two debt stories

Mark Harrison squishes two debt myths.

New field research results: what does every woman truly need?

AV simulations

On May 5th, Britain will have a referendum on changing the electoral system to the Alternative Vote (AV). Over the weekend I decided to simulate the 2010 election under AV. (Some people prefer gardening....)

A bit of background: the basis for this was David Sanders et al's paper (viewable here). In the British Election Study survey, they gave respondents an AV-style polling card and asked them how they would vote. They don't have enough respondents to estimate vote shares in every constituency, so instead they start with the First Past The Post vote shares from the real election, and estimate second and further preferences for each party's supporters using the BES survey data. By their reckoning, the Liberal Democrats would have picked up about 30 extra seats under AV -- not enough to make their seats proportional to their votes, but a big change, and enough to let them form a majority coalition with Labour. (Interesting what-if question: if Nick Clegg was part of a Labour coalition government, would he be listening to classical music and crying?)

When I read the paper, I realised that I could take this a step further, and use the survey data to estimate first preferences as well as second preferences. I reran the analysis. The results were not so good for the Lib Dems; instead of 30 seats, I estimate they would gain about 10.  

	Lab	Con	Lib Dem	Green/SNP/PC	Total
England	191	288	50	0	529
Scotland	40	1	12	6	59
Wales	27	7	5	1	40
Great Britain	258 (258)	296 (305)	67 (57)	0/6/1(1/6/3)	628 (630)

Estimated seats per party under the Alternative Vote, Great Britain

Notes: Numbers in brackets are seats in the actual election. Totals are different because I'm missing data for a couple of constituencies.

It seems that AV would have made only a marginal difference to the election result. Of course, as both I and the original writers say, a simulation like this misses out lots of possible changes. Maybe people will vote differently once they are used to the AV system. Surely, by the next election, vote shares will be very different. Still, to the best of my judgment, AV is a small step rather than a massive revolution. I doubt that it will lead to many more coalitions, or to extremists getting elected, as some people claim.

Here's the PDF if you want more details.

TV dons

A collection of distinguished history professors have written to the Times attacking AV. Here are their arguments in full:

• One person's casting ballot might be worth 6 times that of another.
• Extremist and "non-serious" parties might get some votes.
• er... Churchill!

This is a pretty depressing commentary on British intellectual life. Where the Hell does the "6 times" figure from? Under AV, everyone gets one vote, just as now, and everyone's vote is treated equally. The difference is that people might actually be able to vote for the party they like best, instead of having to choose from the top two in their constituency.

I also find it hard to understand what "non-serious" means, unless it just means "anyone but the Big Three". Maybe the profs are worried about a massive swing for the Monster Raving Loony party.

Let's hope some serious political scientists are drafting a rebuttal.

From the "world turns into Daily Mail editorial" department.

And now on a more Right-wing tip: I met a teacher yesterday, who told me that her school has banned kids from going out in the snow, in case they hurt themselves; and banned conkers.

How Things Work

Step 1. Cadbury's chocolate poisons its customers with salmonella.

Step 2. Cadbury's moves its factory to Poland.

Step 3. Cadbury's brings out a chocolate bar with Union Jack packaging.

... and now a tax coda...

Step 4. Cadbury's creates a subsidiary in Ireland to take advantage of its 10% tax, and fights the UK government in the European Court of Justice.

Are they by any chance related?

    

         Neuman                                Manning

I think we should be told.

And on the subject of international mobility...

... here's another story about young people getting out of Ireland.

Most people's sympathies will be more with the unsatisfied young emigrants than with Vodafone. The generation above them spent irresponsibly on both private and public goods. (Distribute the blame between private and public, according to your own political preferences.) Now the young are expected to pay for it.

Some libertarians see mobility ("voting with your feet") as a substitute for the failings of democracy. They can even get a bit utopian about it. This idea does not work so well if societies have to make investments over time. For then, people may exit during the hard times when society invests for the future, and return during the easy times when the investment pays off.  Mobility can also damage the "social contract" whereby young workers pay the pensions of the old, and expect to be paid for in their turn.

(Technical note: in theory, all these problems may be soluble with individualised funded pensions and with government debt to smooth consumption. In theory is the operative phrase. Real societies aren't like that.)

