Sunday, June 29, 2008

Revenge and the rule of law

There's more to report on that study of cooperation, anti-social behavior and revenge. It's not news (it dates from March 2008), but it may be new to you as it was to me:
In countries like the USA, Switzerland and the UK, freeloaders accepted their punishment and became much more co-operative. But in countries based on more authoritarian and parochial social institutions such as Oman, Saudi Arabia, Greece and Russia, the freeloaders took revenge — retaliating against those who had punished them.

Co-operation for the common good plummeted as a result.

In societies where the modern ethic of co-operation with unrelated strangers is less familiar and the rule of law is perceived to be weak, revenge is more common and co-operation suffers, the study found.
“Our results correlate with other survey data in particular measures of social norms of civic co-operation and rule of law in these same societies. The findings suggest that in societies where public co-operation is ingrained and people trust their law enforcement institutions, revenge is generally shunned. But in societies where the modern ethic of co-operation with unrelated strangers is less familiar and the rule of law is weak, revenge is more common."
That's from a University of Nottingham press release. The paper is Antisocial Punishment Across Societies by Benedikt Herrmann, Christian Thöni, and Simon Gächter.

Sounds rather like a harsh excessively indictment, and western-centric.

I operate from the premise that all people are the same, and it is cultures that are different. That is, the primary reason for differences in behavior is the culture in which one is embedded. But cultures are not just arbitrarily different. They evolve and are locally adapted. I believe they locally adapt based on surrounding conditions and move in the direction of better adaption but that this process is slow and imperfect.

A question is, was it ever a good cultural adaptation to take revenge for being punished for noncooperative behavior?

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Saturday, June 28, 2008

The Curse of the Remittances

Truth or fiction?

Some in the UAE consider it a problem that foreign workers send money home instead of spending it in the UAE. I don't. But what about what remittances do to the receiving country's economy? Is it all good news?

From Foreign Policy :
According to a new study by the International Monetary Fund (IMF), remittances may actually encourage government corruption and ineffectiveness. In an analysis of 111 countries between 1990 and 2000, researchers found that high levels of remittances often lead to greater corruption and irresponsible economic policies. In other words, officials in remittance-rich countries are often let off the hook for failing to provide basic services, freeing them to divert resources for their own purposes. “[T]here’s less of an incentive for citizens to demand reforms” when remittances are high, explains Ralph Chami, a division chief at the IMF Institute and a coauthor of the report. And because the government assumes citizens with help from abroad will turn to the private sector for essential services such as healthcare and education, leaders face little pressure to change. “The government says, ‘I know you’re getting money; what’s my incentive to fix [the] situation?’” says Chami.
Here's a link to the paper (PDF).

Economists often argue that exporting workers and receiving their remittances (sent to their families) is just another form of exports. Putting these two arguments together, are we to conclude that exports take governments off the hook and lead to greater corruption and irresponsible government projects? Of course not.

I suspect that exporting labor is often the result of bad government policy. People leave because of government failure: the economy is over regulated, excessively managed (and, hence, mismanaged), or -- at the other extreme -- does not provide basic infrastructure like roads. But in such an environment remittances may serve as a safety valve that takes the pressure off fundamental reform.

We don't have to just look for present day examples like Bangladesh or the Philippines. The Irish diaspora might also be an example. Ireland of course is also a shining example of what can happen when market reforms are instituted.

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Thursday, June 26, 2008

That revolving tower

Many of you will have read the story of plans to build a revolving tower in Dubai. This isn't the first such announcement of a revolving building of some sort in Dubai, and there's yet to be one. I don't know if this one is any more likely, but the video is pretty cool.

Perhaps of even greater interest from an economic standpoint is the prefabrication construction technique envisioned by Dynamic Architecture.

Addendum: The divine nzm has a devastating comment over at UAE community blog. See especially the Chicago Tribune article about the architect that she points to.

Tuesday, June 24, 2008

Muslims shunned by Obama


Last week, two Muslim women wearing head scarves were barred by campaign volunteers from appearing behind Mr. Obama at a rally in Detroit.
While the senator has visited churches and synagogues, he has yet to appear at a single mosque. Muslim and Arab-American organizations have tried repeatedly to arrange meetings with Mr. Obama, but officials with those groups say their invitations — unlike those of their Jewish and Christian counterparts — have been ignored.

