Who Speaks?

Chris Barton in the NZ Herald wonders why so few academics join public debate in New Zealand.

The faint voice of academics seemed odd, especially in light of the Education Act 1989, which requires universities to "accept a role as critic and conscience of society". Bridgman found some reasons why: universities, made over by the market reforms of the 80s and 90s, did little to encourage the critic and conscience role; academics believed making regular public contributions would harm their careers; taking a public role was time-consuming, meaning less time for publishing research in academic journals, which are vital to career advancement.

There were also concerns about being misquoted; fears that comments would be seen as a "dumbing-down" of academic knowledge; plus not having the skills to communicate with a wider audience. A common theme, says Bridgman, was the influence of the PBRF system and its bias against research on the New Zealand context, which is harder to get published in the higher rating international journals. In other words academics were, by and large, frightened, self interested and confined by oppressive research demands to their rarefied sphere of influence.

Then there is the long Kiwi tradition of regarding the word "intellectual" as a term of abuse. In his essay The Public Intellectual is a Dog, Auckland University English Department lecturer Stephen Turner sums up the problem: "Just talking about public intellectuals make you, or rather me in this case, a wanker rather than a well rounded bloke." The British have also been bagging intellectuals for a couple of centuries, as Auckland University associate professor Laurence Simmons points out in his introduction to Speaking Truth to Power. It's a stereotype which says experience rather than abstract ideas, the supposed currency of intellectuals, offers the better guide to social and political practice.

I'd add to that some pretty serious thin market problems: we just don't have the think tank environment in New Zealand that is found elsewhere to help encourage academics to take on a more public role.

In any case, of the 24 academics listed as providing expert public analysis on New Zealand's business climate, I'm the only one listed from the University of Canterbury. I'm a bit worried that the other hundred-odd academics in the College of Business and Economics know more about Canterbury's system of incentives, rewards, and (in the current environment of redundancies) punishments than I do.

I would have added Canterbury's Glen Boyle to the list of academics who speak on business. I'm also surprised that they missed Matt Nolan at TVHE in their list of occupational economists; he's done rather more than I have on topics around the financial crisis.

Heart monitor

The University of Canterbury's seen some declines in student numbers since last February's earthquake. The New Zealand Herald last week gave some details.

"We have lost a whole pipeline of students," said Keith Longdon, the university's acting chief financial officer.

The university, which had 15,500 students enrolled this year, expects to lose about 20,000 full-time students over the next eight years. The number of first year students discontinuing or failing to complete study fell 25 per cent, international students by 30 per cent and continuing students 8 per cent.

Student tuition fees are $5 million below its 2011 forecast while operating costs are $12 million more than projected, partly reflecting a more than doubling of insurance costs to $6.2million from $2.5 million and a $1.8 million increase in energy costs, the university says.

The University's fortunes in the longer term seem tied to the speed and strength of the Christchurch rebuild. If things perk back up quickly, students will want to live here and the University will be in fine shape. If the ancillary amenities that students expect from a city take a while to come back, and if the government doesn't fill the temporary gap, there's risk of downward spiral where worsened conditions lead to the loss of our best academic staff which, eventually, cuts enrolment.

As Canterbury's bonds are traded on NZX, it's probably worth my keeping an eye on yields there. Here's a bit of fun though. First, here's the two year yield history on Canterbury's bond issue:

The bond was issued with a 7.25% coupon rate. It rose a tiny amount with the 4 September earthquake, and had returned to pre-quake lows immediately prior to the 22 February quake. We see bits of movement upward subsequent to the half-year report released 1 September, but nothing huge - just bouncing around between 6.9% and 7.35%. 

If you zoom in to the last four days, you see a 10,000 unit move at 10 am 7 December pushing the price up to 7.75%. At 12:38 PM, this story came out, with sensational headlines on whether Canterbury could meet its bond obligations but concluding that there's pretty much no chance we fail to meet bond payment obligations. Another 10,000 unit trade pushes yields up to 8.6% at 1:35 PM before they fall at 11:40 am 8 December on a 25,000 unit trade back to 8%; it's been flat at 8 on low volumes since then. 

Weird things happen in thin markets on low volumes. I'm not sure there's anything substantial in the newspaper article that wasn't in the University's 1 December forecast statement other than that the news story frames things in terms of students lost where the forecast was in dollars. But the market didn't move subsequent to the forecast, only subsequent to the news story. 

