I recently visited a number of universities in the Maritimes. For those not in the know there are a lot of very small universities in the region. These universities tend to have small student bodies and a similarly small faculty compliment. In talking to these people something became very clear.
The happiest and most productive of departments I visited was at the smallest of the universities I visited. This of course got me thinking. What makes university faculty most likely to be productive? (BTW this is an issue I’m personally concerned about.)
The university in question has had a stable student population for decades (about between 2250 and 2500) and does have a fairly large endowment. On the down side it does have something of a history of labour unrest, with a potential for faculty strikes every few years.
What has always amazed me about this group is how much pleasure they take from their work and how much research they actually get done despite an onerous teaching load. Thinking about it for the last couple of weeks, I’ve spotted a few things to consider.
1) Few layers of administration. This is a small university with relatively few AVP’s DAVP’s, ADAVP’s, associate dean’s, coordinators, etc. This means there is a hope of influencing the outcome of administrative decisions. Despite this it is possible for a department head to devote comparatively little time to admin busy work. Unlike larger schools in which most faculty members don’t know who is making administrative decisions this week and don’t feel they have any meaningful say in the direction the university takes or have to spent countless hours in meetings that accomplish nothing.
2) The group legitimately respects each other and gets along. When hiring, attention was paid to how different people appeared to “fit”. In a small group this is exceptionally important. You need someone who is going to be of a complimentary temperament. Many academic units ignore this to their detriment. Ideally, you need someone who agrees with just enough not to make you insane. I’ve seen this group subject their own (and my work when I visit) to intense thoughtful scrutiny. It isn’t always the velvet glove sort either, but it is always done in a way that lets you know it’s about making it “right”.
3) Really bright, engaged, students. I’m not even talking about graduate students, though they offer fill this role. The students I have encountered there are genuinely engaged, willing to challenge, and capable of putting up a really good intellectual fight. There is accordingly a great atmosphere of academic debate and thought.
Considering all these factors, it really makes me wonder if Universities in Western Canada have taken a wrong turn in pursuing size. Would a larger number of smaller universities better achieve the stated objectives?
Monday, February 21, 2011
Monday, February 14, 2011
Paying for "IT"
There is an ongoing debate about prostitution in many countries around the world. The question is whether or not it should be legal. An interesting quirk of Canadian law is that prostitution isn’t illegal but solicitation is. You can pay for sex, but cannot talk about paying for sex and mean it.
On the legalization side there are a lot of positive arguments. Places from Amsterdam to New Zealand have legalized prostitution. There hasn’t been an explosion of drugs, violence, family break up, or any of the expected maladies that you might think would go along with legalization.
On the plus side, many places with legal regulated prostitution have less trouble with violence toward sex workers (police are now actually called), fewer sex workers addicted to drugs, and a better chance of controlling STD’s through regular health checks.
So why not just accept it legalize the open and honest exchange of sex for money? There are the usual moral objections and I can wrap my head around some of those.
But let’s put on our cynic hats for a moment. Let’s say we legalize prostitution. Who loses? In general it would mean a transfer of relationship power from people who withhold or limit sex. Think about this; you’re in a bar trying to woo someone and aren’t getting anywhere. If prostitutes are legal, safe, and not entirely shunned you aren’t going to put that much effort in at the bar. You likely won’t be buying drinks for somebody else all night, you’ll give up and go for the open exchange.
You likely won’t put up with a partner withholding sex to get what they want either – again you’ll just opt out. This means a significant reduction in power for anybody who holds out the possibility of sex as leverage. Makes you wonder about the true motives of some who object to legalization.
On the legalization side there are a lot of positive arguments. Places from Amsterdam to New Zealand have legalized prostitution. There hasn’t been an explosion of drugs, violence, family break up, or any of the expected maladies that you might think would go along with legalization.
On the plus side, many places with legal regulated prostitution have less trouble with violence toward sex workers (police are now actually called), fewer sex workers addicted to drugs, and a better chance of controlling STD’s through regular health checks.
So why not just accept it legalize the open and honest exchange of sex for money? There are the usual moral objections and I can wrap my head around some of those.
But let’s put on our cynic hats for a moment. Let’s say we legalize prostitution. Who loses? In general it would mean a transfer of relationship power from people who withhold or limit sex. Think about this; you’re in a bar trying to woo someone and aren’t getting anywhere. If prostitutes are legal, safe, and not entirely shunned you aren’t going to put that much effort in at the bar. You likely won’t be buying drinks for somebody else all night, you’ll give up and go for the open exchange.
