Mercatus

Notes On The Road

naveenmblogs@gmail.com (naveen) — Fri, 13 Apr 2007 07:53:00 -0700

So here I am, back in India after a couple of years, doing research for a project in the relatively rich rural district of West Godavari in Andhra Pradesh. Some biased observations based on the few data points here.

Train prices are increasingly affordable and hence demand outstrips supply. For the first time, I was ready to book First class AC Tatkal to catch a project deadline and yet tickets were not available.

Cities like Hyderabad and Bangalore have traffic bursting at the seams. Apparently, Bhimavaram, a rich district wanted its own airport but politics dictated otherwise. Increasingly different transport solutions will be sought and have to be supplied.

Main roads in West Godavari are very good. I wonder about the contracting system in place for their maintenance. Gautam Bastian told me some interesting road factoids. Highways are intentionally made curved so as not to have drivers sleep off. Some well maintained roads in Orissa are oddly ill-maintained at certain stretches along the road. Turns out it is so because the road contract was given based on points marked on maps. The slight difference on the map between the parts of the road provided to two different contractors translates into no-man's land in reality and nobody maintains it!

Autos present a particularly blind-spot for policy-makers. Every city has had its share of strikes and passenger complaints because autos dont charge by the meter. And it is obvious why it will happen moreso. Meter fares are distance-based. In reality fares are hugely a function of getting return passengers. Which again is a function of spatial density of the auto-using populace. That is why sometimes it is difficult to take an auto from the Secunderabad station to Paradise (a commerical area) in the morning. Because all the traffic is towards that area and very little away from it. And similar problems for areas on the outskirts of the city. The regulation-imposed fare creates heartburn for passengers because they consider autodrivers violating the "law." What do you think? Towns in rural India seldom have digital meter based fares. Can we learn something from the dynamics there?

The Hussain Sagar is a pleasure in Hyderabad. Having greenery or water in the midst of a city is thandak for sore eyes.

Greenery reminds me of the farms in West Godavari. Green fields everywhere, and relatively prosperous people ... the gift of the river Godavari.

It is not odd to find statues of actors like Balakrishna in West Godavari district. However one particular statue of a foreigner kept coming up at odd places and it intrigued me. Curiosity unbound, I enquired about him. Turns out to be Sir Arthur Cotton, the man behind the prosperity of the West Godavari district. His entrepreneurial efforts in the 19th century led a famine-affected district turn into one of the most fertile parts of AP. No wonder some farmers invoke him before beginning their work. Read more about him here. And despair why his efforts have not been replicated for the drier parts of AP like Telangana.

Internet speed is so bad that the Reliance internet card for connectivity on-the-go seems really cool because it is something I could not do even in the US.

The decent hotel where I am staying in small-town Tadepalligudam has the clock faster by 20 minutes because the manager says it makes the staff more active!

It is a joy to see Shahrukh and Raju Shrivastava on TV instead of the YouTube.

It is increasingly becoming difficult with the moral dilemma of whether to give or not to give to beggars.

It is a great time to be a teen. You can dream BIG!

The Unknown Education Revolution in India

naveenmblogs@gmail.com (naveen) — Thu, 8 Mar 2007 04:20:00 -0800

This is an op-ed piece of mine that appeared in today's issue of Mint. In response to the photo-post Photo-state of schools in an urban slum in Delhi, there were a few comments and emails deploring the state of schooling. I couldnt present the empirical side of the story, that there are improvements happening on ground. That there has been progress made through the regulatory cracks of schooling.So I wrote this article to present the other side of the story.

Unknown Education Revolution
There is a silent and telling revolt against the poor performance of government schools

Naveen Mandava

Walking around the hot summer streets of Sangam Vihar—Delhi’s largest slum colony sprawled over 150 acres and home to 4 lakh people—in 2005, Aditi Bhargava noticed that almost every street had a school.

These schools were often just holes in the wall or a room with a few benches populated by eager children. They were not government funded or subsidized, nor did they have world-class facilities.

These were low-budget schools, where poor parents paid small amounts extracted from their meagre wages in the hope that their children would get a good education, a promise too rarely delivered at the “free” government schools. View photographs in the Photo-state of schools in an urban slum in Delhi post.

Aditi’s discovery piqued my interest in this phenomenon. I realized that Sangam Vihar was not a path-breaking exception but part of a mainstream, silent and telling revolt against the poor performance of government schools.

Independent research continues to report strides both in the quality and quantity across all private schools in urban and rural areas. Most people in urban areas and at least 28% of the rural population already have access to private schools.