Ireland is a small country with a history of emigration. Crises may be made worse if the young and talented rush for the exit. Positive conclusion: small is not always beautiful.

Normative conclusion: a country is not just a bag to store capital and labour. Concordia parvae res crescunt, discordia maximae dilabuntur ;-)

Vodafone, globalization and taxation

Globalization skeptics argue that tax rates for capital haven't gone down very much as a result of increased capital mobility. Stories like this one suggest that they ought to focus their attention specifically on multinationals. Nick Cohen has a thoughtful take on the issue.

I am slightly more sympathetic to Dave Hartnett. If you are aiming to maximize the government's tax revenue, you probably would like the ability to negotiate with big multinational companies. Treating them the same as everyone else might just lead them to move elsewhere. On the other hand, there is a rules-versus-discretion issue: a reputation for being flexible on tax may lead other companies to demand special deals. Also, as Mr Cohen points out, the moral effects are not good.

Adverts for that new Bush memoir are everywhere.

All over the tube.

Inflation

Everyone is discussing whether central banks' policies (low interest rates, quantitative easing) will increase inflation. At the moment headline inflation rates are low, so the inflation doves are winning the argument.

Before the crisis, there was a similar argument. Then optimists pointed to low headline inflation rates to show that we couldn't be in a bubble. But house prices aren't included in headline inflation. There was massive inflation there. Could the same thing be happening now? Obviously the house price bubble has not yet come back, but central bank policy could be sustaining prices at higher levels than they would otherwise be, and laying the foundations for another asset-price boom.

More generally, could it be that low interest rates act as a transfer to the mortgage-owning median voter?

Just asking, because my ignorance of macroeconomics is profound.

I need a Hiwi

Where have all my subjects gone?
Where are the public goods?
I need a uniform variable
To calculate the odds

Isn’t there a white knight to program in zTree
Late at night at the MPI I dream of what I need

I need a Hiwi
I’m holding on for a Hiwi ‘til the treatment is right
He’s gotta be pale
And he’s gotta have specs
And just run the code once more tonight
I need a Hiwi
I’m holding on for a Hiwi till the screens all look tight
He’s gotta be thin
And to mainline caffeine

Cos he’s gotta be working all night

Somewhere after midnight
At the ESI group, floor 3,
Somewhere just beyond my reach
There’s a random match for me

Testing and retesting, drinking coffee by the mug
It’s gonna take a superman to get this code debugged!

I need a Hiwi
I’m holding on for a Hiwi ‘til the treatment is right
He’s gotta be pale
And he’s gotta have specs
And his skin should be whiter than white

I need a Hiwi

I’m holding on for a Hiwi cos my pilot was shite
He’s gotta be thin
And he’s gotta stay in,
Yeah, he mustn't go out in sunlight

Up by the server in the Galerie lab
Out where the lightning splits ORSEE
I could swear there is someone out there
Watching me
Through the wind and the chill and the rain
And the flood and the storm
I can feel his approach
Like the subjects at the door
(Like the subjects at the door)

(Like the subjects at the door)

I need a Hiwi...

With apologies to Bonnie Tyler, and love and respect to the Hilfswissenschaftler of ESI Group.

Fontcrime

Now we know the culprit!

Defending Nick Clegg

More on education, following on from a Facebook discussion. Most people around me think that the tuition fees increase is a betrayal of Lib Dem ideals. Well, it sure wasn't in their manifesto... but more broadly, I disagree.

The biggest argument against tuition fees is that they will discourage poor people from going to university. I can't prove this won't happen, but it really has to be a psychological argument. Whether you are poor or rich, if you will get cheap loans to go to university, and have the capacity to do so, it is an insanely good deal, at £7000 a year or at £3000 a year. On average, the increase in your income will pay for itself many times over. So the story has to be: people will be scared off by the sheer amount of debt, and the uncertainty involved. That could be true. People are not perfectly rational calculators, and large debts can be frightening (except to all those geniuses in the City). However, it seems less likely to be a permanent effect. When people get used to the idea of large student loans, and when they see others using them, they will no longer seem so frightening. In particular, the US, which funded university via loans, had a high proportion of people going to college long before most of Europe did. That suggests that loans do not have to scare people off. (My friend Luke made the point that US education was boosted by the free university places given to WWII and Vietnam vets. It is an interesting story. The original GI bill put 8 million people through college. But it seems more likely to provide a kickstart than to have sustained high US college enrolment over the whole postwar period.)