You likely won’t put up with a partner withholding sex to get what they want either – again you’ll just opt out. This means a significant reduction in power for anybody who holds out the possibility of sex as leverage. Makes you wonder about the true motives of some who object to legalization.
Saturday, February 5, 2011
The unfairness of fair trade
I’m intrigued by the idea of so called fair trade as a development mechanism. Two of the most developed countries in the world (Canada and the U.S.) were initially heavily exploited and saddled with “unfair” terms of trade and yet here we are, near the top of the list in term of standard of living. Thus it can’t be a simple fact that unfair trade prevents development.
Let’s take a closer look at “fair” trade. In many cases fair trade involves the purchase of a product at a premium, if there were no premium it wouldn’t have to be marketed differently from plain old trade (I’m always amused when people tell me having to pay more is a good thing). The basis for the premium is that the trade is fair and the consumer gets to feel good about giving extra money to someone deserving (read less well off than they are themselves). So you’re really buying two goods, the coffee, knick knack, or what have you, and the belief you’re a good person. A large part of what you’re purchasing when you buy fair trade coffee is the warm feeling of doing good while getting your daily caffeination. So far no harm, no foul.
Here’s the catch, you only get the good feeling of helping someone who’s worse off. This means you’ll only be willing to pay the premium so long as the people on the other side of the exchange are poorer than you are. Think about it, have you ever seen anything promoting “fair trade” with the U.S. or France?
What’s the result? The people producing the good generally make just enough to keep them producing but not much more. With coffee you keep people working small plots using expensive (inefficient) techniques with little or no hope of improving their lot in life beyond what it is now.
Lots of people who promote fair trade argue that it improves the lives of the people actually producing the good compared to the opportunities offered by the heartless multinational corporations. And in general they’re right, in the short run. In the long run the people producing the fair trade good will remain stuck at a low level of absolute and relative income – they can’t change their techniques or increase the size of their operation to capture more of the value of their good – they won’t qualify for fair trade any more. Further they will always be dependent on the good will of those of us in the rich world. So keep buying your “fair” trade goods if you like the idea of making sure there’s somebody in the world less well off in the long run than you are.
But hey, in the long run we’re all dead anyways, right?
Let’s take a closer look at “fair” trade. In many cases fair trade involves the purchase of a product at a premium, if there were no premium it wouldn’t have to be marketed differently from plain old trade (I’m always amused when people tell me having to pay more is a good thing). The basis for the premium is that the trade is fair and the consumer gets to feel good about giving extra money to someone deserving (read less well off than they are themselves). So you’re really buying two goods, the coffee, knick knack, or what have you, and the belief you’re a good person. A large part of what you’re purchasing when you buy fair trade coffee is the warm feeling of doing good while getting your daily caffeination. So far no harm, no foul.
Here’s the catch, you only get the good feeling of helping someone who’s worse off. This means you’ll only be willing to pay the premium so long as the people on the other side of the exchange are poorer than you are. Think about it, have you ever seen anything promoting “fair trade” with the U.S. or France?
What’s the result? The people producing the good generally make just enough to keep them producing but not much more. With coffee you keep people working small plots using expensive (inefficient) techniques with little or no hope of improving their lot in life beyond what it is now.
Lots of people who promote fair trade argue that it improves the lives of the people actually producing the good compared to the opportunities offered by the heartless multinational corporations. And in general they’re right, in the short run. In the long run the people producing the fair trade good will remain stuck at a low level of absolute and relative income – they can’t change their techniques or increase the size of their operation to capture more of the value of their good – they won’t qualify for fair trade any more. Further they will always be dependent on the good will of those of us in the rich world. So keep buying your “fair” trade goods if you like the idea of making sure there’s somebody in the world less well off in the long run than you are.
But hey, in the long run we’re all dead anyways, right?
Sunday, January 30, 2011
The Hurtful Helicopter
I’ve been doing a lot of reading about prospect theory lately. This theory is likely become taught in most microeconomics courses over the next 10 to 20 years (things move slowly in the academy). There are a lot of important details in the theory, but one that sticks out in my mind is the idea of reference points.
