Hans Rosling debunks myths about the so-called "developing world" using extraordinary animation software developed by his Gapminder Foundation.
In this lecture, with interesting images and communicative visualizations, he explores the techniques in order to show the story in the data. It's worth your time watching it because of two reasons - learning something new and seeing how to make an impressive presentation.
You can use some of the tools at his Gapminder site.
Wednesday, June 20, 2007
Tuesday, June 19, 2007
Will China Really Overtake America?
Here is a story from Financial Times.
Interestingly, Martin Wolf, FT's chief columnist, points out that if China were to achieve the GDP-per-capita levels of Portugal – the poorest country in western Europe – its overall GDP will be larger than that of the US and the European Union combined.
Interestingly, Martin Wolf, FT's chief columnist, points out that if China were to achieve the GDP-per-capita levels of Portugal – the poorest country in western Europe – its overall GDP will be larger than that of the US and the European Union combined.
Infamous last words
I served as an interpreter for an EMBA class named Strategic Management of Technological Innovation for three straight days - from June 14th to June 16th. Thanks to George Farris, our eloquent and humorous lecturer, we learned many serious concepts and ideas that can be used to formalize our strategic thinking in the decision making processes. But what I want to mention here are some amusing anecdotes from his lecture - some infamous last words made by some notable geniuses but they ALL turned out to be WRONG！
"I think there is a world market for maybe five computers." Thomas Watson, chairman of IBM, 1943.
"This telephone' has too many shortcomings to be seriously considered as a means of communication The device is inherently of no value to us," Western Union internal memo, 1876.
"The concept is interesting and well-formed, but in order to earn better than a C, the idea must be feasible." A Yale University management professor in response to Fred Smith's paper proposing reliable overnight delivery service. (Smith went on to found Federal Express.)
"Heavier-than-air flying machines are impossible." Lord Kelvin, president, Royal Society, 1895.
"Stocks have reached what looks like a permanently high plateau." Irving Fisher, professor of economics, Yale University, 1929.
"There is no reason anyone would want a computer in their home." Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.
"Everything that can be invented has been invented." Charles H. Duell, commissioner, U.S. Office of Patents, 1899.
"I think there is a world market for maybe five computers." Thomas Watson, chairman of IBM, 1943.
"This telephone' has too many shortcomings to be seriously considered as a means of communication The device is inherently of no value to us," Western Union internal memo, 1876.
"The concept is interesting and well-formed, but in order to earn better than a C, the idea must be feasible." A Yale University management professor in response to Fred Smith's paper proposing reliable overnight delivery service. (Smith went on to found Federal Express.)
"Heavier-than-air flying machines are impossible." Lord Kelvin, president, Royal Society, 1895.
"Stocks have reached what looks like a permanently high plateau." Irving Fisher, professor of economics, Yale University, 1929.
"There is no reason anyone would want a computer in their home." Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.
"Everything that can be invented has been invented." Charles H. Duell, commissioner, U.S. Office of Patents, 1899.
The Making of an Economist Redux
David Colander has published a new version of his critique on graduate education in economics. As he himself emphasizes, his critique is quite different from his critique of 20 years ago. Here are some interesting findings, some of which are quite different from his previous study.
Again, through survey and interviews with graduate students at seven top-ranking graduate economics programs, he finds out that students in different schools, albeit have distinct views on economics, world economy, and the profession, their perceptions are converging. The breakdown by schools shows less difference among schools in this study compared with the previous. Part of the reason is the definition of mainstream economics today. Since neoclassical economics has incorporated many elements that previously were considered heterodox in developments in fields such as behavioral economics and evolutionary game theory, economic opinions at different schools could have exhibit some extent of consistency. Further more, economics today has become more consciously empirical than it was, and the mathematics that it uses is more likely to be applied mathematics rather than pure mathematics.