What's the strategic political calculation? In American election politics it hurts to spend time with Muslims or Arabs, if for no other reason than they constitute a very small slice of the electorate. But George W. Bush has met with Muslim and Arab-American organizations.

Obama is the putative Democratic nominee for the US presidential race. Many American believe he is a Muslim although he is not. So many Americans were turned off by the remarks of his minister at Trinity United Church of Christ, and by other events at the church, that Obama resigned from the church a few weeks ago. Apparently it is true that a sign of modernity that one can hold contradictory thoughts in your head at the same time.

In other news, most Americans -- regardless of religious denomination -- believe there is more than one means of salvation. That applies to Southern Baptists and Catholics.

Friday, June 20, 2008

Links I liked

1. How to drive an economist crazy. Say "price gouging" and mean it.

2. Sweetness and decay. "Immediately after one person performs a favor for another, the recipient of the favor places more value on the favor than does the favor-doer. However, as time passes, the value of the favor decreases in the recipient's eyes, whereas for the favor-doer, it actually increases. "

3. What your bumperstickers say about your driving.

4. Obamanomics. Newly discovered tribe in Brazil should be wealthy. And increase in oil prices should make New Zealand better off. And Britain would have benefited from being small.

Wednesday, June 18, 2008

Oops: Engineering malfunction

A bridge under construction near the heavily traveled Sheik Zayed Road at the Defence Roundabout collapsed Monday night. That is the same interchange where the iconic tower the Burj Dubai is being built.

The Gulf News reports,
"The accident happened due to miscalculations on the part of the contractor as a result the pillar and the scaffolding could not take the load of the bridge and it collapsed," said the RTA statement.

It also said that the damage was just five metres and it did not block the traffic because it was far away from the main road.
The Kipp Report has more.

Tuesday, June 17, 2008

Links I liked

1. Robin Hanson - "our worst bias is meta - being more aware of biases makes us more willing to assume that others' biases, and not ours, are responsible for our disagreement."

2. James Heckman - "interventions early in the life cycle of disadvantaged children have much higher economic returns than later interventions such as reduced pupil-teacher ratios, public job training, convict rehabilitation programs, adult literacy programs, tuition subsidies or expenditure on police."

3. Barack Obama - "[absent African-American fathers have] abandoned their responsibilities, acting like boys instead of men."

4. Mick Stroup says the Ricardian equivalence strawman still lives.

Monday, June 16, 2008

Political compass: social and economic

These are my latest test results at Political Compass.

"Right" is right on the economic (horizontal) scale.

"Libertarian" is on the social (vertical) scale.

I'm about the same as Milton Friedman, though not quite as right as he. In the Political Compass terminology we are both neo-liberals ("couples social Darwinian right-wing economics with liberal positions on most social issues. Often their libertarian impulses stop short of opposition to strong law and order positions, and are more economic in substance (ie no taxes) so they are not as extremely libertarian as they are extremely right wing.")

One way to put it is that I lean towards freedom for the individual in the social and the economic realm. But that doesn't mean I condone fraud or price manipulation. Rather, I believe the anarchy of the market generally produces the greatest good, that government has a narrow role to play in regulating markets, and we should be as wary of government failure as we are of market failure.

Take the test here.

Inflation in the UAE

Inflation in UAE stands at 12% - Gulf News
DPE [Abu Dhabi's Department of Planning and Economy] estimates that during the first three months of this year, inflation surged past 11.5 per cent while the index for rents, electricity and water was up 18.21 per cent from a year earlier.

The index for food, beverages and tobacco gained 19.78 per cent.

While DPE identifies rent as the single most important component, it acknowledges other factors such as the declining value of the dollar and the surging liquidity from oil surpluses as major contributors to rising prices.
It would be of interest to know the weights used. Food and rent are major portions of the budgets many families. Then there is the cost of private tuition at all levels of education. According to reports those have increased - certainly more than 12% per annum.