The idea is that when considering options (prospects) people compare the possibilities to what they have now. What you have now is a reference point and what you might get is a prospect. It doesn’t take much of a stretch to see that what you expect about something or someone can be a reference point. This is one of the reasons why expectations are so important.
Having established a reference point, the next interesting piece of the theory is that gains are treated very differently from losses. While gains improve your happiness, the effect is moderate. Losses, on the other hand, cause dramatic reductions in happiness. Estimates show a loss as having almost twice the impact of a gain. So gaining $5 bucks, keeping it for a while, and then losing it is worse than never having it at all.
What does this have to do with helicopter parents and happiness? Think about what your average overbearing parent does to a child’s expectations in life. The child has never experienced failure, has been told they are super, special, and just the bestest at everything. These expectations are going to be impossible to meet once you grow up and get out into the world. This means that something that would be a forgone gain (a minor discomfort) for most of us, becomes a crushing loss for the pampered kid. The impact on the happiness of the child will be dramatic. I haven't met a sheltered kid that seemed happy to me, and this might be part of the explanation.
Trying to make your child happy all the time, might just be making them unhappy in the long run.
The idea is that when considering options (prospects) people compare the possibilities to what they have now. What you have now is a reference point and what you might get is a prospect. It doesn’t take much of a stretch to see that what you expect about something or someone can be a reference point. This is one of the reasons why expectations are so important.
Having established a reference point, the next interesting piece of the theory is that gains are treated very differently from losses. While gains improve your happiness, the effect is moderate. Losses, on the other hand, cause dramatic reductions in happiness. Estimates show a loss as having almost twice the impact of a gain. So gaining $5 bucks, keeping it for a while, and then losing it is worse than never having it at all.
What does this have to do with helicopter parents and happiness? Think about what your average overbearing parent does to a child’s expectations in life. The child has never experienced failure, has been told they are super, special, and just the bestest at everything. These expectations are going to be impossible to meet once you grow up and get out into the world. This means that something that would be a forgone gain (a minor discomfort) for most of us, becomes a crushing loss for the pampered kid. The impact on the happiness of the child will be dramatic. I haven't met a sheltered kid that seemed happy to me, and this might be part of the explanation.
Trying to make your child happy all the time, might just be making them unhappy in the long run.
Saturday, January 15, 2011
You Can't Say That
I wonder if anybody else is getting tired of censorship. We’ve just seen two major incidences of censorship in the name of correct thinking; the release of Mark Twain’s Huck Finn and the banning from Canadian air waves of Dire Straits’ Money for Nothing.
The edited release of Huck Finn, is being led by an “academic” in Alabama. Twain’s use of the word “nigger” is to be replaced with the word “slave”, the term injun is also to be removed. The thinking is that schools are more likely to use the book if they can avoid the discomfort of loaded words. Never mind that a discussion of the place of offensive language would benefit all students, we wouldn’t anyone to have to deal with something they found unpleasant.
In a related story, the Canadian Broadcast Standards Council has shown it’s willingness to kowtow to people demanding censorship. After an individual in Newfoundland complained, a Dire Straits song, Money For Nothing, has been pulled from Canadian airwaves; for an ironic use of the word “faggot”.
Have we all gotten so weak that we can’t even tolerate words written years or centuries ago from people we’ve never met and never will meet? Have all the years of self-esteem building failed? Has all the affirmative action been in vain? Are we allowing the frailty of a few to govern what is available to all?
From where I sit our society has not progressed, it has actually reverted into something less robust, weaker, and less healthy. If can’t stand the occasional use of unpleasant words, how are we going to cope with the real challenges of the 21st century?
The edited release of Huck Finn, is being led by an “academic” in Alabama. Twain’s use of the word “nigger” is to be replaced with the word “slave”, the term injun is also to be removed. The thinking is that schools are more likely to use the book if they can avoid the discomfort of loaded words. Never mind that a discussion of the place of offensive language would benefit all students, we wouldn’t anyone to have to deal with something they found unpleasant.
In a related story, the Canadian Broadcast Standards Council has shown it’s willingness to kowtow to people demanding censorship. After an individual in Newfoundland complained, a Dire Straits song, Money For Nothing, has been pulled from Canadian airwaves; for an ironic use of the word “faggot”.
Have we all gotten so weak that we can’t even tolerate words written years or centuries ago from people we’ve never met and never will meet? Have all the years of self-esteem building failed? Has all the affirmative action been in vain? Are we allowing the frailty of a few to govern what is available to all?
