. It made "above the fold" on The New York Times online. Of course, the AP is at it again with an even smaller change:

The economy revved up its engine in the third quarter and advanced at an annual rate of 4 percent-- even faster than previously thought.

The new reading on gross domestic product, released Wednesday by the Commerce Department, exceeded the previous estimate of a 3.9 percent growth rate for the July-to-September quarter. It marked the best showing since the opening quarter of this year and was up from a 3.3 percent pace in the second quarter....

The new GDP figure, based on more complete data, was better than economists were forecasting. They were predicting economic growth would remain at the 3.9 percent pace estimated a month ago.

This is perhaps the purest example of a regularly scheduled press release becoming news, regardless of its importance... Full release here...

NBER Working Paper: CPI Bias from Supercenters

Jerry Hausman and Ephraim Leibtag have a really neat NBER working paper, CPI Bias in Supercenters: Does the BLS know that Wal-Mart Exists? ($). Of course, the question is facetious and deceptive. Their inquiry is really about whether the sample of prices in the CPI are actually representative.

The abstract indicates that they aren't:

Hausman (2003) discusses four sources of bias in the present calculation of the CPI. A pure price index based approach of surveying prices as done by the BLS cannot succeed in solving the problems of bias. We discuss economic and econometric approaches to measuring the first order bias effects from outlet substitution bias. We demonstrate the use of scanner data that permits implementation of techniques that allow the problem to be solved. In contrast, the current BLS procedure does not treat correctly outlet substitution bias and acts as if Wal-Mart does not exist. Yet, Wal-Mart offers identical food items at an average price about 15%-25% lower than traditional supermarkets. The BLS "links out" Wal-Mart's lower prices. We find that a more appropriate approach to the analysis is to let the choice to shop at Wal-Mart be considered as a new good' to consumers when Wal-Mart enters a geographic market. This approach leads to a continuously updated expenditure weighted average price calculation. We find a significant difference between our approach and the BLS approach. Our estimates are that the BLS CPI-U food at home inflation is too high by about 0.32 to 0.42 percentage points, which leads to an upward bias in the estimated inflation rate of about 15% per year. (Emphasis added).

Some detail on this process from the meat of the paper, which I have yet to read in full:

Various studies have demonstrated that food items at Wal-Mart are 8%-27% lower priced that at the large supermarket chains, even after discounts for loyalty card and other special are taken into account. After entry by Wal-Mart conventional supermarkets typically decrease their prices (or do not increase them
as much as in non-Wal-Mart markets) because of the increased competition.
Remarkably, the large expansion and continuing expansion of Wal-Mart and other supercenter food outlets has almost no effect on the BLS calculation of the CPI for food.

The BLS employs a �linking procedure� that assumes �quality-adjusted� prices at Wal-Mart are exactly equal to prices at conventional supermarkets. Thus, when a Wal-Mart store replaces, say a Kroger, in the BLS sample of stores from which it collects prices, it links the lower Wal-Mart price to the higher Kroger price to remove any difference. Even though packaged food items are physically identical at the two stores, the BLS procedure does not recognize any price difference between the stores. This procedure is not based on any empirical study. Rather, it is based on mere assumption. The assumption is
completely inconsistent with actual real world market outcomes where Wal-Mart has expanded very quickly in markets that it entered. Thus, Wal-Mart and other supercenters are nowhere in the food CPI so that we find that the BLS does not know that Wal-Mart �exists� in terms of the estimation of a CPI. We also believe that observed consumer behavior cannot be explained by the BLS assumption of a compensating �quality differential.�

This is really neat, but have studies really found that WalMart prices are 8%-27% lower? Yes, they are. We reprint footnote 5:

A recent December 2003 study by UBS Investment Research found a price gap of 17.3% to 26.2%, �Price Gap
Tightens, Competition Looks Hot Hot Hot.� The previous year UBS found a price gap of 20.8% to 39.1%. For example for a specified identical market basket UBS finds Wal-Mart supercenters to have an average price 19.1% less expensive in Tampa and 22.8% less expensive in Las Vegas. In 2002, Salomon Smith Barney estimated the price gap to be between 5% and 25%. See L. Cartwright, �Empty Baskets, September 12, 2002.