Another interesting result is that different schools can shape different political orientation. Princeton brings in conservative students and turns them into liberals, while Chicago brings in liberal students and turns them into conservatives. By the way, The response to what skills put students on the fast track also differed by schools. Stanford students see problem solving as most important, MIT students think of empirical research as most important, Princeton students regard excellence in mathematics as most important, and Columbia students see having a thorough knowledge of the economy as being most important.
Finally, he makes futher suggestions on economics education, particularly on core courses. Eliminating macro from the core would free up resources in the core, which could be advantageously used in a number of different ways, such as in another econometrics and statistics course. Another potential problem is that the core focuses more on depth, not breadth. Students have little sense of background to the debates or the techniques and do not understand why they developed, and what use they are. It seems reasonable that the core courses should focus on creativity and economic reasoning and not technique.
Again, through survey and interviews with graduate students at seven top-ranking graduate economics programs, he finds out that students in different schools, albeit have distinct views on economics, world economy, and the profession, their perceptions are converging. The breakdown by schools shows less difference among schools in this study compared with the previous. Part of the reason is the definition of mainstream economics today. Since neoclassical economics has incorporated many elements that previously were considered heterodox in developments in fields such as behavioral economics and evolutionary game theory, economic opinions at different schools could have exhibit some extent of consistency. Further more, economics today has become more consciously empirical than it was, and the mathematics that it uses is more likely to be applied mathematics rather than pure mathematics.
Another interesting result is that different schools can shape different political orientation. Princeton brings in conservative students and turns them into liberals, while Chicago brings in liberal students and turns them into conservatives. By the way, The response to what skills put students on the fast track also differed by schools. Stanford students see problem solving as most important, MIT students think of empirical research as most important, Princeton students regard excellence in mathematics as most important, and Columbia students see having a thorough knowledge of the economy as being most important.
Finally, he makes futher suggestions on economics education, particularly on core courses. Eliminating macro from the core would free up resources in the core, which could be advantageously used in a number of different ways, such as in another econometrics and statistics course. Another potential problem is that the core focuses more on depth, not breadth. Students have little sense of background to the debates or the techniques and do not understand why they developed, and what use they are. It seems reasonable that the core courses should focus on creativity and economic reasoning and not technique.
Sunday, June 10, 2007
Good Old Days
Deaths, taxes, competition, weakness in public system, and faculty split are threatening the Department of Economics at UCLA. Almost half of its senior economists are leaving or about to leave.
"It's a long way from UCLA's former glory, when its applied microeconomics earned the joke that UCLA stood for the University of Chicago at Los Angeles. Professors whose names contributed much to UCLA's luster include Armen Alchian, Robert Clower, Harold Demsetz, Arnold Harberger, Jack Hirschleifer, Michael Intriligator, Axel Leijonhufvud, Jacob Marschak and Lloyd Shapley. "
"UCLA is a mess...". Will Berkeley be the next one, since its department, in particular, is besieged by offers as well?
Here is the whole story.
"It's a long way from UCLA's former glory, when its applied microeconomics earned the joke that UCLA stood for the University of Chicago at Los Angeles. Professors whose names contributed much to UCLA's luster include Armen Alchian, Robert Clower, Harold Demsetz, Arnold Harberger, Jack Hirschleifer, Michael Intriligator, Axel Leijonhufvud, Jacob Marschak and Lloyd Shapley. "
"UCLA is a mess...". Will Berkeley be the next one, since its department, in particular, is besieged by offers as well?
Here is the whole story.
Saturday, June 9, 2007
The Source of Innovation
Eric von Hippel, a prestigeous professor at MIT Sloan School of Management, has focused his research on developing strategies to identify new ideas and innovations systematically and quickly. He coined the term of "lead users" and pioneered the thinking of user innovation, as opposed to the conventional view of manufacturer-centric innovation in his well known book, The Source of Innovation. Another book from him, named Democratizing Innovation, has documented how the internet and improvements in computing have changed the innovation process. Now users have much more power.
Since I have neither read the books entirely nor engaged in exploring this as far as professor Hippel and his students do, some of my doubts below are quite lay.
