I’m back

i’m back

Comment on Rust

Was reading Rust’s paper on engine replacement. i was thinking this is a great paper to test whether dynamic programming works for actual human decision makers.

How good is stochastic dynamic programming in explaining the decision to replace a bus engine? the best metric it has is an estimated hazard function, that gives probability of replacement as a function of mileage. he also has confidence intervals around the hazard function.

how does this stand up to the data? can dynamic programming predict zucker’s behavior?

rust doesnt directly show this. he does estimate an empirical (non-parametric) estimate of the hazard function (fig 3). In another figure, fig 5, we have the 1 stnd dev bands, as well as the 95% CI bands. unfortunately, its not superimposed, but i think that the CI bands capture some of the empirical hazard, but not all…

most of the observations are around the 200k mileage, the mean. the total number of buses available is 162, but they at the end look at only a subset of that.  i wonder how good the prediction is at the mean?  not as good, but rust doesn’t provide the guidance at all as to how well…

the empirical hazard becomes erratic high levels of mileage, coz of a lack of observations. at these levels of mileage, there are only a few obs, which are either replacement or not. meanwhile the estimated hazard levels out at high levels (non-myopic) levels off at 7%.

here’s the interesting part, the lack of observations makes it hard to determine which cost function mr zurcher was using. after speaking with zurcher, rust chooses a linear specification.

this is unfortunate coz, if zurcher is not around, how do we know which specification is correct? how do we choose?

A specific question, rust says the method is ‘efficient’. does he mean minimum variance for a given sample size? i’m not sure this is proven, altho i’m willing to believe it.

Provincial and Elections Data

i want to know the empirical relationship between govt policy (spending and taxation) and elections.

One question is: do politicians myopically increase spending and lower taxes in the lead up to an election year? in a regression setup, we can estimate the following model:

Y_it=fixed effect(i)+timedumy(t)+eps

in the philippines, election years are fixed, and therefore perfectly collinear with the year in which they are held. So can cannot seperately estimate this model:

Y_it=fixed effect(i)+timedumy(t)+ElectionYeardummies(t)+eps

as the time and electionyeardummy would be exactly collinear in the year of the elections.

in what sense is this a problem? i cant separate year shocks and elections. although, time varying factors like GDP may help us here.

there is a study in india that looks at this question. in india,  elections and the year dummies are not perfectly correlated, coz states can have elections when they want. These are called midterm elections. the fact that it is whenever they want, implies endogeneity between the timing of actual elections and the shocks that cause states to hold midterm elections.

the author (stuti) solves by using scheduled elections (vs. actually elections). scheduled elections are an IV coz its correlated with actual elections, and its uncorrelated with shocks that coincide with the election year (and induce a midterm election).

work in the philippine case doesn’t have  endogeneity, in stuti’s sense, but there is an identification problem.

i’d be more confident about this if we had enough election years. in theory, we have: ’92, 95, 98 2001 04 07 (as yet uncollected, but theoretically available), so we have 6 elections. i think this is enough to counter the criticism that we can’t separate year shocks from election effects, coz what are the chances that all the election year dummies are significantly different from other years just coz of some cyclical shock that just happens to correspond the the election cycle? very low indeed.

we need fiscal data from 84 to 2006 to use all 6 elections. We also need province-time level variation. in the philippines, its very hard to get time series of provincial level variables for 20 years. the main source of provincial data is fies, and apis. i don’t think there is data for either prior to the late 90s, or even apis and fies are available. but lets see…

Sentimental Heart

A New Year…  A great song from She&Him…

 

Cried all night ’til there was nothin’ more 
What use am I as a heap on the floor? 

Oh what can you do with a sentimental heart 

Cried all night ’til there was nothin’ more 
What use am I as a heap on the floor? 
Heaving devotion but it’s just no good 
taking it hard just like you knew I would 

O-o-old habits die hard when you got, when you got a sentimental heart 
Piece of the puzzle, you’re my missing part 
Oh what can you do with a sentimental heart? 

Cried all night ’til there was nothin’ more 
What use am i as a heap on the floor 
Heaving devotion but it’s just no good 
Taking it hard just like you knew I would 

O-o-old habits die hard 
When you got, when you got a sentimental heart 
Piece of the puzzle, I’m your missing part 
Oh what can you do with a sentimental heart? 
Oh what can you do with a sentimental heart? 
Oh what can you do with a sentimental heart? 

PDF Library

I’m taking the short break to arrange my PDF library using BibDesk. What an amazing program! Not only will it re-arrange my files, name them with a consitent naming convention, it will allow me to generate bibliographies at will, and search through my many, many PDFs…

The upside here is that i get to see what i’ve been downloading for the last three years… It’ll be good to revisit the past…

Overcooked Porkloin!

Gilmore Girls and Obama

Some talking heads were talking about how long this presidential race has been. Two years! says john oliver of The Daily Show. Another way to figure it out:

In the finale of Gilmore Girls, Rory gets a last minute job offer to cover Barrack Obama’s campaign. Back then, he was a long shot candidate, at least compared to Hillary Clinton.

The finale was in May 2007.

In the article i linked to, the comments show that i’m not the only fan who remembered where rory spend the last year and a half!

Elections! — Obama Biden wins

I have no personal stake in 2008 presidential elections. However, its my first while in the US. I expected longer lines, but i guess thats more of a problem in the city, more dense and more people who didn’t vote early.

 

 

Students waiting for their turn

 I was told it was illegal to photograph voters while voting. So i had to wait for them to clear out to take other shots of the booths…

I also got a picture of the new touch screen booths…

Very interesting. Obama won in the same day the elections were held. Man, we need computerized elections so bad…

Costly Property Rights?

Interesting economic history paper on the Philippines by Lakshmi Iyer of Harvard Business School.

It talks about how the US introduced property rights into the philippines tried to introduce a Public lands policy to encourage ownership. There reforms turned out to be expensive when completely subsidized, and too expensive for tenants to purchase these rights, so take-up was small. Its seems the lesson is that land reform works when the land is bought from the original owners on the cheap, and redistributed with as much subsidy as can be afforded, and that rights be protected even at the cost of being politically unpopular.

Seems to be ‘nigh impossible under a democratic government of a poor LDC.

Moreover, the paper had some preliminary evidence that land reform and agrarian productivity aren’t too tightly tied. Maybe another model for agricultural modernization is needed?

It’s Just Like Telling a Joke

From the O*Net database, i learned something today — oral skills presentation is the most important attribute in an economist is oral communication. We joked about this in seminar today, but in a sense its true. Once you’ve written a paper, you must explain it to people. 

This reminds me of a joke told by Conan O’Brien when he was on Leno’s show. Conan shares something he learned from Stan Laurel (Laurel and Hardy) about telling a joke: ”Always do this. Tell the audience what you’re going to do. Do it. And then tell them it has been done.”

Tell them what you are going to do! How is the paper related to other papers? Lots of people ask this question. You want to reassure people that your work is part of the larger story of scientific advance. This is also a practical thing as well: when you want to come up with new work, you look at whats been done and think of ways to extend them.

 Do it! What is the motivation? Really good papers are of the small model kind — present stylized facts and construct a model as a way to interpret the data, and then test your interpretation. Its good to have some kind of empirical regularity at the heart of your paper. There are exceptions, such as pure theory or pure empirical/econometric work.

Tell the its been done! What is the intuitive interpretation of your model? Relate your model to the motivation you were talking about earlier, and to the results of the papers that inspired you that you copied from.