What if you are poor but want to do something idealistic rather than making pots of extra money from your university education? You might then be put off, and either skip university or choose a money-making career. This would be unfair to you, and would also deprive the UK of the benefits of people who do idealistic but low-paid jobs like teaching or social work.

Well, it has to be a very idealistic job for it still not to benefit you to go to university. I am an academic, which is quite idealistic... oh go on, it is. But I will still earn much, much more over my lifetime than if I hadn't gone to university. (Back of the envelope calculation: half a million more.) That holds also for Luke, who is a teacher, or Kemal, who works in a development organization. If you are planning to be Mother Teresa, then yes, you could be put off by debt. But most people do not volunteer all their lives.

There are too few people from poor backgrounds going to university. But what causes this? My hunch is that it is that many people know they would not get accepted at a university, and/or would not be able to benefit from it. For example, you will not get much from university if you cannot write an undergraduate essay. Unfortunately, many 18-year-olds can't. Perhaps some of this is down to natural inequalities in intelligence. But surely a lot of it is down to problems in the education system before university. If you have not been well taught at school, then you won't get a university place. In fact, even in the golden days of free education, the educational inequalities existed (see Figure 3 on page 6). And a study of the original introduction of tuition fees suggests: "much of the impact from social class on university attendance actually occurs well before entry into HE."

If so, then the best way to get equal access to university is to improve the quality of pre-university education, especially for the poorest. That seems to be the idea behind the pupil premium. The Lib Dems will probably get slaughtered over the tuition fees increase. That's a shame, because Nick Clegg is trying to do the right thing.

3. The Eastern Pamir

In the East it's high up and harder to breathe. The country turns from green to absolute desert. There is not much vegetation. Little marmots occasionally run for the cover of their holes. Before they dive in they pause and look around – apparently this behaviour is instinctive, so this is how you can shoot them.
Our first night was in a yurt. These are big tents made of wood and covered in felt, warmed by stoves which seem to come from the 19th century and which are fed by yak and cow dung. There's a hole in the middle of the roof for the chimney: in the day this also lets light in but at night it's covered. A lot of the yurts we saw had solar panels attached, made, like most things in Tajikistan, in China, and providing enough electricity to power a TV and DVD. (Conversation of one nomadic, yak-herding yurt owner: “What do you think of Avatar? I haven't seen it yet.”)

When we arrived at the yurt, the owner's wife was milking a yak, so I asked if I could have a go. It is harder than it looks. The myth that yak milk is pink is untrue. (Maybe it's pink if you go higher in the mountains.) At night I went out to see the stars. Last time I saw the Milky Way properly, I was 18 and in India. I slept well in yurts: it feels nice to be close to the ground.

Next day we arrived in Murghab, a tiny market town of bare white walls. The Kyrgyz' tall white felt hats add to the atmosphere. We spent a lot of time casting roles for a Tajikistan spaghetti Western. Our driver Omur lived here, so we stayed with him.

We headed out to trek next morning. Losing the path on the way up to a pass, we scrambled up the mountainside. The climb was physically easy but the air was so thin – we were at about 4700 m – that we had to stop and catch our breath every minute. The mountain got steeper and steeper, with shale breaking off in our hands. Looking down became unpleasant. When we made it to the top I was as pale as a ghost. This was the time I felt most scared on the journey. We ate biscuits, drank Iranian fruit juice and admired the indescribably magnificent view over the next valley.

Over the next days we headed North to the border and said goodbye to Alessia and Davide. They were great travelling companions. On hearing that he would be sleeping in a yurt, Davide had remarked that he would need a yak to stay warm, to which Alessia replied with the immortal words

“I don't need a yak. I have Davide.”

This inspired the writing of a Yak Song, celebrating the tender bond between a woman and her yak. One recording is still extant.

To make up numbers we picked up Daragh, an Irish guy who had been teaching in China for a year. He spoke Uighur (and hence other Turkic languages like Kyrgyz). We headed South again, stayed one more night in a yurt, and then made our way back to Khorog.