Well, it seems to me that "users" can be the (or may be the only) source of innovation, particularlly in the pre-manufacturing stage in human history. Although some of his researches have shown to us with convincing evidence that the innovative ideas originate from the experiences of users, intuition still tells me that innovative ideas are quite possibly coming from those people with professional knowledge who can benefit from commercializing those ideas. Manufacturers can think as creatively as users, sometimes they themselves are users. Since we can not easily compare the magnitude of different kinds of incentives confronted by users and manufacturers, the real source of innovative process is still hard to reveal.
If we can dichotomize innovation into radical and incremental innovation, then my proposition would be like this: users may serve as a major source of incremental innovation while professional manufacturers can mostly bring forward radical changes.
A final point. As to whether the innovation process is manufacturer centered or user centered, it likes the old debate of whether demand creates supply or supply has its own demand.
Since I have neither read the books entirely nor engaged in exploring this as far as professor Hippel and his students do, some of my doubts below are quite lay.
Well, it seems to me that "users" can be the (or may be the only) source of innovation, particularlly in the pre-manufacturing stage in human history. Although some of his researches have shown to us with convincing evidence that the innovative ideas originate from the experiences of users, intuition still tells me that innovative ideas are quite possibly coming from those people with professional knowledge who can benefit from commercializing those ideas. Manufacturers can think as creatively as users, sometimes they themselves are users. Since we can not easily compare the magnitude of different kinds of incentives confronted by users and manufacturers, the real source of innovative process is still hard to reveal.
If we can dichotomize innovation into radical and incremental innovation, then my proposition would be like this: users may serve as a major source of incremental innovation while professional manufacturers can mostly bring forward radical changes.
A final point. As to whether the innovation process is manufacturer centered or user centered, it likes the old debate of whether demand creates supply or supply has its own demand.
Monday, June 4, 2007
Quote of the Day
Jacob Viner is one of the greatest thinkers in the Chicago school economics. He once talked about the relationship between interests and training in pursuing a professional career, and it went like this,
"...men are not narrow in their intellectual interests by nature; it takes special and rigorous training to accomplish that end.."
-- Jacob Viner, "A Modest Proposal for Some Stress on Scholarship in Graduate Training" (PDF)
By the way, as you may already know, Viner had a reputation as being one of the toughest professors at Chicago, and Milton Friedman was a student of Viner.
"...men are not narrow in their intellectual interests by nature; it takes special and rigorous training to accomplish that end.."
-- Jacob Viner, "A Modest Proposal for Some Stress on Scholarship in Graduate Training" (PDF)
By the way, as you may already know, Viner had a reputation as being one of the toughest professors at Chicago, and Milton Friedman was a student of Viner.
The Making of an Economist
David Colander's The Making of an Economist: Redux was recently published by Princeton University Press, which may serve as a version 2.0 of his 1987 paper in the Journal of Economic Perspectives.
In The Making of an Economist version 1.0, Colander and his co-author Klamer provided some empirical data from the graduate students at six top-ranking economics department, which allow us better to understand the process that shapes economists. Some results are still worthy of mentioning.
Specifically, there was a significant variety of opinions among graduate economics students and among the schools in the survey, and there definitely seemed to be a Chicago school of economics. While Chicago definitely constituted a specific school, Harvard students appeared to be most skeptical, and Stanford students place themselves in the spectrum of opinions between Chicago and MIT students.
There were also tensions between the emphasis on techniques and the desire to do policy-oriented work. Techniques were put far more emphasis on than the understanding of the economy or economics literature.
This paper partly supported the views of critical economists such as Wassily Leontief and John Kenneth Galbraith, "Departments of economics are graduating a generation of idiots savants, brilliant at esoteric mathematics yet innocent of actual economic life."
In The Making of an Economist version 1.0, Colander and his co-author Klamer provided some empirical data from the graduate students at six top-ranking economics department, which allow us better to understand the process that shapes economists. Some results are still worthy of mentioning.