The surprise is not in the absolute number of schools, but their proliferation rate. Nearly 50% of the rural private schools accounted for in the study conducted by Harvard economists Michael Kremer and Karthik Muralidharan were established after 2000, and nearly 40% of private school enrolment is in these schools.

This massive expansion of private primary schooling across India is a harbinger of the Unknown Indian Education Revolution. The survey found that more than 80% of government-school teachers send their own children to a private school. When government teachers don’t trust government schools with their own children, it’s time to sit up and take notice.

So what is fuelling this extraordinary surge and what is the quality of education being imparted? The key to understanding this surge lies in the low entry barriers.

Schools need a “recognition” status so that they can issue valid “transfer certificates” to students leaving the school. But what the recognition status primarily ensures is that teachers are paid according to relatively high government salary scales.

In reality, a primary school doesn’t strictly need “recognition” from the state to start business. Also, rural schools don’t read too much into the transfer certificate. So the rural market for primary education is comparatively unregulated vis-à-vis to secondary education. This is similar to the software industry in India. The government’s light regulation of the sector helped it become an engine of growth.

It is not just the rural rich who are moving to private schools. Studies have found that a large mass of parents are shifting because of the low quality of government education, and concern for their children’s future.

Regulatory gaps and dissatisfaction with government schools are the key factors driving the demand for private schooling. There is already evidence of such a surge in Punjab, Haryana, Uttar Pradesh, Andhra Pradesh, West Bengal, Karnataka, Meghalaya and Delhi. In seven districts of Punjab, 86% of the private schools are unrecognized.

A majority of these private unrecognized schools are operating outside the scope of policymakers’ radars. It is a “don’t ask, don’t tell” situation. Officials think of it as a fringe phenomenon. Consequently, these schools do not make it into any of the education statistics compiled by education departments.

Private schools benefit from being “unrecognized” because they save on labour costs. Teacher costs are the largest expense in the schooling sector. State governments easily spend 90% of their total budget on teachers. In contrast, private-school teachers are paid one-fifth to one-tenth of government salary levels and have more flexibility to innovate and improve learning outcomes.

Studies carried out in India all share the common conclusion that private-school students outperform their government-school counterparts. For example, in a 2005 Delhi study, James Tooley found that children in low-budget unrecognized private schools did 246% better than government school children on a standardized English test, with around 80% higher average marks in mathematics and Hindi.

There are important lessons here for education policymakers in India. Education entrepreneurs need to be encouraged by removing rules that hinder the establishment and operation of schools in the primary, secondary and higher secondary areas of education. Competing schools will create choices for parents, improving access and quality for all. The government can then focus its limited education budget on the neediest sections of society.

Inadequate education in India is not only a funding problem but also a result of over-regulation of the school market. The burgeoning market of low-budget private schools has enormous potential to do public good.
Naveen Mandava is a doctoral fellow in Public Policy Analysis at the Pardee RAND Graduate School in the US. The school is part of the RAND Corporation, a non-profit research organization.

Photo-state of schools in an urban slum in Delhi

naveenmblogs@gmail.com (naveen) — Fri, 19 Jan 2007 17:09:00 -0800

Circa May 2005, Aditi Bhargava, an ex-intern of mine did a short exploratory study of schools in Sangam Vihar in Delhi. The study was part of an internship program at the Centre for Civil Society. Sangam Vihar is one of the largest slum townships in Asia with a population of about 4 lac. The basic research question was this: what and how are the schooling opportunities of the poor there? While her paper by itself demands study, I thought the photographs could speak a lot more.

Government schools in Sangam Vihar

This Primary School is run by the Municipal Corporation of Delhi (MCD) for Classes I-V, and is located in I-block of Sangam Vihar. With 1000 students and 24 teachers out of which only 10-12 are present at a time, this school has been in existence since 1991 on the same premises. A rainy day for these children means a holiday from school.

Parents crowd around the Head Master’s Office in the ‘tent’ school during admissions.

A class in progress at the ‘tent school’ in I-block, Sangam Vihar.

This Primary MCD School is located in J-2 block of Sangam Vihar. This school has 1000 students with a total of 10 teachers. This photo was taken when class was supposedly in progress.

This is a photo of a class in another higher secondary government school in the same area. This classroom has been recently painted. Often it happens that government school expenditures are allotted strictly to line-items. So a budget for painting cannot be diverted to more productive needs if the Principal desires.