Alas, staff who might be worried about redundancy as part of any temporary restructuring at the University can't really use the NZX contract as a hedge except against exceedingly unlikely Armageddon events where the government withdraws financial support, bond default looms, and many staff are set for redundancy. But for more minor transitional changes, we could as easily see yield drops with redundancies that are part of a bailout package as yield increases where redundancies give new news about finances. 

As for me, I'm looking forward to today's graduation ceremonies; I'm especially looking forward to Ruth Richardson's Honorary Doctorate. Her work on the Fiscal Responsibility Act alone would have qualified her for it, but she's achieved rather more than that. Congratulations Ruth!

Weitzman!

Martin Weitzman is presenting here at Canterbury, tomorrow afternoon, on the economics of climate change.

I'm really looking forward to his talk; I hope to see a lot of local Offsetting readers there too. RSVP now if you haven't already!

Weitzman argues that a fat downside tail in the distribution of potential outcomes make the case for strong action to combat global warming - it's insurance that's well worth the premium.

It's a pretty reasonable argument. And, I broadly accept it: it's worth spending a bit on insurance. My general problem with it is that there are all kinds of potential fat tailed risks with deep structural uncertainty. So I have the same problem with Weitzman's argument as I have with Posner's "Catastrophe": there are a non-trivial number of potential states of the world in which all human life is extinguished. It's not immediately clear how we ought to expend resources in insuring against all of the different risks.

At the margin, I'd strongly favour transferring money from general spending to these kinds of insurance expenditures. But how much can or should we spend in total? And how to allocate across risks? I wouldn't be averse to transferring some money from global warming abatement to asteroid abatement: if NASA or somebody else discovers an asteroid that's on track to hit us in a decade, it's remarkably unclear whether there's anything we can do about it. I don't think the decade-long end-game would be particularly fun. There's also the potential emergence of all kinds of different superbugs. The risk of bad global warming outcomes in the medium term is perhaps on par with the risk of emergent superbugs, and much higher than the risk of asteroid (although the costs of asteroid approach infinity). From there we move to less and less likely events - all the way down to Shoe Event Horizons and Grand Collapsing Hrung Disasters. We need some mechanism to help us allocate resources correctly between global warming and other plausible (and, on an insurance argument, even implausible) potential disasters. And if Cost-Benefit analysis fails us when facing issues of deep structural uncertainty, on what basis ought we make decisions?

I hope to get the chance to ask Weitzman at tomorrow's lecture. And I hope to see you there.

Weitzman at Canterbury

Coming up at the University of Canterbury:

Professor Adrian Sawyer, Acting Pro-Vice-Chancellor of the College of Business and Economics and Dean of Commerce, warmly invites you to attend the 7^th Annual Condliffe Memorial Lecture, ‘Why is the economics of climate change so difficult and controversial?  The lecture will be delivered by Martin Weitzman, Professor in Economics at Harvard University.  Event details and an outline of the seminar are provided below.

Date:            Thursday 17^th November 4.30pm – 5.30pm. Refreshments to follow

Venue:         Law 108, Ground floor, Law Building, University of Canterbury

RSVP:          by 10^th November to karen.ashby@canterbury.ac.nz 

Abstract:In this lecture Professor Weitzman will focus on the special features of the economics of climate change that make this area so very difficult to analyse by conventional economic tools.  He will discuss such topics as deep structural uncertainty, whose preferences are included, the possibility of catastrophic outcomes, discounting the distant future, and international public goods.  Professor Weitzman will speculate on how the dilemmas of climate change might play themselves out. 

Biography:Martin L. Weitzman is Professor of Economics at Harvard University. Previously he was on the faculties of MIT and Yale. He has been elected as a fellow of the Econometric Society and the American Academy of Arts and Sciences. He has published widely in many leading economic journals and written two books. Weitzman's interests in economics are broad and he has served as consultant for several well-known organisations. His current research is focused on environmental economics, including climate change, the economics of catastrophes, cost-benefit analysis, long-run discounting, green accounting, and comparison of alternative instruments for controlling pollution. We look forward to seeing you on the 17^thof November.

I'll be there and I hope to see many of you there too.

Informal NZ politics

Add this to the list of "Never would happen in America".

The Prime Minister visited campus [unbeknownst to folks my side of campus]. The Mechanical Engineering students' computer lab overlooked the spot where he was meeting with folks outside. They put a sign in the window inviting him to "come up for a yarn with the country's future engineers." So he headed up. When one of the students invited him to put his best security guy up against their best arm-wrestler, he accepted; they all headed over to the students' arm-wrestling desk. And "Mad Dog" soundly beat the guy from the security detail.