Specifically, there was a significant variety of opinions among graduate economics students and among the schools in the survey, and there definitely seemed to be a Chicago school of economics. While Chicago definitely constituted a specific school, Harvard students appeared to be most skeptical, and Stanford students place themselves in the spectrum of opinions between Chicago and MIT students.
There were also tensions between the emphasis on techniques and the desire to do policy-oriented work. Techniques were put far more emphasis on than the understanding of the economy or economics literature.
This paper partly supported the views of critical economists such as Wassily Leontief and John Kenneth Galbraith, "Departments of economics are graduating a generation of idiots savants, brilliant at esoteric mathematics yet innocent of actual economic life."
Friday, June 1, 2007
Orthodox Economics = Mafia?
I have posted several articles on some criticism of orthodox economics, such as Mark Blaug's Ugly Currents in Modern Economics, Lester Thurow's The Strengths and Weaknesses of Economists and The Rhetoric of Economics by D. N. McCloskey. Even the new president of the American Economic Association, Nobel medallist George Akerlof, gave what was in many senses a radical presidential address this year, attacking some of the discipline's most basic assumptions about what drives human economic behavior.
The latest debate over the above issue is that, whether the neoclassical economics is becoming more and more like a mafia? A controversial article from The Nation says yes, because heterodox and non-neoclassical approaches are unduly ignored.
You can read more comments on this ongoing debates. And as far as I know, the world's largest association of heterodox economists will meet today in Salt Lake City(link).
The latest debate over the above issue is that, whether the neoclassical economics is becoming more and more like a mafia? A controversial article from The Nation says yes, because heterodox and non-neoclassical approaches are unduly ignored.
You can read more comments on this ongoing debates. And as far as I know, the world's largest association of heterodox economists will meet today in Salt Lake City(link).
If We Knew How to Do That, We Would Not Be Poor
Just when I got interests in a book review written by Eric Maskin the other day, many more are out there talking about Samuel Bowles's masterpiece.
"..Like the overnight train that left me in an empty field some distance from the settlement, the process of economic development has for the most part bypassed the two hundred or so families that make up the village of Palanpur. They have remained poor, even by Indian standards: less than a third of the adults are literate, and most have endured the loss of a child to malnutrition or to illnesses that are long forgotten in other parts of the world. But for the occasional wristwatch, bicycle, or irrigation pump, Palanpur appears to be a timeless backwater, untouched by India’s cutting edge software industry and booming agricultural regions.
Seeking to understand why, I approached a sharecropper and his three daughters weeding a small plot. The conversation eventually turned to the fact that Palanpur farmers sow their winter crops several weeks after the date at which yields would be maximized. The farmers do not doubt that earlier planting would give them larger harvests, but no one the farmer explained, is willing to be the first to plant, as the seeds on any lone plot would be quickly eaten by birds. I asked if a large group of farmers, perhaps relatives, had ever agreed to sow earlier, all planting on the same day to minimize losses. "If we knew how to do that," he said, looking up from his hoe at me, "we would not be poor."..."
-- Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution
"..Like the overnight train that left me in an empty field some distance from the settlement, the process of economic development has for the most part bypassed the two hundred or so families that make up the village of Palanpur. They have remained poor, even by Indian standards: less than a third of the adults are literate, and most have endured the loss of a child to malnutrition or to illnesses that are long forgotten in other parts of the world. But for the occasional wristwatch, bicycle, or irrigation pump, Palanpur appears to be a timeless backwater, untouched by India’s cutting edge software industry and booming agricultural regions.
Seeking to understand why, I approached a sharecropper and his three daughters weeding a small plot. The conversation eventually turned to the fact that Palanpur farmers sow their winter crops several weeks after the date at which yields would be maximized. The farmers do not doubt that earlier planting would give them larger harvests, but no one the farmer explained, is willing to be the first to plant, as the seeds on any lone plot would be quickly eaten by birds. I asked if a large group of farmers, perhaps relatives, had ever agreed to sow earlier, all planting on the same day to minimize losses. "If we knew how to do that," he said, looking up from his hoe at me, "we would not be poor."..."
-- Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution
Monday, May 28, 2007
Widening Marriage Gap
One study pointed out that among the elite (excluding film stars) in the United States, only 4% of the children of mothers with college degrees are born out of wedlock. And the divorce rate among college-educated women has plummeted. Of those who first tied the knot between 1975 and 1979, 29% were divorced within ten years. Among those who first married between 1990 and 1994, only 16.5% were.
At the bottom of the education scale, the picture is reversed. Among high-school dropouts, the divorce rate rose from 38% for those who first married in 1975-79 to 46% for those who first married in 1990-94. Among those with a high school diploma but no college, it rose from 35% to 38%. And these figures are only part of the story. Many mothers avoid divorce by never marrying in the first place. The out-of-wedlock birth rate among women who drop out of high school is 15%. Among African-Americans, it is a staggering 67%.
Another study found that a college professor's kids hear an average of 2,150 words per hour in the first years of life. Working-class children hear 1,250 and those in welfare families only 620.
From Mankiw's Blog and the Economist.
At the bottom of the education scale, the picture is reversed. Among high-school dropouts, the divorce rate rose from 38% for those who first married in 1975-79 to 46% for those who first married in 1990-94. Among those with a high school diploma but no college, it rose from 35% to 38%. And these figures are only part of the story. Many mothers avoid divorce by never marrying in the first place. The out-of-wedlock birth rate among women who drop out of high school is 15%. Among African-Americans, it is a staggering 67%.
Another study found that a college professor's kids hear an average of 2,150 words per hour in the first years of life. Working-class children hear 1,250 and those in welfare families only 620.
From Mankiw's Blog and the Economist.
Jimmy Wales and Wikipedia
Last Thursday, Stephen Colbert interviewed Wikipedia founder Jimmy Wales on his "I-report-I-decide" Colbert Report. Wikipedia is dedicated to spread knowledge freely to every corner of the world, and at the mean time keep and strengthen the internet neutrality.
On TED talk last year, Jimmy Wales also spoke on his originating ideas and how he made wikipedia a reality.
Undoubtedly, wikipedia has become my first choice when I want to get more information on a specific person, a particular event, a technical term or any key words I hope to acquire a relatively deep understanding.
p.s. For more video/audio clips on Jimmy Wales, please drag down the side bar to the bottom of his wiki page.
On TED talk last year, Jimmy Wales also spoke on his originating ideas and how he made wikipedia a reality.
Undoubtedly, wikipedia has become my first choice when I want to get more information on a specific person, a particular event, a technical term or any key words I hope to acquire a relatively deep understanding.
p.s. For more video/audio clips on Jimmy Wales, please drag down the side bar to the bottom of his wiki page.
Behavior, Institution and Evolution
Accidentally, a book review published in Science magazine in Nov. 2004 drew my attention the other day, not only because the reviewer - Eric Maskin- is among the most prestigious mechanism design theorists in mainstream economics, but also because of the title - "Markets and Where They Came From" - is quite shining.
The book, Microeconomics: Behavior, Institution and Evolution, written by Samuel Bowles stood out for several reasons.
First, according to Maskin, "not only did the author convey the elements of the conventional theory of capitalist economics, he offered a wealth of cutting-edge material as well".
Second, in this book, standard behavioral assumptions of orthodox economic theory was challenged through modifications with evolutionary game theoretic dynamics. While, "abandoning the self-interest axiom need not lead to complete theoretical permissiveness". Through experiments of "public-good" games, altruism was asserted as an important ingredient in the working of modern economics.
