Friday Afternoon Delight

I just got out of a paper seminar at the Economics department. I've been attending this friday afternoon seminar eversince I started in the masters program. It's fun and entertaining as you get to see professors disagree on a particular approach to an economic problem. Sometimes discussions can get heated. It's more fun when the paper presentor is a job applicant and hoping to make a good impression. The questions are tough and from the looks of it, by the time the professors are done with their questions there is really no telling if the job hopeful did well or flat out messed it up.

It's not only with their verbal assault that the professors do the most damage. Sometimes during the talk you can observe their faces do all sorts of contortions to communicate their disagreement with the statement just made. Eye rolling and occasional head scratching are favorites for this crowd. They could give Jim Carrey a run for his money. I pity the presentor as he searches for a symphatetic face in the room. Sometimes I like to practice what professors do and attempt to produce lines on my forehead matched with a squint of the eyes as a reaction to a seemingly obvious point the job applicant is making :) I do this knowing this might happen to me in the not so distant future :)

100 Too Many?

A recent article published in the Philippine Daily Inquirer quotes a study funded by the Asian Development Bank. It seems that the main finding of the study is that there are too many universities in the Philippines! They put the blame on the Commission on Higher Education (CHED) for allowing more and more universities and colleges to operate. Now the main recommendation is that the government should aim to reduce the number of universities since this "oversupply" they claim is diluting the quality of higher education. I could not disagree more.

First of all, if they claim CHED screwed up the accreditation of the universities what is the assurance that they are going to do a better job cherry picking which ones to remain in operation? Second, are these so-called experts telling us that they know better than what the markets set as equilibrium number of schools and degree programs? Are they telling parents and students that they are in a better position to decide which schools should be patronized? Third, how is it that more players in the higher education business (yes it is a business) result in lower quality? Is it not competition that spur greater improvement? The quality of philippine telecomminications only improved after they deregulated entry to the industry.

I know that some of these schools have a long way to go to deserve the honor of being called colleges and universities, but they do meet the demand from the public. If they are of good quality, the education market will reward them by increased enrollment and higher revenues. If they are the so-called 'diploma mills' eventually they will fade away as graduates realize that the value of education from these type of schools are not worth as much in the labor market. Markets are not perfect, but I'd rather place my bets on it than a bureaucrat.

Tipping Point

Been to a couple of restaurants with my mom while she is visiting. Coming from the Philippines where tipping is not really part of things, she still had to adjust to seeing me leave money for the server. In the Philippines it's not just done (well it is, but not in a mandatory "you have to leave 15-18%" way). That's because servers there do not get the bulk of their income from tips. Not like here in the US where the basic wage rate for servers are low, such that they have to rely on tips a lot.

There is a rich literature on the economics of tipping. Tipping is seen as providing incentives for the server to provide better service. He/She works for the tip by making sure the customer is satisfied with the food, drinks refilled every now and then, and asking from time to time if they are doing fine (kinda annoying if you are in the middle of swallowing a big morsel of steak :) ). Restaurant managers use tips too to motivate employees, they are also able to track down performance of servers, and measure customer satisfaction with the level of service. The economics literature has some evidence that tips are higher when the server is female, when drinks are consumed, number of items served is higher, and when the dining party is bigger.

You would expect that restaurants with servers that rely a lot on tips would have better service compared to those restaurants where no tipping is allowed. But this is not necessarily true, especially in the case of Philippine restaurants. I've had some of my best dining experience there without the explicit incentives from tips. Now that deserves a tip.

One-Way Ticket

While arranging my mom's itenerary for her visit, I discovered that doing a lot of one-way trips using discount airlines will give me the lowest price/trip combination. The interesting thing about this is when you do a roundtrip itenerary using a discount airline the price is even higher. Why is that? It used to be that one-way fares from big airlines (Northwest, United, USAir, Delta) are priced higher. This makes sense if they view one-way passengers as those with inelastic demand, that is those who don't react to higher prices as much. Makes sense if the passengers are really desperate to fly.

Discount airlines though view one-way passengers differently. They price lower to this class of passengers because they view them to be price sensitive. In fact Southwest's default option is for one-way.

So for traditional airlines, a bundled service is more cheaper, while for nimbler new players disaggregated flights are more cost effective. Interesting. More on this later.

Third Shift

I like working after hours when everyone in the office is gone. There's less distraction in terms of sounds in the hallway of people walking or just genereally sounds that people in the office make. If there was a ghost here at the department...it hasn't introduced itself yet. Heck, we could have been friends by now :)

My meeting with my committee turned out very well. We've basically agreed on what I would be doing and what's going to be included in the "thing." No more debates or questions about that. Now let's see if I can deliver.