Hausman and Leiptag have a separate paper analyzing consumer benefits from entry by supercenters, with identical sources...

2004Q3 GDP Rises from 3.7% to 3.9%

Jeannine Aversa of the AP files an absolutely meaningless report:

The economy - helped out by more brisk consumer and business spending - grew at an annual rate of 3.9 percent in the third quarter, a performance that was stronger than previously thought.

The new reading on gross domestic product, which is based on additional data, was up from the 3.7 percent growth rate first estimated for the July-to-September quarter, the Commerce Department reported Tuesday.

GDP measures the value of all goods and services produced within the United States and is considered the broadest barometer of the economy's health.

The 3.9 percent growth rate registered in the third quarter represented a pickup from the second quarter's 3.3 percent pace and marked the best showing since the opening quarter of this year.

A revision of +0.2% is not good news, it's noise: an irrelevant and economically meaningless statistical abberation. There is, practically speaking, absolutely no difference between 3.7% and 3.9% quarterly growth at an annual rate, even if the BEA can allegedly pinpoint where it previously undercounted. In fact, there is practically speaking, no difference between 3.9% and 3.3%. GDP measurement is not that accurate!

Journalists seem to have no background in errors of economic data; so here are two rules of thumb: 1) the average change in GDP from the first to third release is about +/-0.5%, and 2) revisions after that (which are uncorrelated with the first two revisions) revise estimates an average of +/-1.0%. Anytime you see changes smaller than that, they're more likely than not to be eliminated by later revisions.

Note to The New York Times web editor, just because it sounds important, doesn't mean it should be on the front page:

Google and Known Unknowns

Sometime time back Brad DeLong had an interesting post about searching and creating metadata which is worth quoting in detail:

�Let's take Donald Rumsfeld's four catagories: the known knowns, the known unknowns, the unknown knowns, and the unknown unknowns:

The known knowns: The things that you know, and that you know that you know. Here there is no information retrieval problem at all.

The known unknowns: These are the things that you know are on your hard disk someplace, but you're not sure where they are or what, exactly, they say. Your recollection needs to be refreshed. Here is where search based on full-text indexes plus high-quality metadata shines. We know how to make full-text indexes. We know how to search such indexes plus metadata. The only potential problem is a social engineering one: how to make sure that high-quality metadata about files is created and maintained.

The unknown knowns: Once you have found your known unknown, you then want to find what other files on your hard disk are related to it. The same keyword and text search won't necessarily pick them up. This is what subdirectories--folders--are supposed to be for: one of the benefits of grouping related files in subdirectories is that one can then thrash about and get hold of related information. And, because one file may well belong to more than one possible group of unknown knowns, we have symbolic links--aliases. Once again, however, there is a social engineering problem: how to make sure that files are sorted into the right folders and that the right symbolic links are created, for this task can also be "tedious in the extreme." And we are vain and lazy infovores.

The unknown unknowns: These are things that one would search for if one remembered enough about what was on one's hard disk (or knew enough about what was on the web) to know that one should look for them. Here we have a very difficult problem: how do you jog someone's memory or tell them enough about what is known so that they can figure out what kinds of things they can search for? I think that this is a very hard problem indeed.�

I think product�s like Google�s Desktop Search fit into the �known unknown� category above. David Pollard further expands on Google�s foray into the �Personal Content Management� tools. More on the competition between Google and Microsoft is described in this Economist article.

My favorite desktop searching tool is Copernic Desktop Search. Together with Google it is a good combination. A list of similar products is given by DeLong. I wonder why our IT departments didn�t recommend these, they ought to be concentrating on improving personal productivity.

Number Employed vs. Unemployment Rate

(Warning: This is another vague, interminable rant on the quality of data).

Occassionally, the number employed rises even while the unemployment rate rises--or both decline. This is normal and explicable. One could argue that the number of people looking for jobs increased more than the number of jobs. But one could also argue that the real reason for this inconsistency is purely statistical, not economic. The series aren't really linked, so the economic explanation is an illusion.