The video seems to be from a student's phone cam; John Key notices the students somewhere around the 2:20 mark then heads on over.

• There is, effectively, no security while the PM wanders among a pile of Engineering students and hangs out for a short visit. No pre-clearing the room, no background checks for the folks he could potentially meet.
• I love the informality of NZ politics:
• The Prime Minister tells the students a story about a friend of his, an underachiever in high school who went to Canterbury to do Mechanical Engineering. I'm transcribing from the video, but I think this is what he said: "...when he came to Canterbury, his old man really got stuck into him just before he came in and said, 'Shit, you've got to pull your finger out and do some work,' and so every grade, every subject, an A+. So get off your ass!"
• The guy from the PM's security detail admits his "left arm is stuffed" and so only challenges with the right.
• It's not quite Bart vs Australia, but close.
• In 2005, when then Prime Minister and Labour Leader Helen Clark visited the University of Canterbury and gave an address outside the library promoting her bribe the students zero interest student loan policy, she faced a pretty mixed reaction. Some supporters, some loud angry boos, and one wag waving a sign reading "Gerry Brownlee will eat us all!" Now, Key gets a big cheer when he enters the room. National is probably underpriced at 95% likely to win the next election.

Facebook Schadenfreude

Do Facebook fans love gloating over their friends' misfortunes? An upcoming seminar in Canterbury's management department suggests they do.

This research looks at one of Facebook's more nuanced appeals. In the seminar, we will look at the way in which Facebook eases the tension between consumers' desire to stare, and the social norm that dictates that we should not stare. Interviews with avid Facebook users reveal that their motivations for staring into the lives of their 'Friends' are driven by not just a desire to collect novel and interesting information, but also because their friends' posts repulse them, and their friends' misfortune release feelings of Schadenfreude and self affirmation. This research also shows that starers perceive a greater level of connectivity and closeness to those they are staring at, even though the person being stared at has no idea of the starer's behaviour.

And so I will engage in a bit of self-affirmation as a non-Facebook user and feel superior to those Schadenfreude fans. Ahhh.... I can feel the smug. It's palpable.

Wait, what's that you say? I can't get smug self-satisfaction about not having had the misfortune of being part of the unfortunate group who get smug self-satisfaction from others' misfortunes without causing some kind of logical fallacy? Bah, I say. BAH.

The high cost of cheap parking

Seamus loves citing the old line by former University of California Supremo Clark Kerr:

"The three purposes of the University? To provide sex for the students, sports for the alumni, and parking for the faculty."

Apparently, Dalhousie has failed on one of these three margins.

For professor Dan Middlemiss, the thought of another year navigating the parking lots of Dalhousie University was simply too much to bear.

On Monday, after an hour of waiting in line for a parking pass on the Halifax campus, the expert on Canadian defence policy stormed up to university administrators and handed in his resignation.

“I went straight upstairs, I said, ‘I’m not kidding this time, I don’t have to put up with this. I’m resigning,’” he told a CBC camera crew after flagging it down.

Prof. Middlemiss had been one of hundreds of professors, students and staff lined up on the campus Monday afternoon in a bid to snatch up an annual parking permit from a dwindling supply.

Normally, it’s a calm and orderly affair, but this year, amid news that the university was trimming parking privileges, Dalhousie drivers staged a run on the university’s security office, which issues the $260 permits.

...
Dalhousie only has 2,000 parking spaces for roughly 20,000 students and staff. In past years, administrators have sold upwards of 3,300 parking permits, earning them the derisive nickname of “hunting passes.” According to Prof. Middlemiss, in order to teach a 2:30 p.m. class he needed to have his car in the lot before 7 a.m. Otherwise, he would be stuck circling the block for a metered space — or hiking in from a distant residential street.

“I’m getting old to the point where I’d like my beauty sleep,” he said.

Simply letting the market clear by prices rather than queuing would solve a lot of problems. Equilibrium prices could be high though:

Drivers can get around the musical chairs of Dalhousie parking by paying $1,200 to $1,400 for a reserved space in a parkade, but even then, each year administrators are forced to turn away more than two-thirds of the applicants.

If all the parking spots cleared in prices, there's no way prices would be as high as in the parkade.  I don't quite understand why they don't build another parking garage that would charge high daily prices.

We used to have problems finding parking at Canterbury; it doesn't look likely to re-emerge as a problem here anytime soon.

Fortunately, New Zealand universities have never been called on to provide sports for the alumni. Or, perhaps unfortunately; having a US-style alumni network which could be drawn upon for support in times of earthquake would be ridiculously helpful. University sports then could be serving as a very expensive insurance policy.

