Polls and markets

For those interested in this continuing debate, Andrew Leigh and Justin Wolfers have a new paper (PDF) comparing the performance of polls and betting markets in predicting election outcomes.

For what it’s worth, I think the two are about equally good, at least when an election is about to happen. There’s no indication that markets have significant private information: for example, they react, and sometimes overreact to ‘news’ that turns out, in retrospect, to be misleading. But most of the time, they provide a pretty good summary of available public information.

This is not too surprising to me. Although I’m strongly of the view that financial markets are not fully efficient in the semi-strong sense of making optimal use of all public information, the violations are subtle (but important!). Tests of election markets simply don’t have the resolution to pick up subtle violations, as opposed to occasional single-point observations, for example, the collapse of the Bush bet when the first exit polls on election day suggested a Kerry win.

Draft submission to Parliamentary inquiry

At the suggestion of Andrew Bartlett, I’m planning on putting in a submission to the Parliamentary Electoral Matters Committee, which is currently conducting an inquiry into the electoral laws, as it does after every election.

The topic is the possibility that the Government may change the Electoral Act to require websites containing electoral material to identify a person authorising its content.

Comments would be much appreciated.
Read More »

A bit more on education

One interesting piece of information in the education debate surfaced yesterday. This was a study of disadvantaged kids undertaken by ACER for the Smith Family, which found that, on average, they underestimated the level of education required for the jobs they hoped to get and, correspondingly, planned to finish education too early. This was true both for boys (who mostly wanted trade jobs) and for girls (who were hoping for professional jobs). You can get the whole study here (PDF).

On the whole, this does not look good for Howard’s suggestion that leaving school at year 10 is a sensible idea. Of course, there are exceptions. If you have a job lined up, with a skilled trade apprenticeship and TAFE entry, this makes sense. But in this rare case, you probably don’t need the PM’s advice. The actual labour market experience, and educational attainment, of people who leave school in Year 10 is, in general, far less favorable than this.

Conversely, if the idea that parents are too concerned with encouraging their kids to go university had any basis, it would presumably be reflected in a decline in the wage premium for university graduates. No such premium decline was observed during the 1990s, despite the huge expansion in graduate numbers. Now that the number of domestic students has been held fixed for nearly a decade, it is likely that the premium is rising.

Easter treats

Well, we’ve bought our Easter eggs and Easter bilbies, and we’ve had plenty of Hot Cross Buns. I used to like those solid candy eggs when I was young, but they seem to have gone out of favour, and they’d probably be too sweet now anyway. Does anyone have any other seasonal treats they can recommend (or, for that matter, warn against).

The Economist on Turkey

One thing that’s struck me about the recent wave of triumphalism regarding good news from the Middle East is how rarely Turkey is mentioned[1]. Yet Turkey’s progress towards full-scale Western-style democracy over the last few years has been by far the most hopeful development in the region over this period.

And the Bush Administration has played a positive (if occasionally unsubtle) role here, strongly backing Turkey’s application to join the EU, which is the main motive for reform. Yet this never seems to get a mention, while the fact that the absolute monarchs of Saudi Arabia have decided, like their counterparts in Communist China, to permit municipal elections is presented as if it’s a democratic revolution.

For those interested, The Economist has an excellent survey.

fn1. Except in the context of Thanksgiving.


There’s already been a bit of blogospheric response to the latest study on wasteful consumption (PDF) by Clive Hamilton and others at the Australia Institute . As Andrew Norton notes in the comments to Jason Soon’s post, the study reflects Clive’s rather ascetic wordview, one not shared by the majority of Australians. And, no doubt, waste is in the eye of the beholder. To take one of Clive’s examples, I must admit to buying books and not reading them, at least some of the time, but I can find excuses for this, whereas I’m scandalised by the idea of throwing out perfectly good clothes because they’re out of fashion.

That said, I think that, unless you are willing to take a completely agnostic view of social trends of all kinds, it’s hard to avoid the conclusion that the present period is one of generally excessive consumption. There are underlying economic causes of this, including low interest rates, easy credit and an economy that rewards successful speculation more than effort[1]. This in turn produces a demand for cultural celebration of consumption which reinforces the whole process. The wheel must turn and I think Clive is right to give it a bit of a shove.

And, leaving aside the fact that an excessive focus on consumption is bad for us, Tim Costello was spot-on on TV pointing to the moral obscenity of allowing children to starve while we making strenuous efforts to acquire trivial items for ourselves. No-one is perfect here, but, as I’ve said before, we all seemed a lot happier when we were putting a bit of our spare time into the tsunami aid effort. If we could keep this up, the world would be a much better place.

Such things are cyclical: material prosperity was just as eagerly celebrated in the 1950s, and this produced the anti-materialist reaction of the 1960s.

fn1. And even where wealth is produced by effort, it commonly takes the form of a capital gain, on the sale of a business, a renovated home, or whatever.

Timber Tour

While Crooked Timber is out of action, I thought I’d tour the sites of those Timberites who maintain individual blogs in addition to posting on CT. There’s a lot of overlap with CT, and too much to describe everything so I just thought I’d give you a sample:

* Eszter has a Flickr album of Chicagoland. I need to look into this.

* Kieran has a review column, including one of The Money Game by ‘Adam Smith’. I got this as a school prize when it first came out way back when, and was really impressed. It played quite a big part in steering me towards economics.

* Over at John and Belle’s they’re debating the hardy perennial: was Communism as bad as Nazism ? I had a go at this a while back. Also, Belle puts in a bid for the Nobel Peace Prize

* Brian is going to a philosophy conference where the usual questions of existence, meaning and so on will be complicated by a union boycott of the main venue

* Daniel is threatening a Welsh-triumphalist post about the Six Nations when we get back on air, but hasn’t gone so far as to reanimate his blog for the purpose.

For the rest of the team, you’ll just have to wait until our hosting negotiations are concluded.