The number employed comes from a survey of businesses, and the unemployment rate (number employed/ labor force) comes from a survey of households. The household survey comes up with its own estimate of number employed, and uses a different definition, to boot; the only real link between the two surveys is the actual economy. The measurement processes of each survey program are incredibly different. It almost seems remarkable that the data are as close as we find them to be... The business survey indicated growth of 337,000 jobs in October and 139,000 in September. The household survey indicated growth of 298,000 jobs in October, after a decline of 201,000 in September.

Producing these data series is an enormous task for the Census and BLS: covering a dynamic population, utilizing bureaucratic organizations, serving heterogenous goals, blocking (or aborbing) political pressures, conducting independent survey samples, and employing differing complex methodologies combine to yield estimates that are some of the best numbers we have about economic exchange.

The tasks that newspaper reporters set for the data, require data that can expose and explain minute changes in overall employment, and employment among races. But the errors in each of these surveys are frequently larger than the granularity needed. How large? One indication is given in the article linked above:

The jobless rate for African-Americans jumped to 10.7 percent last month, up from 10.3 percent in September. The rate for Hispanics fell to 6.7 percent from 7.1 percent from the previous month, while the rate for teenagers grew to 17.2 percent from 16.6 percent. The rate for whites held at 4.7 percent.

Now, do you really think that the unemployment rates are that variable month to month? Or is this survey error? How would you extract the signal from the noise?

Anecdotes vs. Data: Real Estate Edition

It seems that many real estate agents, like many baseball club recruiters and managers, rely on gut instincts and personal experience instead of the data:

In higher price ranges, though, agents report an uptick in the number of days properties are staying on the market. "I'm looking at the listings for Bethesda now," Jane Fairweather, an agent with Coldwell Banker Residential Brokerage in Bethesda, said last week. "Here's what I see priced between $800,000 and $900,000: 279 days on market, 83 days, 16 days, 118 days, 56 days, 17 days, 2 days, 55 days, 30, 45, 27, 67, 120."

Always remember that we have to pick and choose our anecdotes carefully; they're non-random, judgmental surveys, easily biased by not being representative of the whole. Anecdotes can provide valuable insight into areas for which no reliable data are available. But wait, that set of anecdotes above--covering a narrowly priced range of homes in a single area--didn't compare anything over time! And hard, reliable data are available on the average length of time homes have been on the market.

So what happens when the reporter looks it up?

Although many agents report anecdotally that homes are remaining on the market longer, statistics from the area's multiple listing service show days on market for all properties relatively flat for most local jurisdictions in September.

Now, I'm not one to ignore people whose livelihoods depend on being right about a specific market. And I understand the urge for the juicy soundbite for a reporter to nibble. But is it too much for the reporter to point out that real estate markets fluctuate all the time? That is, shouldn't we expect that--even in a sizzling market--a real estate agent would likely be able to find one neighborhood whose expensive houses are staying on the market longer than before?

Revisiting Edmund Andrews

Last October, I noted with sadness that I could no longer trust The New York Times business section for Mr. Andrews' failure to substantiate claims regarding the "majority" of economists' and forecasters' views on the economy. I argued that factual assertions made in news articles require source statements; only when social facts are established within reason can we move forward in public debate.

Now, Russell Roberts is all over Mr. Andrews for a whole shopping cart full of intelectual crimes: drawing conclusions from inconclusive data , stating opinions as facts, using political sources without disinterested affirmation, and simply getting the numbers wrong. He concludes:

I suspect the New York Times reporter misread it to mean that the number of jobs in the high-paying industries is unchanged, ergo, zero job growth in the high-paying industries.

I have a call into Mr. Andrews. I'll re-post if anything changes.

But here's what's amazing and a little bit frightening. This claim that no new jobs are being created in the highest-paying industries will become what Joel Best calls a "mutant statistic." Whether it's true or not, because it was in the Times, it will get quoted and cited as fact. I don't think it is. If I'm wrong, I'll let you know.

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