In Khorog we tried to get a plane back to Dushanbe. It was heavily oversubscribed (you just turn up and queue, there are no bookings). At one point our fixer said he would try and get us a lift on the army helicopter. Arianna turned pale but was eventually persuaded that this would ROCK. Alas, the army didn't want to take non-nationals for fear of questions from the KGB. (Yes, Tajikistan still has its own KGB.) Instead, we stayed one more night at a homestay. This was a fabulous place run by a family who were reminiscent of Giles' cartoons. They wore something turquoise, colour-coordinating with the apartment. The grandmother ruled the roost and cooked fabulous meals. There was an aunt who was constantly fighting with the uncle; a downtrodden sister who swept up; and the granddaughter, a schoolgirl in Dushanbe, who told us “all my friends are so Emo! [mimes wrist-cutting]”. Youth culture is truly universal.

I left Germany!

I had a really happy two years in Jena. The people there are an incredibly nice and warm-hearted bunch. The MPI is a great research environment. I will miss you all!

2. The Bartang and the Wakhan

In Khorog we fixed ourselves up with two other Italians to share a UAZ jeep down the Wakhan valley. Before meeting them we decided to hike up the Bartang valley for a day or two. This involved negotiating a ride in a Chinese-made Cherry minivan. We ended up paying about double the local price, which isn't really so bad a deal. The drive up the Bartang was beautiful but hair-raising. Sometimes the van felt as if it would fall over sideways, sometimes we had to get out and clear stones from the road, and once we were the first to test a newly-rebuilt wooden bridge. When we got out, one of our fellow passengers invited us into her cousin's house and we had our first taste of Tajik hospitality. Marifat spoke good English (and Russian and Pamiri and some Tajik) and was trying to find a job in Khorog.

We walked up the valley towards Ravmeddra, but by now it was late and we started to look for a house which was supposed to be open for hikers. Surely the one with no door and nothing but straw inside wasn't it. An hour later, as night fell on the steep and narrow path, we decided that probably was it and headed back there. We lit a small fire and fell asleep, woken only by the occasional bat and by the lumps in our backs, which Arianna described as "Tajik stone massage".

In the morning, we found ourselves in a deserted village. A local guy came by to gather hay. We couldn't communicate much but when Arianna said she came from Italy he smiled and said "Berlusconi!"

We got back later that day, stopping only for a couple of hours with the local police, who had a disagreement with our driver, and met our Italians that night. Davide and Alessia had been working in the embassy in Afghanistan and had got married in Kabul. (Most travellers in Tajikistan work in development of one kind or another... or are mountaineers or serious trekkers.) We asked them about Afghanistan. They were very informative, and very pessimistic. Bullet points: everything has got worse since the fraudulent presidential election; the Taliban control about 60% of the countryside; there are no good solutions.

Next day we set off. Our redoubtable jeep driver was called Omur. Lots of people report driver nightmares. We must have been lucky: Omurbek* is fast, safe and knows everything about the area. He is also quite a cool dude and has a great cowboy hat. Omur lives in Murghab and is ethnically Kyrgyz, like most people in the Eastern Pamirs.

The Wakhan valley runs down the Tajikistan-Afghan border. Like all the Pamirs (valleys) in the region it has its own language; these split off from each other before the European languages did. The Wakhan language is called -- what else? -- Wakhi. Under the Soviets people learned Russian. Now there is a push to teach Tajik: not necessarily an improvement, in the eyes of many.

Our first stop was in Ishkashim, in a homestay that was well on the way to being a proper hostel. In the morning we visited the Afghan market, which is held right on the border under the auspices of the Tajik police. (Exciting moment: seeing your mobile picking up an Afghan network.) The Afghans made the Tajiks, with their Western hairstyles and jeans, look rich. Then we rocked on down the valley, stopping at hot springs, fortresses complete with modern anti-personnel mines, and Buddhist temples, until we reached Langar. That was the first night you could really see the stars.

* -bek means something like "Mr."

A moral victory

In Tajikistan, I argued with Arianna about Europe versus the US. It's an old chestnut. Arianna thinks the US is a hideous capitalist maw where the poor sell their kids to Walmart as frozen turkeys. I know the truth -- the US is a glorious country of Freedom, unlike Europe which is inevitably doomed to Euro-Islamo-welfaro-infertili-sclerosis. So, in the spirit of Rousseau's remark in the Social Contract --

"What is the end of political association? The preservation and prosperity of its members. And what is the surest mark of their preservation and prosperity? Their numbers and population."*

-- I bet her that there were more immigrants from the EU to the US than vice versa. "No way", she said. "Five times more", I said, as a proportion of the source area's population. And we bet a dinner on it.