Third, altruistic preferences were not only needed for understanding modern economic behavior, they were, even more important in the creation of the foremost institution of private property. How did Bowles make his explanation reasonable? Well, a simple version of "Sharer-Punisher-Grabber" game was deployed in explaining this evolution process. Hobbesian equilibrium(only grabbers and sharers were left) and Rousseausian equilibrium(the grabbers vanished) were the possible configurations, depending on the stating points. But since the latter one was not able to withstand "mutations", therefore it tended to be less stable. Then came about the fourth type of people, "bourgeois", who behave differently according to whether they controlled the prize (or the site). The transition followed the path from Rousseausian equilibrium to Bourgeois equilibrium, rather than the other way. Why? That's because altruistic behavior could stabilize the Rousseausian equilibrium and thus make the transition possible.
The book, Microeconomics: Behavior, Institution and Evolution, written by Samuel Bowles stood out for several reasons.
First, according to Maskin, "not only did the author convey the elements of the conventional theory of capitalist economics, he offered a wealth of cutting-edge material as well".
Second, in this book, standard behavioral assumptions of orthodox economic theory was challenged through modifications with evolutionary game theoretic dynamics. While, "abandoning the self-interest axiom need not lead to complete theoretical permissiveness". Through experiments of "public-good" games, altruism was asserted as an important ingredient in the working of modern economics.
Third, altruistic preferences were not only needed for understanding modern economic behavior, they were, even more important in the creation of the foremost institution of private property. How did Bowles make his explanation reasonable? Well, a simple version of "Sharer-Punisher-Grabber" game was deployed in explaining this evolution process. Hobbesian equilibrium(only grabbers and sharers were left) and Rousseausian equilibrium(the grabbers vanished) were the possible configurations, depending on the stating points. But since the latter one was not able to withstand "mutations", therefore it tended to be less stable. Then came about the fourth type of people, "bourgeois", who behave differently according to whether they controlled the prize (or the site). The transition followed the path from Rousseausian equilibrium to Bourgeois equilibrium, rather than the other way. Why? That's because altruistic behavior could stabilize the Rousseausian equilibrium and thus make the transition possible.
Friday, May 25, 2007
Mankiw's advice to Bernanke
It's just a year old story. Former Chairman of the President's Council of Economic Advisers, Dr. Greg Mankiw had five advices to the new Fed chairman Ben Bernake after Alan Greenspan had stepped down.
1. Since Alan Greenspan had successfully challenged the widespread consensus - which was made clear by Kydland and Prescott - that "monetary policy set by discretion is tempted to be time inconsistent, leading to more inflation than is optimal". Which position would Mr. Bernanke believe in?
1. Since Alan Greenspan had successfully challenged the widespread consensus - which was made clear by Kydland and Prescott - that "monetary policy set by discretion is tempted to be time inconsistent, leading to more inflation than is optimal". Which position would Mr. Bernanke believe in?
2. Related to the above question, Mankiw expressed his opinion on Bernanke's persistent advocacy on "inflation targeting" , which might cost policy flexibility. "...Greenspan never announced a commitment to any particular target inflation rate because he wanted to maintain maximal flexibility..."
3. Bernake should be prepared to talk not only about monetary policy, but also about issues related to financial stability in that "Greenspan has not been shy about expressing opinions on a broad range of economic issues". While "you should also stay away from issues that have a trifecta of problems..."
4. Mankiw suggested him become as boring a public figure as possible. "...if you, as the new Fed chairman, accept a lower public profile than Greenspan, the true nature of the Fed could be more widely appreciated, and that would be a step in the right direction..."
5. Honestly, "luck plays a large role in how history judges central bankers".
Well, the last point sometimes may stochastically dominant the other four.
Wednesday, May 23, 2007
Smartest Books
More than two years ago, Fortune offered an ultimate reading list for us. On that list, 75 books were regarded as the smartest books that can teach you everything you really need to know about business. In retrospect, this list is still worthy of notice.
But what if we have to make a change on that list, say, add another 25 to make it just 100 smartest readings, what's your advice?
But what if we have to make a change on that list, say, add another 25 to make it just 100 smartest readings, what's your advice?
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