There was good reason to believe inflation was 15 to 20% two years ago. I have my doubts that inflation is as low as 12% today.

Readers, what do you think?


Friday, June 13, 2008

Note to self

Get in the habit of reading the Financial Times Mideast page. Currently highlighted:

Saudis plan to grow crops overseas -Riyadh is in talks with Ukraine, Pakistan, Sudan, Turkey and Egypt to set up projects of at least 100,000 hectares to grow cereals that will secure its food supply- Jun-13

Output slides in Gulf in spite of oil boom - The region’s labour markets need to be modernised as research reveals productivity decreasing outside the oil and gas sectors, threatening sustainable economic growth - Jun-12

MidEast cools on smelter plans - Rising energy prices are causing oil-rich governments to change their minds about hosting large aluminium projects amid worries about giving away energy reserves cheaply - Jun-13

Viewpoint: Inflation fight involves painful choices - Higher oil prices drive up inflation in countries that import oil, but producers themselves face serious inflationary pressures when oil prices rise - Jun-11

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Wednesday, June 11, 2008

Sociology major? It's your density.

The economist's economist, David Hamermesh, takes a look at those ranking starting salaries for college majors. The ones where economics does so well. As I've long suspected, studying economics mostly means you're smart and willing to work hard.

FreeExchange writes it up so I don't have to. But here's a key quote from Hamermesh himself at Freakonomics:
While differences in earnings by college major are huge, once you account for longer hours worked by business and engineering majors, by the fact that they often have higher SAT scores, and other factors, the differences are much smaller; indeed, over half of the variation in earnings by major disappears.

In other words, the amounts of human capital generated in college by different choices of major are not so different from one another as most people believe. Liberal arts majors don’t do that much worse than business majors; and economics majors do as well as business majors do.
Related - Bryan Caplan explains why you should choose economics over engineering:
Econ is the highest-paid of all the easy majors. My students often howl in protest when I say this, but come on: Econ does not put the crimp on your social life that CS or Engineering do. It's not even close.
The link to Caplan contains several other recent posts about economics salaries by economics bloggers.

Tangentially related, Michael Medved writes,
With applicants drawn from an ever-widening segment of the populace (including the likes of Dukakis, Clinton and Obama), and increased focus by the country's most ambitious kids on just two schools at the competitive pinnacle of the academic heap, Yale/Harvard graduates increasingly came to represent America's best — not just the best-connected.

Today, the most prestigious degrees don't so much guarantee success in adulthood as they confirm success in childhood and adolescence. That piece of parchment from New Haven or Cambridge doesn't guarantee you've received a spectacular education, but it does indicate that you've competed with single-minded effectiveness in the first 20 years of life.

And the winners of that daunting battle — the driven, ferociously focused kids willing to expend the energy and make the sacrifices to conquer our most exclusive universities — are among those most likely to enjoy similar success in the even more fiercely fought free-for-all of presidential politics.
Thanks to Greg Mankiw for the Medved pointer.

UPDATE - Craig Newmark discusses the latest raw starting salary numbers for college majors put out by National Association of Colleges and Employers.


Social and anti-social anti-social behavior

Wall Street Journal - Study Finds Culture Influences Reaction To Reward, Rebuke
In the most sweeping global study yet of cooperation, a team of experimental economists tested university students in 15 countries to see how people contribute to joint ventures and what happens to them when they don't. The European research team discovered startling differences in how groups around the world react when punishment is handed out for antisocial behavior.
Among students in the U.S., Switzerland, China and the U.K., those identified as freeloaders most often took their punishment as a spur to contribute more generously. But in Oman, Saudi Arabia, Turkey, Greece and Russia, the freeloaders more often struck back, retaliating against those who punished them, even against those who had given most to everyone's benefit. It was akin to rapping the knuckles of the helping hand.

To explore cooperation across cultures, Dr. Herrmann and his colleagues recruited 1,120 college students in 16 cities around the globe for a public-good game. The exercise is one of several devised by economists in recent years to distill the complex variables of human behavior into transactions simple enough to be studied under controlled laboratory conditions.
The students behaved the same way in all 16 cities until given the chance to punish those taking a free ride on the shared investment. Punishment was done anonymously, and it cost one token to discipline another player.
Among those punished, differences emerged immediately. Students in Seoul, Istanbul, Minsk in Belarus, Samara in Russia, Riyadh in Saudi Arabia, Athens, and Muscat in Oman were most likely to take revenge by deducting points from other players -- and to give up a token themselves to do it.

