Friday, April 27, 2007

What's the value of a life?

Economists ask such questions because society cannot otherwise make good decisions about actions that extend life, as opposed, say, to improving the quality of life. To put it another, what sounds like a repugnant notion - that the value of person can be expressed in economic terms - is necessary to making choices, including moral and ethical ones.

The task of measuring the value of a life isn't easy, however. The Undercover Economist has a nice explanation. It's tricky to measure but some clever economists have found ways to do so. The Undercover Economist writes:
Being a soldier is risky; so is being a drug-dealer or prostitute. The difficulty, evidently, is to disentangle the health risk and the financial reward from all the other motivations to choose a particular way of life. That isn’t easy but economists try.

World Bank economist Paul Gertler and his colleagues reckoned that Mexican prostitutes valued their lives at about $50,000 per year, based on willingness to take money not to use condoms. At five times their annual earnings, that’s a similar figure to workers accepting risky jobs in rich countries.
See also this work by Kevin Murphy and Bob Topel that he cites.

Thursday, April 26, 2007

Migration operates like compound interest

The New York Times Magazine has a long and exceptionally well-written essay, "A Good Provider Is One Who Leaves" by Jason DeParle. His subject is migrant workers with a focus on workers from the Phillipines.

Here's one bit about the UAE:
As an Islamic state that bans socializing between unmarried women and men, Saudi Arabia held out few hopes for marriage or kids. Rosalie approached her 30th birthday resigned to a dutiful life alone. She celebrated at a Jeddah restaurant with Filipino friends; one of them, knowing they had a private room, disregarded the gender rules by bringing along her nephew, a construction engineer. The nephew, Christopher Villanueva, took Rosalie for an after-dinner walk, trailing her by a few paces in case the religious police happened by. “I was trembling!” Rosalie said. With both of them living in guarded single-sex dorms, their 18-month courtship occurred largely by cellphone. When they flew home in 2002 to marry, they had never been alone.

In the Philippines the following year to deliver her first baby, Rosalie saw an ad seeking nurses in Abu Dhabi. At $1,100 a month, the job paid twice what she made in Jeddah, and Abu Dhabi had no religious police. She aced the test and caught another plane to the Middle East, this time as a mother. Christine — “Tin-Tin” — was 7 months old when Rosalie tore herself away. The baby stayed on the farm and soon called her Aunt Rowena “Mama.” When a second daughter, Precious Lara, followed, she considered Rowena her mama, too. The girls cried when Rosalie held them on visits, filling her with worry and regret.
Migration operates like compound interest, building upon itself. Capitalizing on permissive visa laws, Rosalie has now brought a cousin and three siblings to Abu Dhabi. Rowena will soon start a secretarial job, and Roldan and Boyet are working with computers. Rosalie has also gotten Tin-Tin back, though not without some continuing distress: the girl, now 4, still treats Rowena like her real mom.

Already the family benefactor, Rosalie recently got a big promotion. As a charge nurse at the Al Rahba Hospital, she now earns $2,000 a month — 20 times what she earned a decade ago when she left the Philippines. Plus she has free health care and housing. Nonetheless, she is determined to stamp one more visa on the passport page. After a decade of trying, she has passed the American nursing exam and will soon retake the English test, which she narrowly failed. “The U.S. is the ultimate,” she said. “If you make it to the U.S., there is no place else to go.”
Read it all here. It's worth it.


New evidence of bonded labor :: BBC

In Britain. Read the entire BBC report. Here's an excerpt:
we found evidence of a new form of trafficking from eastern Europe and within Britain; evidence migrant workers were lured here by deception.

We have uncovered conditions that - taken together - amount to a form of bonded labour which is creeping back into the low paid and hidden corners of the country's otherwise booming economy.
It's worth reading the story to gain insight into how it is that some migrant workers in the UAE fall into a form of bonded labor.

