Globalization and cultural convergence

I was at the Trade and Development seminar today at the WTO where the sandwiches were great. Matthias Thoenig was presenting his paper (which is not available online) on how increasing trade flows were reducing the cultural distance between countries. Cultural distance was explained by how differently people were answering questions of the World Values Survey on mutual trust, happiness, religion, and other values that you would want to transfer to your kids, such as respect, tolerance, integrity etc... It stroke me at the end when his conclusion was to control trade because it was destroying cultural differences. Wait a minute.

A convergence of such values was a good thing in my head all along. You can't call the fact that some people are unhappy in certain countries and happy in otehr countries and say that it should remina like that for the sake of culture! Better for it to converge towards happiness. That is human progress. Same thing for mutual trust. It's like saying that countries should stay poor as it is better for tourism!

I would imagine that the worldwide convergence in income be accompanied by a convergence in values. The fact that some countries think it OK to praticse female genital mutilation should not be regarded as a desired cultural difference. Or the fact that you don't want homosexuals as neighbors. As countries become richer, they become more educated and less anti-homosexuals. A convergence in such liberal values is desirable in my opinion. It could save us from a third world war.

And this certainly does not mean that Japanese stop eating sushi, Greeks stop eating Tzattziki and Indians stop watching crazy bollywood dancing over tandoori chicken or that Nigerians stop wearing bubas. It just means that we start accepting each other, or at least understanding and tolerating each other.

To Smoke or not to Smoke – A Comment in Two Acts

- Act One -

It can be surprising sometimes which kind of topics the Economic discipline has incorporated into its realm. One of these fields is the “Economics of Smoking” which exists now also as the “New Economics of Smoking”. On one hand the potential costs of smokers for the health system of a country gives enough reason for economists to care about smokers. On the other hand it is surprising to see that it requires a whole new “Economics of…” for a field that seems rather trivial at least from the point of view of the individual smoker.

An influential researcher on this topic is Jonathan Gruber, who writes on the NBER website

“...The fundamental problem with the rational addiction model is that it does not account for the "self-control" problems faced by smokers. There is ample evidence that adults are unable to quit smoking even if they have a desire to do so….”

Well having smoked for easily 10 years this does not come as too much of a surprise to me nor will it to any other person: smoker or non-smoker. Gruber goes on to say:

“…These facts motivated Koszegi and me to develop an alternative formulation of the smoking decision which changes the traditional formulation in just one critical way: by allowing smokers to be time inconsistent. This approach, now widely used within the new field of "behavioral economics," is one where there is conflict between what the smoker would like for himself today and what he would like for himself tomorrow. Today's "self" is impatient. Faced with the tradeoff between the short- term pleasures of smoking and the long- term health damages of doing so, he will greatly discount the latter and decide to smoke. But tomorrow's "self" is much more patient. That more patient self would prefer to quit smoking. The problem, however, is that tomorrow never comes. The next day, the future self who was patient is now the current self who is impatient. So the smoking continues, to the long-term regret of the smoker. This is in contrast with the time consistent formulation that is assumed by the traditional economics model. In that formulation, today's self and all future selves are in agreement about the advisability of smoking, leading to no regret or inability to carry out plans to quit.

Now this is amazing! If you ever thought about smart ways of “marketing” your research, this part of the outline of Gruber’s research agenda is a perfect example of how to do this. Why? Because it sounds incredibly great and smart , but at least all smokers (economist or not) could have told you the same, however in very different words, since probably most smokers keep telling themselves: “One day I will stop!” Unfortunately, that day never comes since we keep telling us that sentence every other day. And: We are fully aware of this!

Gruber continues by writing:

“…The key implication of time inconsistent preferences is that one's future self would like to somehow constrain one's current self to behave more patiently [..]. Thus, time inconsistent consumers will have demand for commitment devices that can be used to induce more appropriate behavior in the present. Indeed, the search for such commitment devices is the hallmark of most recommended strategies for quitting smoking: people regularly set up socially managed incentives to refrain from smoking by betting with others, telling others about the decision, and otherwise making it embarrassing to smoke…”

Having stopped to smoke just recently, I was aware of the commitment problem. Also all the other smokers and non-smokers at our lunch table in the Economics department saw immediately the reason for my public “outing” of having become a non-smoker. So either the people sharing lunch with me in the Graduate Institute are really smart or the fact that we are all economists implies that we have understood the problems of incentives and commitments or less charming to our “self” it is a rather obvious thing to do. Irrespective of this, the bad news for me and my future as non-smoker according to Gruber is that:

“..Unfortunately, […] there is no way to truly commit oneself to not smoke..”