"They didn't believe they did anything wrong," said economist Herbert Gintis at New Mexico's Santa Fe Institute. And because the spiteful freeloaders had no way of knowing who had punished them, they often took out their ire on those who helped others most, suspecting they must be to blame.
Such a readiness to retaliate, researchers said, reflected relatively lower levels of trust, civic cooperation and the rule of law as measured by social scientists in the World Values Survey, which periodically assesses basic values and beliefs in more than 80 societies. In countries with democratic market economies, peer pressure goaded people to cooperate. Among authoritarian societies or those dominated more by ties of kinship, freeloaders instead lashed out at those who censured them, the researchers found.
Studying peer pressure in 15 countries, economist Benedikt Herrmann at the UK's University of Nottingham reported on "Antisocial Punishment Across Societies" in Science.

The researchers also ranked the national responses against the World Values Survey, which periodically assesses values and cultural changes in societies all over the world.
Emphasis added. Thanks to The EclectEcon for the pointer.

My first-hand, though strictly anecdotal, experience in the UAE is that there is less cooperation and more free riding than in the US in team project situations. Rebukes are avoided, because they can bring about a sometimes strong reaction. And -- again, casual empiricism -- there was a lot of "they didn't believe they did anything wrong." The system is there to be gamed.

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Like a virgin

The plight of the rejected bride persuaded the Montpellier student to go ahead with the surgery.

She insisted that she had never had intercourse and said that she had discovered her hymen was torn only when she tried to obtain a certificate of virginity to present to her boyfriend and his family.

She said she had bled after an accident on a horse when she was 10.
[F]or the patient, a 23-year-old French student of Moroccan descent from Montpellier, the 30-minute procedure represented the key to a new life: the illusion of virginity.

Like an increasing number of other Muslim women in Europe, she had a "hymenoplasty," a restoration of her hymen, the thin vaginal membrane that normally breaks during the first act of intercourse.

"In my culture, not to be a virgin is to be dirt," said the student, perched on a hospital bed as she awaited surgery Thursday. "Right now, virginity is more important to me than life."

As Europe's Muslim population grows, many young Muslim women find themselves caught between the freedoms that European society affords and the deep-rooted traditions of their parents' and grandparents' generations.

That trend in turn has created a demand among cosmetic surgeons for hymen replacements, which, if done properly, they say, will not be detected and will produce tell-tale vaginal bleeding on the wedding night. The service is widely advertised on the Internet; there are medical tourism packages to countries like Tunisia where the procedure is less expensive.

"If you're a Muslim woman growing up in more open societies in Europe, you can easily end up having sex before marriage," said Hicham Mouallem, a doctor in London who performs the surgery. "So if you're looking to marry a Muslim and don't want to have problems, you'll try to recapture your virginity."
"Who am I to judge?" asked Marc Abecassis, the plastic surgeon who restored the Montpellier student's hymen. "I have colleagues in the United States whose patients do this as a Valentine's present to their husbands. What I do is different. This is not for amusement. My patients don't have a choice if they want to find serenity - and husbands."
That sentence, "I have colleagues in the United States whose patients do this as a Valentine's present to their husbands": yuck.

See my post on the black market for hymen restoration in the UAE.

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Monday, June 09, 2008

Links I liked

1. The Corn-Ethanol Industrial complex. "Ethanol, once heralded as the homegrown Nicorette gum of America's oil addiction, is getting a second look from lawmakers suddenly concerned about the unintended consequences of merging the fuel and food markets."

2. The wisdom of the crowds (not). (Charts)

3. Carbon footprint of food: More complex than we think. "Reducing carbon emissions is more complex than 'buy local'."

4. This Global Show Must Go On. "What’s really happening is that many people, whether in the United States or abroad, are unduly suspicious about economic relations with foreigners. These complaints stem from basic human nature — namely, our tendency to divide people into “in groups” and “out groups” and to elevate one and to demonize the other."