I wonder whether an undercover report like the BBC's coverage of the UK labor market could occur here? The BBC's report used a TV journalist from Lithuania who posed as a job seeker.


Wednesday, April 25, 2007

Labor force participation of married mothers is falling

The labor force participation of married women in the US is falling, especially among mothers of infants. Go here to see the Bureau of Labor Statistics report.


Monday, April 23, 2007

What I'm reading

1. Globalization of labor. Is labor getting a smaller share of income and yet a larger income? Yes says the IMF.

2. Driving alone, in traffic. Putnam redux.

3. The Constant Economist. Rachel Friedberg, economist, takes a busman's holiday.

4. The Obesity Conjecture, by David Friedman, "an academic economist who teaches at a law school and has never taken a course for credit in either field." Excerpt:
Over time, although the hardwired elements of behavior do not change--evolution is slow--the cultural elements do. Instead of demonstrating how wealthy and generous you are by urging your guests to have a second and third helping of dinner, you do it by providing them smaller amounts of particularly tasty, sophisticated, or expensive dishes.

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Everyone has a price; women half that of men

The New York Times reports:
Iran’s Islamic penal code, which is a parallel system to its civic code, says murder charges can be dropped if the accused can prove the killing was carried out because the victim was morally corrupt.

This is true even if the killer identified the victim mistakenly as corrupt. In that case, the law requires “blood money” to be paid to the family. Every year in Iran, a senior cleric determines the amount of blood money required in such cases. This year it is $40,000 if the victim is a Muslim man, and half that for a Muslim woman or a non-Muslim.


Saturday, April 21, 2007

US presidential candidates and their economists

The New York Times suggests economists influence presidential candidates.

Free exchange figures candidates select economists that agree with them.

The NYT article gives a nice roundup of who is advising whom, and advice they are likely to give.

If you think you're not getting enough exercise you probably are

And if you think you are getting enough exercise you probably are. Or something like that.

Overcoming Bias has this post on "Mind-Set Matters: Exercise and the Placebo Effect" by Harvard psychologists Alia J. Crum and Ellen J. Langer.

If the result was no placebo effect I wonder if it would be publishable.

It's interesting that the subjects reported no change in behavior. It's all in their head.

Wednesday, April 18, 2007

Sheik Mohammed presents UAE development plan

The International Herald Tribune reports:
One of the United Arab Emirates top leaders urged the country's citizens on Tuesday to stop relying on government handouts and reduce number of foreign workers, who he said threaten national security.

During a speech, Dubai leader Sheik Mohammed bin Rashid Al Maktoum outlined a strategy that he said would make the Emirates one of the world's most developed countries — just days after The World Economic Forum identified the Gulf country the as the Arab world's most competitive economy.

His strategy called for major improvements in the country's educational and justice systems as well as reducing the dominant foreign work force that, Sheik Mohammed said, discourages Emirati citizens from taking private sector jobs.

Sheik Mohammed, who was named federal prime minister and vice president last year, said he would personally oversee the country's work force. He put the ministers of Justice, Education, Health and Labor on notice that their jobs depended on meeting his goals for improvements and their ministries would be benchmarked against international best practices.
The speech seemed to give the dynamic Sheik Mohammed a broader role in federal affairs, overshadowing the country's head of state, Sheik Khalifa, who sat in the audience. Sheik Mohammed called for more integration of the autonomous emirates with the federal government in Abu Dhabi, the wealthiest of the seven.

Sheik Mohammed said he wanted to reduce foreign labor and influences in a country where some 85 percent of the country's 5 million population is foreign, while moving citizens into the private sector's top posts.

He called for an immediate end to foreign labor in "marginal economic activities" and described the 300,000 illegal laborers in the country as a national security threat.

At the same time, he chastised Emirati families for hiring too many maids and domestic servants — which form 10 percent of the labor force.

"The number of domestic helpers in some families exceeds the size of the family itself," he said. "Most families maintain a number of domestic help which is beyond their actual need."