However, my efforts are not doomed yet since:

“…the government, on the other hand, can provide an excellent commitment device: cigarette taxation [..]. By raising the price of cigarettes, the government and courts can make smoking more costly for today's self, helping achieve what the smoker's own long-term self would desire by lowering smoking today. ..”

Unfortunately for me, this is the point where I disagree. Yes, it is true that higher prices discourage smoking (in particular for young smokers who just start and this is why I am for cigarette prices as high as possible). BUT, there is a limit to it. I remember very well the times that Berlin’s streets where full of cigarette vendors who sold well below the prices in the stores. So, price increases have a natural limit and this will be well below the price that the addicted smoker is willing to pay (during the time that I smoked cigarette prices nearly doubled).

So if you read up to this point you probably know what my stance is on the successful approach to fight smoking, at least from the point of view of the individual smoker…to be continued with some statistics on the issue…

A hopefully lasting non-smoker

Pirates and Business

"Pirates operating around the lawless African country are more likely to use weapons than in the past; a Spanish fishing vessel was attacked at the weekend using grenade launchers."

Do you like graphs? Here's a gallery with some nice stuff like the ones on this post. From The Economist, of course. Turns out South Africa will be better tha India or China to do business. Anyone wants to start a business? I'm in.

Economics blogs

For those in need of inspiration, here's a link to a list of all the best economics blogs. Here's a cool site with unusual data. Here's another one.

Here's a very well done wikipedia entry on polls on who is gonna be the Democrat's candidate (Obama or Clinton)

Lost in Translation

No, this is not a review of the movie with the above title, which I still have to see. This is much more about the way in which social scientists talk:
I recently, visited the homepage of my former university to find the following announcement for a conference on "Kritik der polysexuellen Ökonomie" (sorry it is only in German and even though I consider my English sufficiently good I do not see myself in the position of translating the text; not to speak about the meaning of the text). The text is here reproduced:

"...Theorie der polysexuellen Oekonomie ist Ausdruck eines historischen Prozesses, in den/m alle vergangenen Kämpfe um Integration und Verschiebung (Frauen/ Homos/Transen/usw.) münden und weiterhin treibend bleiben. Sie lässt historisch einzigartig die Möglichkeit einer sexuellen Oekonomie erblicken, die zum ersten Mal in der Geschichte nicht ständischfeudal, nicht rassexistisch-segregationistisch strukturiert wäre, ein universeller (Welt)Markt, auf dem alle Körper als Waren auftreten, ineinander tauschbar sind (welche Verzögerung, seit 1789). Aus der Perspektive dieser liberalisierten Zirkulation erscheinen Paarmonogamie, Zwangsheterosexualität und segregationistischer Rassismus lediglich als Marktbeschränkungen, als vormoderne Überreste präkapitalistischer Vergesellschaftung. Die polysexuelle Bewegung durchschlägt die Zwei dreifach: des Geschlechts (Mann/Frau), der Sexualität (Homo/Hetero), des Paars (Ich/Du). Sie etabliert ein tableau économique, auf dem die Körper un/mittelbar nach der zu ihrer Reproduktion gesellschaftlich durchschnittlich notwendigen sexualisierend-sexuierenden Arbeitszeit bepreist werden. Gleich sind die Körper somit, insofern sie alle der Herrschaft desselben Wertgesetzes unterworfen sind. Ungleich, insofern sie diese Herrschaft ungleich hart trifft. Erst an der einen Norm gemessen, werden sie als Mehr und Minder quantifizierbar, universell hierarchisierbar. Erst das Schönheitsregime bringt die Hässlichen hervor und mit ihnen die alle ergreifende Angst: übrig zu bleiben. Liberalisierung der Oekonomie ist also Abschaffung ihrer Begrenzungen, nicht bereits Abschaffung der Oekonomie, um die es geht. Gesucht wird ein Modus von Vergesellschaftung, der weder der (unterkonsumptiv) krisenhafte des Single-Marktes ist, noch der des Paars, des Ehevertrags, Handelsabkommen auf Lebensabschnittszeit. Weder protokapitalistische Oekonomie allgemeiner Konkurrenz also, noch sozialistische, Planwirtschaft, die die Armut (eine und nur eine Ware Anziehungskraft für jede[n?]) für die Ewigkeit verwaltet. So gestellt, springt die Lösung des Problems unmittelbar ins Auge: Gesucht wird Communismus, polysexuell."