5. Why oil prices will tank. "The sudden surge in demand and the production bottlenecks have thrown the market radically out of balance. Almost exactly the same thing happened in the housing market. And both housing and oil supply react to a surge in demand with a long lag."

6. Bryan Caplan on US and European roads (link fixed). "Much as it pains me to admit, I would choose to live in the country with the Euro system. If you're at least upper-middle class, the convenience is worth the price. Yes, this is another secret way that Europe is better for the rich, and the U.S. for everyone else."

7. The Prius versus the Hummer. Mile for mile, which is better for the environment? A nickel for your thoughts.

8. Recycling, cents or nonsense?

Sunday, June 08, 2008

The Middle East youth bulge

Financial Times
The bombs and the bluster in the Middle East are tediously familiar. Less so is what is arguably the most daunting strategic challenge facing the Arab countries: the youth bulge. As a special report in the Financial Times this week spelled out, up to two-thirds of Arabs are under 25 and more than one in four have no job, in a deeply troubled region with the world’s worst employment rate.
the reasons for relative Arab failure to develop go very deep, as a seminal series of Arab Human Development reports begun in 2002 by the United Nations Development Programme – written by Arab professionals and intellectuals – unflinchingly laid bare.

If one has to identify three overarching problems, they are a woeful education system, political autocracy and the absence of the rule of law – and they are all related.


Abu Dhabi looks beyond borders for agricultural land

Financial Times
Abu Dhabi is preparing to launch a large-scale agricultural project in Sudan to develop more than 70,000 acres of land as part of the oil-rich Gulf emirate’s efforts to secure food supplies.

The project comes amid growing interest from Middle Eastern states to use land overseas to ensure food security. Saudi Arabia and Egypt have also held talks with Sudan and are considering agricultural projects of their own in Africa’s largest nation, officials from those countries confirmed on Tuesday.

Sudan has vast, but under-developed, agricultural re-sources and has been described as a potential bread basket for the Middle East.

Robert Zoellick, president of the World Bank, said Riyadh – which plans to phase out domestic wheat production by 2016 to preserve its finite water resources – had asked the institution for help with plans to invest in agricultural projects abroad. [Saudi Arabia's wheat initiative has always been, ahem, insane.]
Sudan – keen to attract funding and technology into agriculture – provides land free of charge to investors for such projects, officials said. Although rich in resources, it has been blighted by decades of misrule and conflict, and suffers from a dilapidated infrastructure and inefficient bureaucracy.
Details of the Sudan scheme have not been finalised but the Abu Dhabi fund will seek to produce corn, alfalfa (feed for livestock) and other crops, with wheat a possibility. A feasibility study on the project was due to be finished in four months, Mr Shamsi said: “Food security in Abu Dhabi, that is one of the main reasons.”
Meanwhile, the war in Darfur persists.


Saturday, June 07, 2008

Prayer and productivity

In a well known paper on religion and economic growth, Barro and McCleary find
economic growth responds positively to the extent of religious beliefs, notably those in hell and heaven, but negatively to church attendance. That is, growth depends on the extent of believing relative to belonging. These results accord with a perspective in which religious beliefs influence individual traits that enhance economic performance. The beliefs are, in turn, the principal output of the religion sector, and church attendance measures the inputs to this sector. Hence, for given beliefs, more church attendance signifies more resources used up by the religion sector.
A major Islamic cleric has issued a fatwa that echoes these conclusions.

Arab Times
'Praying is a good thing ... 10 minutes should be enough,' Al-Jazeera television personality Qaradawi says in a religious edict, or fatwa, published on his website.

Praying five times a day is one of the five pillars of Islam, along with the well-known requirements of making a pilgrimage to Mecca and of giving alms to the poor.

Two of each day's five sessions -- the dhuhr (noon) prayer and asr (afternoon) prayer -- fall within working hours, bringing work to a standstill at least twice a day in many places.

A prayer generally takes an average of 10 minutes, but it can be extended if a worshipper chooses to recite one of the longer verses of the Koran.