Too many able-bodied Emiratis are living off government handouts, he added.
The Gulf News coverage is here. Additional coverage by GN:
A balanced diet for sustainable growth
Call for cautious Emiratisation
Abdullah: Strategy not set in stone
Khaleej Times reports:
Shaikh Mohammed unveils federal government strategy
Khalifa lauds new strategy
Bring on the future, here’s the master plan...
Cabinet reshuffle ruled out

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Monday, April 16, 2007

I stand corrected

I didn't think it would happen: 45 arrested in campaign against ‘beach pests’.


It's not a flaw, it's a feature

Emirates Today reports:
“The solution to what our children see will not be by monitoring published material but by education that starts at home,” said Abdullatif Al Sayegh, Chief Executive of Arab Media Group. “The internet blockage rate [of unwanted material] in the UAE has reached 40 per cent. That is among the highest in the world.” Al Sayegh’s remarks came at a conference on Emirates Media Freedom at Zayed University in Abu Dhabi.

Delegates debated what the Emirates should expect from its media – the employment of nationals, levels of censorship and freedom of expression – and educating the next generation about how to benefit from the media.

Jaber Obaid, manager of Emirates Media Radio, said: “There has not been one single study on the extent of freedom of speech in the UAE.”
Most of the blocked material is images and videos. Internet service is already slow due to due capacity. Just imagine what service would be like if there was great access to material? Censorship could be increasing the value of the service to users not interested in that material.

Blocking. It's not a flaw, it's a feature.

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Emaar first quarter results

Sweet or sour?

Gulf News starts sweet:
Emaar Properties has posted a net profit of Dh1.72 billion for the first quarter of 2007, an increase of 13 per cent over first quarter 2006 results of Dh1.52 billion.

Revenues for the first quarter increased by 74 per cent from Dh2.239 billion in the first quarter of 2006 to Dh3.904 billion while the annualised earnings per share (EPS) are Dh1.13 compared to the actual EPS of Dh1.06 for 2006.

Emaar's first quarter performance was marked by robust domestic sales for its new launches at Downtown Burj Dubai, including new commercial space in The Old Town Island and Burj Dubai Square.

The New York Times starts sour:
DUBAI (Reuters) - Dubai-based Emaar Properties (EMAR.DU), the largest Arab real-estate developer by market value, reported its slowest rate of profit-growth in the first quarter in at least two years as the U.S. housing market cooled.

The earnings missed even the smallest profit-forecast of four analysts polled by Reuters last month.

Net income in the three months to March 31 rose 13.3 percent to 1.72 billion dirhams ($468.5 million), or 0.28 dirhams per share, compared with 1.52 billion dirhams, or 0.25 dirhams per share, in the year-earlier period, Emaar said.

Compared with the fourth quarter, revenue fell almost 30 percent. Cost of revenue tripled to 1.98 billion dirhams.
Here's Emaar's income statement. See the note at the end.

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Friday, April 13, 2007

A Secret Dubai Bouquet

Thursday, April 12, 2007

Getting your water fix

News flash: Supply of Indian IT workers is not perfectly elastic

IT wages are rising in India. Why? India may have a large population, but its schools have a limited capacity to produce qualified graduates. Cafe Hayek has the story.

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AIU London

Because American University in Dubai claims US accreditation through its US parent, American Intercontinental University, I have followed the accreditation probation of AIU closely. What I missed until today, was that over a year ago, the London campus also came under the scrutiny of accreditors:
Quality watchdogs have privately delivered their first vote of "no confidence" in the academic standards of an entire university following a routine audit.

The Times Higher [Education Supplement] has learnt that the American InterContinental University in London (AIU London) has been informed by the Quality Assurance Agency that it has failed an audit carried out by a team of inspectors last year [2005].
It is understood that the judgment is being disputed by the private London institution, which is led by Geoffrey Alderman, an outspoken critic of the QAA [link added]. Thus the official verdict may not be made public for months and could be changed before publication.
Professor Alderman is a former QAA inspector himself. So he will have known what was at stake when he put the AIU forward to be audited by the inspectors. An approval from the inspectors would have provided a powerful marketing tool for the university.

