Archive for February, 2011

Indian Banks should nudge to improve pensions planning for employees

February 10, 2011

RBI in this notice points  that there has been a change in Payment of Gratuity Act 1972. Under the act, people are eligible for pensions. However, as it happens in most pension cases, people did not choose to opt for the pensions. I am guessing a large% did not choose the pension plan just based on previous such studies.

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Getting fit – the Behavioral economics way or Chinese way?

February 10, 2011

This Boston newspaper article highlighted a new idea to improve fitness levels – Gym-pact. This is the second variant of the original idea based on behavioral economics.

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Learning economics by shovelling snow off the roof

February 9, 2011

Seth Gitter asks this question on his blog- Why Greg Mankiw shovels snow off of his roof?

Greg Mankiw is the author of one of the leading intro to econ text books, and like any intro to econ book he discussed comparative advantage. In short comparative advantage shows you can be better off if you do what you’re best at. So instead of shoveling snow off of his roof, Mankiw should spend an extra hour consulting and make $500 and pay someone $100 to shovel snow off of his roof. Yet Mankiw last week was up on his roof shoveling snow, despite his worries he might fall off an injure himself (he wasn’t worried about dieing as much since he had life and not disability insurance)

Few people hire someone to do everything for them, most people cook their own food, wash their own clothes, and spend time with their children even though many people could earn more working extra. The basic theory doesn’t include a few things.

1. People on salary might not be able to earn a few extra dollars to make trade offs.
2. After a certain number of hours working is less fun, even things like being an economist. We do get utility from cooking our own dinner, so at some point we might like to do things ourselves
3. Transaction cost are high, I could hire someone to do my laundry, but either I would have to take it somewhere, a pain, or pay more to get it picked up and delivered.

But I think Mankiw still would have not been influenced by 1-3. In short, I think Mankiw just couldn’t find anyone to hire. He was worried about his roof collapsing and in the snow storm most crews were over booked (although they should probably raise their price then) or might not get to the Mankiw residence in time.

Mankiw responds and agrees to Gitter. And adds it is again snowing in Boston and asks:

Anyone know of any job openings for middle-aged economists in warm climates?  Maui would be nice.

Superb stuff.

UK links

February 9, 2011
  • Robert Peston points UK Chancellor has implemented a higher bank levy from 2011 itself.

    Earlier it was at 0.5% of bank’s wholesale finance amount for 2011  and 0.75% from 2012 onwards. It has been made 0.75% from 2011 itself leading to a rise in total levy by GBP 150 mn to GBP 473 mn.

  • Stephanie Flanders points to BoE dilemma. If BoE raises rates tomorrow, would it signal strong economy and stronger pound? Not at all as economy is still weak. So what does it do?

Microfinance firms seen as Ponzi schemes?

February 9, 2011

IFMR blog points to some furious comments on CGDEV blog where people have said microfinance firms are like Ponzi schemes. IFMR blog defends saying nothing of this sort is happening.

What a time for microfinance firms. From becoming an idea worthy of Nobel peace prize and tons of accolades to being seen as a ponzi scheme even by some. Microfinance sector has lost a lot of face and needs serious brand rebuilding.

This blog always thought the whole idea was overhyped and glamorised a bit too much. THis is how development economics has been for so many years. You pick one idea, hype it and stretch it to an extreme. And then comes the happy realisation that all was not true. Development and getting out pf poverty is much more complex than thought to be….

Celebrating 75 years of Keynes’ General Theory

February 9, 2011

In Feb-11, Keynes published The General Theory of Employment, Interest and Money.

Matthew Luzzetti and Lee Ohanian have written a paper saying the book was all about being in the right place at the right time. They present a summary in voxeu. They say why General Theory became popular in 1930s and then declined in 1980s.  

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South Africa faces similar poor public service issues

February 9, 2011

A followup to the post on PAL opening office in SAfrica (SA).

I read this superb speech from Trevor Manuel welcoming JPAL in SA. Manuel is  Minister in the Presidency in charge of the National Planning Commission. Some key points:

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What is the Cure of India’s Inflation Problem?

February 9, 2011

This is the title of my interview at daulutguru.com (though the interview covers many other topics). Daulutguru is a web-based forum for finance and economics students.

Also check the list of previous interviewees. Some interesting names there :-)

Will roads alone help in increasing productivity in rural areas?

February 8, 2011

Many research says rural roads are critical in turning the fortunes of the rural economy. So whether you are looking at agriculture or rural migration to urban, roads play a useful role.

A group of World Bank economists report in this paper that constructing a road alone does not help in rural areas. Transportation costs and economics matters as well. Without a subsidized motorised transport people still use either cycle or walk:

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J-PAL opens office in South Africa

February 8, 2011

Jameel Poverty Action Lab (J-PAL) opened its 4th office in South Africa.  It will be called its Africa centre. Surprising that it opened its Africa centre so late as bulk of the studies come from Africa.

There was a conference marking the operning of the centre. Lessons from studies so far based in Africa were discussed. There is an interesting Conference Book covering studies in Africa. Then there are presentations from J-PAL researchers.

PPTs etc are pretty good and worth a read.

Impact of tax on soft drinks/sugar-sweetened beverages

February 8, 2011

In this superb short note, Leslie McGranahan and Diane Whitmore Schanzenbach assess the impact of taxation on soft drinks/ sugar-sweetened beverages (Pepsi, coke  etc).

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Raghu Rajan asks why did economists not spot the crisis?

February 7, 2011

In his blogpost, Raghu Rajan reflects why economists did not spot the crisis.

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Dismal state of managment research in India

February 7, 2011

Economic Research in India has company. .

Nirmalya Kumar of LBS in this article points state of management research is even in a worse shape:

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Michael Lewis reviews Ireland’s economic situation

February 7, 2011

Michael Lewis (of Liar Poker fame) writes this superb account (as always) of Ireland’s economic situation.

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Was the financial crisis avoidable?

February 4, 2011

Economists debate this issue in this NYT forum.

Terror at the Taj: Harvard Case Study

February 4, 2011

It was in the news lately. I have not been able to locate the case study till now (they say not yet public). But there is a summary of the findings here.

It is prepared by Rohit Deshpandé of HBS. He flips the case saying why people demonstrated such bravery without having any training for the same:

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Comparing IIP growth with ASI growth

February 4, 2011

Office of Economic Adviser to Commerce Ministry or the  agency that releases WPI inflation and core industry data, has updated its website. Do check it out.  It has put up some interesting studies/working papers as well.

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From Community Banker to Central Banker

February 4, 2011

Fed Governor, Elizabeth Duke in this speech talks about her journey from being a community banker to becoming a governor at Fed.

Interestingly, she wanted to be an actress but too up banking to manage her acting dream.

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National Infant Mortality Rate at 50

February 4, 2011

The latest data (2009) shows India’s Infant Mortality Rate (IMR) has come down from 53 in 2008 to 50 in 2009. It has declined from 60 in 2003 to 50 in 2009.

There is huge variance in state-wise numbers.

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How Fed’s Asset Purchases helped?

February 3, 2011

In this short note, FRBSF economists say the Fed’s asset purchases were very useful.

They summarise their paper on the same topic:

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