I have no clue to what extent we're successful in ensuring sex for the students; we kinda leave them to their own devices on that one and hope for the best.

French folk songs

Post earthquake budgets at Canterbury remind me of some of the tunes I learned in music class.

You see, I went to a French-immersion elementary school in Manitoba.

We sang from a book called "Les 100 plus belles chansons". Almost invariably, the lyrics were of murder and death and cannibalism, usually to pleasant and upbeat tunes. Or at least those were the ones Mlle. Parent chose for us to sing to her in chorus. If there were non-cannibal non-death songs in there, I don't know about them.

I'm particularly remembering the one where a sailing crew had to draw straws to see who would be eaten when the food ran out: Il était un petit navire. 

Another greatest hit: The lament sung by a mother bird whose babies flew from the nest too early, fell, and were eaten by a fox: A la volette.

Good times....

Catching cheaters

Panos Ipeirotis notes the extreme cost to lecturers of pursuing cheaters.

By the end of the semester, 22 students admitted cheating, out of the 108 enrolled in the class.

The process of discussing all the detected cases was not only painful, it was extremely time consuming as well.

Students would come to my office and deny everything. Then I would present them the evidence. They would soften but continue to deny it. Only when I was saying “enough, I will just give the case to the honorary council who will decide” most students were admitting wrongdoing. But every case was at least 2 hours of wasted time.

With 22 cases, that was a lot of time devoted to cheating: More than 45 hours in completely unproductive discussions, when the total lecture time for the course was just 32 hours. This is simply too much time.

When 1 out of 5 students in the class being involved in a cheating case, the lectures and class discussions became awkward. For the rest of the semester there was a palpable anxiousness in class. Instead of having friendly discussions, the discussions became contentious. Not a pleasant environment.

This, of course, had a direct effect to my teaching evaluations. Instead of the usual evaluations that were in the region of 6.0 to 6.5 out of seven, this time my ratings went down by almost a point: 5.3 out of 7.0. Instead of being a teacher in the upper percentiles, I was now below average.

The Dean’s office and my chair “expressed their appreciation” for me chasing such cases (in December), but six months later, when I received my annual evaluation, my yearly salary increase was the lowest ever, and significantly lower than inflation, as my “teaching evaluations took a hit this year”. (And I publish in journals not endorsed by Business Week, but I will leave this story for another time.)

Josh Gans explains that optimal structures take enforcement out of lecturers' hands so that enforcement is more credible.

So what should the administration do to change the equilibrium? First, take the enforcement of cheating out of the Professor’s hands. Employ a policing person who is the one who receives the Turnitin results and decides what to do about it. Make it their job and you solve the free-riding problem right away. You also allow cross-course, repeat offender detection. And you change the cheating equilibrium to one where enforcement is expected. Finally, the Professor has their hands clean and so suffers no conflict over teaching evaluations.

Canterbury isn't far from this. Everything is run through TurnItIn. Anything that looks dodgy, I hand off to the Head of Department. There's still a short meeting between the student, the HoD, and me, but it's short and the HoD is the bad guy. And there's reporting within the College (and hopefully extending within the University) on proven cases of plagiarism such that track records get established; we then can apply schedules with increasing marginal penalties.

This was all getting pretty reasonably firmed up in the pre-quake world. I'll be using TurnItIn again this semester; hopefully, I won't have to haul anybody into the HoD's office. But TurnItIn has embedded itself nicely here; after a few years, most students have cottoned onto that they can't get away with the dumber forms of cheating.

Congratulations Ruth!

Ruth Richardson, former NZ Finance Minister and largely responsible for pushing through the second necessary set of economic reforms in the early 1990s, is to be awarded an honourary doctorate at Canterbury's graduation ceremonies this year.

The only graduation ceremony of any kind that I've ever attended was my high school grad. Circumstances and lack of interest kept me away from the others, though I really regret having missed Denis's awarding of the Canterbury Research Medal last year; I'd forgotten that that award was tied to grad rather than being a separate event.

I will be attending this year's ceremony. And I hope that the Gnomes of Canterbury do something suitable to celebrate.

At the Australian Conference of Economists last week, I enjoyed Judith Sloan's presentation on the horrors of Australian labour market regulation. I understand that Ruth takes a reasonable amount of the credit for sorting out our equivalent messes. And, for the most part, those reforms have stuck: the current Employment Relations Act isn't as clean as Ruth's Employment Contracts Act, but the main features are still there. All of New Zealand effectively remains a "right to work" state; there are no closed shop unions, and union membership remains voluntary.