The best estimates of migrant stocks I know come from the Global Migrant Origin Database, which comes out of Sussex IIRC. Actually, for our purposes, OECD stats would be fine. We did the calculations today while waiting for our follow-up vaccinations. (PS: Arianna, Malta is so in the EU; others, therefore these calculations are slightly inaccurate.)

TOTAL IMMIGRANTS FROM EU-27 TO US: 4 730 294.
Divided by EU population, which can't possibly be more than 500 million, so let's say it is that: 0.9%. (Actually, according to Eurostat, it is almost exactly 500 million.)

TOTAL IMMIGRANTS FROM US TO EU-27 ... 571 706. Accidentally including Croatia.
Divided by US population of about 300 million: a paltry 0.19%.

OK, not five times, but four times. I owe you dinner, but the moral victory is mine!

(NB also: not much is changed by excluding Eastern Europe.)



* though Rousseau excluded "naturalisation or colonies" as external aids.

Bullshit from many angles

Some facts about the THES universities rankings story, in case anyone in the UK was wondering.

1. Five out of the top fifty universities is a pretty good score, given that we have about 5% of total OECD population.
2. If your universities slide in a single year, this is unlikely to be due to a sudden collapse in quality. It is more likely because the ranking method has changed, which is just what happened in this case.
3. It seems exaggerated to call the THES rankings "the major global benchmark of worldwide university performance", as the THES editor does.There are several different rankings out there. The most respected, I would say, is the Academic Ranking of World Universities published by Shanghai Jiao Tong university. In the 2010 version, the UK gets five out of the top fifty spots... and the same number in 2009... and in 2008.
4. Previous THES rankings seemed crazily pro-UK to me. Four out of the top ten universities in the world? Seventeen in the top 100, with the University of Manchester beating UCLA, and Bristol beating Northwestern and Berkeley? I don't find that plausible.

Summary: this non-story should be headlined CHANGE IN METHODOLOGY CAUSES RANDOM DRIFT IN PROXY FOR DIFFICULT-TO-MEASURE VARIABLE. For useful information about university rankings, see Wikipedia.

1. Dushanbe to Khorog

 When we arrived at Dushanbe airport, the scary plane ride to Khorog wasn't going, so made our way to the taxi station where you can hire 4WDs for the journey. The station was dusty, dirty and poor, with a store selling biscuits and tea, and the first of many very disgusting toilets. I felt happy as soon as I got there.

We cut a deal for 150 Somani (35 EUR) per person to go in the back of a Mitsubishi Pajero. The hierarchy of 4WDs is, in ascending order:

1. UAZ (pronounced Wox) - basic green Soviet-era jeeps, but very fixable
2. Pajero
3. Toyota Landcruiser

Our driver Petrus turned out to be super reliable, driving safely but fast when he could -- not often -- and bribing cops smoothly at the ten or so checkpoints we hit during the ride.

Tajik roads are dreadful. At best they are like a very old English country lane. At worst, it is more comfortable to drive off-road: the bumps in the road are harder to anticipate. After a few days, we got used to constantly being shaken up and down, and it became oddly soothing.

We got to Khorog in 15 hours, which the guys at the guesthouse said was an incredibly good time. Every few hours we stopped to stretch our legs and buy fruit from village kids, or eat. It was Ramadan, but you don't need to fast if you are traveling: despite this, one of our fellow-passengers did. He was a Tajik returning from Moscow. Emigration to Russia for work is common in all the stans, and a lot of people bemoan the brain drain.

A lot of the road passes along the Afghan border, which is formed by the Amu-Darya (Oxus) river. The difference is striking: Tajikistan seems poor, but it has roads and electricity. Afghanistan looks unchanged since the middle ages.

We arrived at the very nice Pamir Lodge, around midnight, and got the last free room. In the morning, Khorog looked poor and messy. (But next time we arrived, on our way back from Murghab, it would seem large, rich and colourful.)