A negative judgment would come as a major personal blow to Professor Alderman. As senior vice-president of AIU London, he led the audit process.
AIU is understood to be considering legal action against the OUVS, blaming it for the damaging judgment. Its lawyers were due to meet OU officials this week. An OU spokesman said it had written to AIU London in December "advising it of our intention to end the accreditation agreements".
As a private institution, AIU London is not obliged by law to submit to QAA inspection. It is understood that this voluntary status could form the basis of its dispute with the QAA.
More: American Intercontinental first to fail new QAA audit April, 2006 (subscription required).
The QAA audit of AIUL is here.

This google result for "AIU London QAA" is revealing and amusing:
[PDF] AMERICAN INTERCONTINENTAL UNIVERSITY File Format: PDF/Adobe Acrobat - View as HTML AIU-London is the. first American institution of higher education to be admitted to QAA membership. Whereas. British taxpayer-funded universities have to be - Similar pages


Monday, April 09, 2007

The New Silk Road :: WaPo

The new Silk Road is largely the result of the confluence of China's and India's economic growth and high oil prices. China and the six oil-rich members of the Gulf Cooperation Council (GCC) -- Saudi Arabia, Bahrain, Oman, Kuwait, Qatar and the United Arab Emirates -- are flush with cash. What's more, Chinese and Indian energy needs will ensure that the GCC region -- the equivalent of the world's 16th-largest economy -- continues to grow. By 2025, forecasts show, China will import three times as much oil from the Persian Gulf as the United States.

Key "caravan posts" on the new Silk Road are regional economic "winners" or rising stars: Dubai, Beijing, Mumbai, Chennai, Tokyo, Doha, Kuala Lumpur, Singapore, Hong Kong, Riyadh, Shanghai, Abu Dhabi. The old Silk Road civilization centers such as Persia (Iran), the Levant (Lebanon, Syria, Jordan) and Mesopotamia (Iraq) lag behind. Dubai, it might be argued, is the unofficial Middle East capital of the new Silk Road -- a gathering place of capital, ideas and traders fueling the growth -- and Iran, once a central force, is the sick man, albeit with enormous potential.

Investors from the GCC have been pouring money into real estate, banking and infrastructure across Asia. The Kuwait Investment Authority, the largest foreign investor in the Industrial and Commercial Bank of China, has doubled its Asia investments in the past two years. A Dubai official said last month that some GCC states are contemplating buying the yuan to diversify their reserves. Meanwhile, Chinese, Korean, Indian and Japanese companies are active in Middle East real estate, consumer products and industrial investments. China and Egypt -- another Silk Road laggard, just now sputtering to life -- have pledged to double trade in the next few years.
Thanks to Scott of Hybla for the pointer.

Here's something about the original Silk Road.

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Thursday, April 05, 2007

Cheating on UAE taxes

You often hear the assertion that the UAE is tax free. And you hear that tourism touted as a major component of a diversified UAE economy. But tourism is one of the sectors that is taxed:
All hotel establishments, restaurants, night clubs and tour operators in Dubai will have to pay 10 per cent municipality fee on their sales before the 16th of each month with effect from March 29.

The decision comes in line with the Executive Order No. 2, 2006, regarding collection of the municipality fee. The order came after a number of hotels, restaurants, night clubs and tour operating companies were found cheating on the municipality fee by submitting wrong statements regarding their sales to avoid the fee.

The order exempts UAE nationals from paying the fees for wedding parties held in hotels. It also stresses the importance of keeping account records in order by the hotels.
Sales taxes on these establishments have been in place for some time. What has changed is that the municipality is increasing its efforts to catch tax cheats.

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