From where I sit our society has not progressed, it has actually reverted into something less robust, weaker, and less healthy. If can’t stand the occasional use of unpleasant words, how are we going to cope with the real challenges of the 21st century?
Wednesday, January 5, 2011
Monetary Cure?
This comes out of a question I asked when the Parliamentary Budget Office was giving a seminar here. In one set of forecasts, the PBO is projecting that interest rates will remain low for the next several years. Given the lack of inflationary pressures we’re seeing and speed of the recovery south of the border, this makes a lot of sense to me. In a different forecast, they were predicting that Canadian labour productivity wouldn’t be rising very quickly in the foreseeable future. Again, I can believe this.
The problem arises when you put the two together and this was basically the question I asked. What I was initially intrigued by was the apparent contradictory nature of these two predictions. Of course it was the last question and I didn’t get to ask a follow up, so you get to suffer.
Start with the idea behind a monetary stimulus. The whole point of reducing interest rates is to encourage consumers to buy (on finance) durables and firms to engage in more investment spending. This is a pretty textbook story so far. Reduce interest rates, increase consumption and investment, and presto the economy recovers.
Investment in economics isn’t quite the same as what most people think of as investment. When we talk about investment, we’re talking about the purchase of new physical capital not financial capital. We’re talking about the stuff that tends to make people more productive like machinery, computers, and so on. So a monetary stimulus should be followed by a period of increased productivity as new capital comes “online” and increases labour productivity.
The problem with the story so far is that it ignores the excess capacity many measures show in the Canadian economy. If there is a lot of excess capacity in the economy, we aren’t likely to see a lot of investment in new capital. Why buy more capital when you aren’t using what you’ve already got? So, for the monetary stimulus to have any impact on the Canadian economy, all the heavy lifting has to be done by consumers. This is actually what’s happening. Consumer debt is on the rise in Canada and is now reported to be higher than (relative to income)in the U.S. It is possible we’re setting ourselves up for a debt driven bubble in consumer spending.
There’s another catch. Consumer spending generally doesn’t go to stuff made in Canada. Look at almost all your consumer goods, electronics, appliances, etc. Not very much of it is made in Canada. A lot of it is made in places like China or Korea. So a spike in consumer spending doesn’t do a whole lot for the Canadian economy.
So the follow up question remains. Is the monetary stimulus of low interest rates likely to do us any good or is the cure likely to be worse than the disease?
The problem arises when you put the two together and this was basically the question I asked. What I was initially intrigued by was the apparent contradictory nature of these two predictions. Of course it was the last question and I didn’t get to ask a follow up, so you get to suffer.
Start with the idea behind a monetary stimulus. The whole point of reducing interest rates is to encourage consumers to buy (on finance) durables and firms to engage in more investment spending. This is a pretty textbook story so far. Reduce interest rates, increase consumption and investment, and presto the economy recovers.
Investment in economics isn’t quite the same as what most people think of as investment. When we talk about investment, we’re talking about the purchase of new physical capital not financial capital. We’re talking about the stuff that tends to make people more productive like machinery, computers, and so on. So a monetary stimulus should be followed by a period of increased productivity as new capital comes “online” and increases labour productivity.
The problem with the story so far is that it ignores the excess capacity many measures show in the Canadian economy. If there is a lot of excess capacity in the economy, we aren’t likely to see a lot of investment in new capital. Why buy more capital when you aren’t using what you’ve already got? So, for the monetary stimulus to have any impact on the Canadian economy, all the heavy lifting has to be done by consumers. This is actually what’s happening. Consumer debt is on the rise in Canada and is now reported to be higher than (relative to income)in the U.S. It is possible we’re setting ourselves up for a debt driven bubble in consumer spending.
There’s another catch. Consumer spending generally doesn’t go to stuff made in Canada. Look at almost all your consumer goods, electronics, appliances, etc. Not very much of it is made in Canada. A lot of it is made in places like China or Korea. So a spike in consumer spending doesn’t do a whole lot for the Canadian economy.
So the follow up question remains. Is the monetary stimulus of low interest rates likely to do us any good or is the cure likely to be worse than the disease?