And before the prayers themselves, there is also a mandatory ablution during which worshippers must wash their faces, hands and arms, feet and heads. In large office buildings, the trips to the bathroom can also eat away at valuable work time.

Qaradawi's plea to reconcile faith and productivity may hit some hurdles as it risks upsetting the deeply entrenched custom of 'prayer breaks' at work.

Society's increased Islamisation over the past 30 years has already silenced some critics of long prayer sessions.

According to an official study, Egypt's six million government employees are estimated to spend an average of only 27 minutes per day actually working, reflecting a real problem with productivity.

Qaradawi's fatwa is aimed at removing prayer as a pretext for not producing.
Read the whole thing, which is interesting throughout.

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Friday, June 06, 2008

Obama wins nomination

In reference to Mark Shields' comments last night on PBS News Hour about the time Hillary Clinton is taking conceding she's lost. Remember Pinochet lingered near death for many, many days. "I have good news and bad news. The good news is Pinochet is dead. The bad news is you have to tell him."


Thursday, June 05, 2008

Living proof

Khaleej Times
His Highness Dr Shaikh Sultan bin Mohammad Al Qasimi, Member of the Supreme Council, Ruler of Sharjah and President of American University of Sharjah (AUS), yesterday urged the graduating Class of 2008 to nurture a spirit of tolerance and cultural understanding and to contribute to the development of their societies.
Dr Shaikh Sultan congratulated the Class of 2008 on their achievements and hard work, and stressed on the importance of education in creating cultural understanding. "Education and knowledge are not limited to a nationality or a country. Tolerance and understanding are the means to the betterment of the world. American University of Sharjah is living proof that tolerance and peaceful co-existence between people from different cultures can be achieved," he said.
It is living proof, indeed. May it always be so.
(Photo credit: Gulf News)


First US refinery in 30 years

The US has not had a new refinery in 30 years. Some of this is due to regulation that biases incentives towards investment in old refineries, much of it is due to regulation and public resistance to refineries in general: NIMBY -- not in my backyard. Some of the reason the oil market does not work well is scarcity of refinery capacity in total, and scarcity of refinery capacity specific low quality oil.

It seems that the US could have a new refinery by 2014:
ELK POINT, S.D. — Voters in Union County on Tuesday approved rezoning for what would be the first new U.S. oil refinery in more than 30 years.

With all 13 precincts reporting, 3,932 voters, or 58 percent, endorsed their county commission's rezoning of almost 3,300 acres north of Elk Point for the $10 billion refinery while 2,855, or 42 percent, opposed it.
Most rural precincts strongly rejected the rezoning, but they didn't have the population numbers to overcome support in the county's largest towns.
Hyperion Resources had said it would leave Union County without a fight if voters rejected the rezoning.

Jason Quam of the group Citizens Opposed to Oil Pollution said late Tuesday his group will sit back and evaluate its next steps. "It's going to be a long road before anything's done on it," he said of the refinery.
Company executives said it would help the United States reduce its dependence on overseas oil. The refinery would process 400,000 barrels of thick Canadian crude a day.
Supporters cited economic development benefits from the refinery. Hyperion officials said the project would mean 1,800 permanent jobs and another 4,500 construction jobs over a four-year period.

Hyperion called it a "green refinery" and said it would produce ultra-low sulfur gasoline and diesel and be among the cleanest and most environmentally friendly in the world.
Critics of the proposal hit hard on the quality of life issue, saying an oil refinery would produce millions of pounds of toxins during its lifetime. They also said it seemed as if the state and local governments allied themselves with Hyperion and had not asked critical questions.

Plans called for construction to begin in 2010 and last about four years.
If you wonder what can be done to bring down the world old price this is one place to start; that is, by making more of the thick Canadian oil economically feasible to use.

Thanks to Carpe Diem for the pointer. See also CD's earlier post on the falling number of US refineries.


As gas prices rise, so does slugging

Slugging, also known as "casual carpooling", is a self organizing form of carpooling where strangers pick up strangers for the commute to work. It's spreading in major US cities. I suspect it is illegal in the UAE.

Here's an article about its spread. Here's the website. This is an old favorite about slugging.

Thanks to Newmark's Door for the reminder.

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