No Comment!

Homer's favourite magazine

The Swissmakers

"We believe that the assimilation of a foreigner
happens when the subject has spent enough time in our country without having been noticed". This is one of the opening sentences of "The Swissmakers", an acute satire about integration/assimilation policies of foreign citizens in Switzerland.

After immigrants have made a formal request for citizenship, it is the duty of the agents from the "office for assimilation" to compile a report of "good candidacy" which, together with an interview with a commission of local citizens (mostly about Swiss history but also on other aspects of private life) determines whether or not the “Swiss wannabe” deserves his/her passport.

According to Rodmer, the strict, inflexible, super-efficient, thick-headed agent from the Zurich office and one of the main character of the movie, every decision of the commission is based on this report. This is the reason why his approach to the job is extremely rigid. “An agent has to pose precise questions to get precise answers: no empathy has to be established with the candidate otherwise the decision is fatally flawed”. The other agents of the office, Fischer, who is absent-minded, romantic and day-dreamer, has a different view. He thinks that sometimes “also instinct may provide a valuable judgement”.

The cases they have to examine are an Italian-communist pastry chef from Apulia, a dancer from Yugoslavia and a psychiatrist from Germany. "Everybody is welcome in Switzerland...the tourist as much as a worker...but things become different when somebody wants to become citizen..." are told the agents on their training. Their job is to constantly monitor how these people live: the conditions of their apartments, the amount of savings in the bank, the stability of their private life... They have to check this constantly and even randomly. If things are not clear, extra-work on Saturdays is needed to make an informed decision. Any single aspect of the candidates’ life has to match what somebody should expect from a Swiss citizen. No deviation from the norm is considered licit if anybody has serious intentions about citizenship. For example “curtains on the window are a symptom that you house is in order, you cannot live without any”, says a neighbour of the Yugoslavian dancer to Fischer, in one private conversation. As Rodmer puts it, even “happiness” is worthless: what counts is for people (foreigners) to learn how to integrate themselves.

The two guys work together, but then Fischer gets tired of the methods imposed by Rodmer. Being loyal to his role though, he “makes” a Swiss citizen, but in a different way…

The dialogues are highly enjoyable, while the direction is sometimes too pedantic. The movie was released in 1978, and apparently, it is one of the most successful Swiss movie ever made. It was blockbuster until 1997, when it was surpassed by Titanic..but honestly it’s way better than Di Caprio’s worst movie..

A bad allocation of talent

From Chris Blattman's blog: "Generous NGO and research project salaries give the educated and talented the incentive to work in the social sector rather than the productive one".

Here's a paper idea: Do a survey and show that the HEID students with the best grades want to work in the unproductive sector (for example, the UN), relatively more than the average. Control for sex, age, origin, specilization and haircut.

Idiocracy

In this week's Economist, Lexington is about how "Congress is doing its best to lose the global talent war". It starts with Mike Judge's Idiocracy, "one of the most unjustly neglected films of the past few years":

Two typical citizens—the army's “most average” soldier and a street prostitute—find themselves transported 500 years into the future. They soon discover that they are towering geniuses compared with the knuckle-draggers who inhabit the America of 2505. The country's best university is run by Costco. People are named after brands such as Frito and Mountain Dew. Starbucks has become a chain of brothels. The president is a former porn star and wrestling champion.

Apparently, America's politicians are doing all that they can to let Mr Judge's dystopia materialise, with their straight dumg immigration policy, trying their best to keep the world's best and brightest from darkening America's doors. They call this a policy of national self-sabotage.

All in all, Idiocracy sounds like a Rigot Movie night. Anyone interested?