Sunday, December 26, 2010
The Deadweight Loss of Christmas
There’s been a lot done about the deadweight loss of Christmas over the years (It really starts with Waldfogel in the 1993). We’ve all received those gives that, well, suck. You know what I’m talking about; the dancing/singing gorilla, the hideous sweater, any “executive” gift, etc. The economic argument is really simple, people would get more utility (happiness) out of the whole exercise if we gave cash and let them pick what they wanted for themselves. We could even go one step further and just do net transfers and save ourselves a lot of hassle.
Well, I got a phone call from somebody this year very apologetically saying they were sending a cheque for Christmas. This suited me just fine. I can buy whatever I want, and assuming I know myself better than they do, I can come closer to maximizing my utility. Combine this with the fact that they avoid the insanity of shopping at Christmas, and wins all around right?
If it is wins all round, and this person knows I’m a weird breed (an economist) why apologize? Why should we be embarrassed to send money as a gift? Might there be something important going on?
A gift is often an expression of how you feel about them and how well you know them. This works for somebody you know really well, but not for people you don’t know that well. This is also high risk. If you get it wrong, you reveal you don’t really know them that well. Not exactly the message you want to send.
Once upon a time, if you lived in a different city or had more free time than somebody else, gift giving would have made sense. You’d have access to different goods at different prices. Or you would have been able to devote more time to shopping than the person on the other end of the exchange. With internet shopping and research, this doesn’t hold up any more.
One of the things I’ve heard people saying about shopping for somebody (and I’ve done it myself) is you want to buy them something they wouldn’t normally get for themselves. There are two ways to interpret this. One, you’re asserting the person you’re buying for is a moron and you know better than they do what will make them happy. While this is certainly a possibility, the sentiment isn’t really a match for that ol’ Christmas spirit. While I generally think that humans aren’t the best at knowing what will lead to happiness, I’d at least like to think I have a better idea of what will make me happy than you do.
The other side of buying something for someone they wouldn’t normally get for themselves is one aspect of gift giving that does make a lot of sense, particularly for those with children or other responsibilities. Money given as a gift often (in my experience) gets spent on something boring and practical, paying down the mortgage, fixing the car, toilet paper, etc. By giving someone a gift that is purely about their own enjoyment (a day at the spa for example) is actually giving them permission to enjoy a pure luxury or to be a little bit selfish and not feel guilty about it. This can have value above and beyond the purchase price.
So instead of us exchanging gifts this next year, maybe we should just give each other permission to be selfish for a day without guilt. Just don’t ask me to wrap it.
Well, I got a phone call from somebody this year very apologetically saying they were sending a cheque for Christmas. This suited me just fine. I can buy whatever I want, and assuming I know myself better than they do, I can come closer to maximizing my utility. Combine this with the fact that they avoid the insanity of shopping at Christmas, and wins all around right?
If it is wins all round, and this person knows I’m a weird breed (an economist) why apologize? Why should we be embarrassed to send money as a gift? Might there be something important going on?
A gift is often an expression of how you feel about them and how well you know them. This works for somebody you know really well, but not for people you don’t know that well. This is also high risk. If you get it wrong, you reveal you don’t really know them that well. Not exactly the message you want to send.
Once upon a time, if you lived in a different city or had more free time than somebody else, gift giving would have made sense. You’d have access to different goods at different prices. Or you would have been able to devote more time to shopping than the person on the other end of the exchange. With internet shopping and research, this doesn’t hold up any more.
One of the things I’ve heard people saying about shopping for somebody (and I’ve done it myself) is you want to buy them something they wouldn’t normally get for themselves. There are two ways to interpret this. One, you’re asserting the person you’re buying for is a moron and you know better than they do what will make them happy. While this is certainly a possibility, the sentiment isn’t really a match for that ol’ Christmas spirit. While I generally think that humans aren’t the best at knowing what will lead to happiness, I’d at least like to think I have a better idea of what will make me happy than you do.
The other side of buying something for someone they wouldn’t normally get for themselves is one aspect of gift giving that does make a lot of sense, particularly for those with children or other responsibilities. Money given as a gift often (in my experience) gets spent on something boring and practical, paying down the mortgage, fixing the car, toilet paper, etc. By giving someone a gift that is purely about their own enjoyment (a day at the spa for example) is actually giving them permission to enjoy a pure luxury or to be a little bit selfish and not feel guilty about it. This can have value above and beyond the purchase price.
So instead of us exchanging gifts this next year, maybe we should just give each other permission to be selfish for a day without guilt. Just don’t ask me to wrap it.
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