The Father of Spam

Nope, I’m not going to talk about some unfortunate hog :) I’m referring to the postal service. After three weeks of being away, it took me almost an hour to sort through and shred the junk mail that accumulated in my postal box. You know why we receive so much junk mail? It’s because the US Postal Service is running a monopoly. A monopoly so extensive they even own your own postal box such that it is a federal offense to put a party invitation in your neighbor’s postal box, that’s right, they control what gets into your mailbox. They make money by encouraging firms to send you junk mail and they are happy to deliver it. Remember the do not mail initiative? Yeah, that idea went very far. If it is so irritating to get unwanted phone calls why not unwanted mail?

How to solve this? We have to take ownership of our mailbox. Think of your email box, you can put measures to prevent junk mail, that’s because you exercise rights over it. Imagine if FedEx and UPS start leaving junk parcels and packages on your front porch. They will be in a world of lawsuits. It’s because you own your porch. If we own our mailboxes we can dictate what goes into it. We can sell space in it. Want to send me junk mail? You pay.

Epiphany

Driving back to my apartment from my office at the Department late in the afternoon, I used the same campus streets I have driven on many times before. I took the campus perimeter road, passed by the University President house like I have done so many late evenings. The two towers of dormitory rooms cast a shadow on the road, the cluster of student housing to my right is visible with the absence of leaves from the trees the are lined up in front of it. I took the left turn like I always do at the bottom of the hill, and steered the car towards the short strip of downtown. Then it hit me. I don't want to be here in August and for that matter, the rest of the next Fall semester. As good as this place has been to me, it is time. Time to take the show elsewhere. I reached for my sunglasses from the passenger side seat as the sunlight is again on my face, at this street it is always like this, this time of the year.

Getting Dumber

I just got the results of last semester's teaching evaluations. One of the weird questions in this evaluation is one where the students are asked if the instructor was knowledgeable about the subject being taught. If they answered no, wouldn't that be a credit to the instructor since they didn't know about the subject matter when the semester started?

I was looking at my evaluations for the past 5 semesters and I pretty much score perfect on this question with the combined agree and strongly agree responses adding up to a 100% every semester. That was before last semester. As it turns out I got dumber. 7.2% of respondents disagreed that I was knowledgeable about the subject I was teaching :)

The thing with evaluations is it captures only both ends of the distribution, those that were not very satisfied and those that were very satisfied with your performance. Because only these students really do care to get their opinions recorded. Still, I would like to go back to being 100% knowledgeable :)

Love Actually

Professor Gary Becker of the University of Chicago pioneered the use of economics to analyze social interaction, his papers on the Theory of Marriage are classics and should be read not only by economics students but by other social sciences students as well. While in the middle of my long drive back, I was thinking about the economics of petty lover's quarrel by couples (i.e., toilet seat issues, driving styles, looking at other ladies, etc.). I heard a phrase before and it went like "familiarity breeds contempt" and this is supposed to explain how couples drift apart after being together for some time (Pitt-Aniston?).

You would observe and expect that newly "coupled" couples would rarely have these petty quarrels because they are either putting their best foot forward or the present value of the pleasure of their future together is high compared to the cost of letting small things pass at the early stage (i.e. women: "i can still change him").

Yet you also see old couples who've been together a while yet have not drifted apart and seem to have grown into each other (80 year olds that still hold hands). I would predict they don't have petty quarells anymore. If they do, it would usually result in irreconcilable differences and breakup of their union. Differences might have been too big for their common interests to cover and for the fight to start in the first place.

Now I come to a perverse prediction. I predict that couples with a high degree of caring and love for each other actually have more of these so-called petty quarrels yet they remain together. The reason is love (call it the unexplainable presence of a mathematical argument in a person's utility function that's linked to the welfare of another person). Love lowers the cost of making up, because you care about the person, you can afford to almost get at each other's throat yet meet again in the middle because the cost of renegotiation of diverging interests is low.

Dog and Pony Show

I had a good round of job interviews at the annual conference. I have not seen that many economists in one place. Imagine if the ground opened up and swallowed them all (a good start if you will ask other social scientists). A negative supply shock! that's sure to increase surviving economists salaries for years before supply catches up again.

I wonder how much information is really exchanged during a face to face interview. Both parties to the show are basically well informed of the background of each other. It is more likely that potential employers are just making sure if you do really have full set of teeth, able to tie your shoes, and dress yourself in the morning and able to follow instructions and conference maps on your way to the interview room. :)

The interesting part really are the information that each party is not volunteering details for. I'm pretty loose at interviews....heck what's the worse thing that can happen? them not hiring me? There are other important things to worry about right now, like finishing up a couple of conference papers :)