Congratulations Ruth! And excellent that the University of Canterbury is extending her this well deserved honour.

Fence in or fence out?

Coase taught us that externalities are two-sided: there can't be an externality if nobody's around to experience it. And so we seek rules that make the lowest cost avoider of the externality be the one to bear the costs.

Today's application: open-plan offices. Canterbury's Department of Economics and Finance is now split between two open-plan barracks among a couple dozen such buildings in a muddy part of campus that once was a running track. Odds are that we'll be in the barracks for the next year and a half, but the right tail on that estimate is thick. They're gutting the old Commerce building looking for any problems in the cement floors (remember, we're still in earthquake-land); we have to entirely vacate that building, with most of our stuff going into long term storage as there's no way that the current facilities have room for everything.

But enough whinging; on with the problem at hand.

We all make noise in the course of our work: taking phone calls, chatting with colleagues, typing exceptionally loudly on a Das Keyboard Ultimate. Initial recommendations were that staff move to a small private room inside the open-plan space for extended phone conversations or chats with colleagues. The alternative is that everyone buy a set of noise-cancelling headphones. I've been pushing for the latter. Wearing headphones is pretty low cost, especially relative to having to run and transfer calls all the time. And everyone has a different idea about how annoying other folks' conversations are; that's more easily solved via the volume knob on a headset than by shushing colleagues. Added benefit: the heavy construction equipment outside provides only a visual distraction. A hundred bucks spent on a good set of headphones puts me into my own little world, open-plan office or not: money very well spent.

Two norms seem to be developing across the two barracks. In my barracks, the micro folks pretty much live and let live. Folks who don't like noise wear headphones (ok, it's just me so far, but folks are only starting to move in), others wear no headphones, and if I'm taking a long phone call, I head for the private room less for my colleagues' benefit than for privacy. In micro, we're basically Coaseans (as is right and proper for any Top-100 Economics Department)

In the pod where the macro, finance, and experimentalists live, a norm of being shushed all the time seems to be emerging. We'll see whether the two-norm equilibrium holds or whether those wacky macro folks see the light. Either could be optimal depending on folks' costs of wearing headsets and folks' noise abatement costs.

Final note: none of this counts as an externality for policy purposes precisely because we expect firms to optimally structure things within their own contractual nexus. The optimising employer will seek that the lowest cost avoider bear the costs and will allow sufficiently disaggregated decisionmaking to allow inter-departmental heterogeneity in different types of cost be reflected in different barracks' solutions.

World economics rankings

Selections from the new QS World Rankings of Economics Departments:

• 1. Harvard
• 2. MIT
• ...
• 37. Auckland (implausibly high)
• Tied equal in rankings 51-100, and listed in alphabetical order:
  • Boston University
  • Cal Tech
  • ...
  • University of Canterbury (probably about right)
  • ...
  • University of Minnesota
  • ...
• Tied equal in 101-150 (among others): University of Otago; Victoria University at Wellington; University of Waikato; Massey University

Ok, more honestly, there's no way that the NZ universities deserve to rank quite this well. Canterbury probably punches above weight in relative rankings because, in reputational surveys, Canterbury just has a good-sounding name: evocative of long English traditions, maybe it's really part of Oxbridge for all that the American survey respondents know.

But let's ignore the caveats and boldly assert that the University of Canterbury's economics department is tied equal with Boston University, the University of Minnesota, Cal Tech and other illustrious institutions. And, more importantly, we're better than Otago.

More Shameless Advertising (UPDATED)

I noted here that the annual New Zealand Association of Economists annual conference was coming up (Wednesday to Friday this week at the Amora Hotel in Wellington). The final progamme is here.Tim Harford is leading off with the keynote address at 9:00 on Wednesday morning. It is possible to register on-site at the Amora Hotel, for either a single day or the full conference.

Also, as a first this year, Canterbury's Economics Department is hosting a function for former staff, alumni, and friends, at the Amora Hotel at 7:00pm on the Wednesday. This is in association with the conference but not part of it, so people not registered for the conference are welcome to attend. We don't have a good database of our former students, and so have not been able to contact all of them. So, dear friends and alumni, if you read this blog but have not been directly contacted about this event, we do love you and would love to see you there!

If interested, go the facebook link and click on "I'm Attending". And if you are a facebook user, go to our facebook page, and click "like". We hope to use this page as a way of maintaining contact with alumni and friends.