Archive for September 18th, 2012

Inflatable Dams…a possible solution for overflowing city during rains

September 18, 2012

Most Indian cities and towns are a mess during rains.

Here is a solution from NY who have built something called inflatable dams (HT: Prof. Matt Kahn Blog). It helps  rescue NY during rainstorms/hurricanes etc.  It is fairly interesting how it sucks excess water flows during these events..

A picture and working of the dam is given here.

Could it be a solution for Indian cities?

What works? State regulation or consumer awareness?

September 18, 2012

An interesting paper by James Habyarimana and William Jack of Georgetown Univ.

The usual debate is what is better – Should state regulate to ensure safety etc for consumers? Or should consumers be made more aware and let them decide. Ideally one should have a bit of both but econs want to know which is more effective. Moreover, in case of limited resources one needs to choose the most effective policy option.

The case here is of road safety. They do a random experiment to understand whether state regulation is better or a consumer empowerment intervention. Their findings show it is latter:

This paper compares the relative impact of two road safety interventions in the Kenyan minibus or matatu sector: a top down set of regulatory requirements known as the Michuki Rules and a consumer empowerment intervention. We use very detailed insurance claims data on three classes of vehicles to implement a difference-in-differences estimation strategy to measure the impact of the Michuki Rules. Despite strong political leadership and dedicated resources, we find no statistically significant effect of the Michuki Rules on accident rates.

In contrast, the consumer empowerment intervention that didn’t rely on third party enforcement has very large and significant effects on accident rates. Our intent-to-treat estimates suggest reductions in accident rates of at least 50%. Our analysis suggests that in institutionally weak environments, innovative consumer-driven solutions might provide an alternative solution to low quality service provision.

 They could have written the paper a little better. Becomes confusing towards the middle..

The consumer awareness mission is nice bit. They put stickers on these vans on safe driving etc and reward  the drivers (via a lottery) to keep the stickers pasted on the vans:

Institutional weakness and corruption may compromise the effectiveness of a variety of reform efforts, especially those that rely on third‐party enforcement. In the case of public transportation, an alternative to top‐down campaigns like the Michuki rules is to empower passengers to demand higher quality services directly, not by threatening to report a bad driver, but simply by openly complaining to him.11 To motivate the potential impact of such a strategy, we argue that complaints to the driver represent contributions to a local public good, and that a collective action problem among passengers could arise accordingly. Multiple equilibria can exist in such environments, characterized by different aggregate levels of public good provision. This suggests that lowering the resource or psychic costs of complaints, for example by making them appear more legitimate and thereby giving passengers a voice, could lead to discrete changes in the intensity of consumer monitoring and enforcement, and perhaps meaningful changes in safety and outcomes.

To test these ideas, we conducted a randomized control trial of an intervention aimed at empowering matatu passengers to exert pressure on drivers to drive more safely.12 The intervention was simple  and cheap: stickers with evocative messages intended to motivate passengers to take demonstrative action ‐ to “heckle and chide” a dangerous driver ‐ were placed in about half of roughly 2,300 recruited matatus. The stickers included graphic images of injuries, and text in English and Kiswahili encouraging passengers to “Don’t just sit there! Stand up! Speak up!”

An initial small pilot in fall 2007 was compromised when we discovered that stickers were quickly being removed from treated vehicles. In response to this, we reissued stickers and scaled up to the full sample in early 2008, but in an attempt to ensure higher rates of compliance we ran a weekly lottery amongst drivers of participating treatment matatus. Each week three prizes of 5,000, 3,000 and 2,000 Kenyan Shillings were awarded to drivers (about $60 – roughly a week’s wages, $35, and $25) if their vehicle was found to have all stickers intact upon inspection by our field staff. 

Interesting. How we usually do not think of such issues in designing experiments and surprises crop up from somewhere..


Capping LPG Cylinders to 6 an year…some discussion

September 18, 2012

Based on my experiences living in India and seeing several such allocation policies, I found this 6 cylinder cap another corruption scam in making. Somehow, people in India are too smart  and try and work around the system.

I found two articles giving different viewpoints:


  • For the move: BS edit says it gives lessons on transparency. It says the govt. created a website showing LPG usage before the reform. This helped create awareness on the misuse and build public support for the need to cap the cylinders.

    In a press release yesterday, Oil Marketing cos said based on this database, they saw around 44% of population uses around 6 cylinders per year. Hence, the number.

  • Against the move: Bibek Debroy in this funny piece calls it  a policy that cannot be policed. He makes up a nice story on how in order to help his  driver learn he tries several interventions and in the end the driver remains same..he relates this similar to the diesel story (and several other govt. policies) which only lead to worse outcomes.

Both give different sides of the debate. Using IT is welcome to usher transparency but frankly such policies do not  help despite the best intention. One will soon hear stories on how we gamed the system to keep milking subsidised cylinders..

It would have been better if government released some note/paper explaining this 6 cylinder rationale and how they will ensure it will work..

RBI’s Balance Sheet and Liquidity Management: 2011-12

September 18, 2012

Here is my new analysis based on RBI’s recently released Annual Accounts for 2011-12 (along with the Annual report). It is continuation of my efforts to demystify RBI’s B/S and how it creates liquidity. I had looked at a more historical perspective here  and this one focuses on 2011-12.

I also try and link this balance sheet with WSS, continuing previous attempts to demystify RBI’s WSS

Comments/Questions are welcome…Each time I learn new things with respect to central bank balance sheets..


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