The area has about 3-4 government schools but still demand outstrips supply.

Private Unrecognised Schools in Sangam Vihar

An unrecognised school is one which doesnt have licence or permission from government and is not in accordance with government-framed regulations.

A sign on the building of an unrecognized school, advertising its facilities.

A ‘Computer Lab’ at the Quasi-recognised school in G-block of Sangam Vihar. The computers somehow seem more decoratory than functional.

Aditi interviewing the parents of the schoolkids. She is responsible for all the photos and undertaking the actual research.

That is me interviewing the parents. Most of them were highly enthusiastic about the education of their children. Not surprisingly, they wanted private school education at government school rates!

Three observations kind of hit you directly and have important influence on the policy understanding of Indian education.

1. The public conception of government schools can be very different from reality, and well, quite wishful. The standards that the government sets for private schools are often not followed by itself. The MCD government here has limited resources and a leaky implementation mechanism.

2. There is a booming private schooling market here. A school atleast in every gully! Of course, the quality is highly variable. Some are better than the government school but quite a few arent as well. Parents prefer to send their children to these private schools unless they want free/low-cost government education. It maybe that parents are buying into the "advertisements" and lack information to compare quality among various schools and choices.

3. Licensing restrictions in any good/ service generates its own "black market". And this private schooling black market is what we witnessed. Are these licensing/ regulatory barriers necessary?

Should you penalise a messenger for bad news?

naveenmblogs@gmail.com (naveen) — Thu, 18 Jan 2007 09:50:00 -0800

Public policy writing in India is too steeped in macroeconomics and plain vanilla political analyses. Pratap Bhanu Mehta's writing is a good exception like the article The truth is not in the facts.

What happens when you penalise the messenger for bad news? Think about it.

Here is an excerpt from the article to shed light on what I am talking about.

Just look at Uttar Pradesh’s crime data. During the last two years of his rule incidence of dacoity in UP has fallen by more than 70 per cent; incidence of kidnapping for ransom by more than 60 per cent. Most categories of violent crime are registering drops. According to data work done by the noted police scholar Arvind Verma of Indian University, UP’s crime rates now look closer to what they were like in 1953. In the United States, any politician would die to have such a record on crime control. What astonishing success! ... The unreliability of the UP crime data, alluded to above, tells a story of attempts to induce accountability gone horribly wrong. Even in normal circumstances, the police would rather not register FIRs. One of the perverse consequences of threatening police officers with punishment if crime increases is that the number of crimes registered decreases dramatically, as seems to have happened in UP. So the first issue in any debate on police reform has to be getting internal incentives within the police right, so that there are no internal disincentives to register FIRs. ...

With any branch of government, the central metaphor for accountability is not autonomy, but designing an appropriate system of checks and balances.

I largely regard that as true. If you cannot marketise a public good like police, then having incentives by itself will not make it work. You need to decentralise power, have transparency, critical checks and balances and yes, a good research wing to analyze the crimes.

Where Poetry and Cost-benefit analysis meet

naveenmblogs@gmail.com (naveen) — Fri, 12 Jan 2007 20:21:00 -0800

A Ballad Of Ecological Awareness

The cost of building dams is always underestimated—
There’s erosion of the delta that the river has created,
There’s fertile soil below the dam that’s likely to be looted,
And the tangled mat of forest that has got to be uprooted.

There’s the breaking up of cultures with old haunts and habits loss,
There’s the education program that just doesn’t come across,
And the wasted fruits of progress that are seldom much enjoyed
By expelled subsistence farmers who are urban unemployed.

There’s disappointing yield of fish, beyond the first explosion;
There’s silting up, and drawing down, and watershed erosion.
Above the dam the water’s lost by sheer evaporation;
Below, the river scours, and suffers dangerous alteration.

For engineers, however good, are likely to be guilty
Of quietly forgetting that a river can be silty,
While the irrigation people too are frequently forgetting
That water poured upon the land is likely to be wetting.

Then the water in the lake, and what the lake releases,
Is crawling with infected snails and water-borne diseases.
There’s a hideous locust breeding ground when water level’s low,
And a million ecologic facts we really do not know.

There are benefits, of course, which may be countable, but which
Have a tendency to fall into the pockets of the rich,
While the costs are apt to fall upon the shoulders of the poor.

So cost-benefit analysis is nearly always sure,
To justify the building of a solid concrete fact,
While the Ecologic Truth is left behind in the Abstract.

--Kenneth E. Boulding

Beauty and the Bias

naveenmblogs@gmail.com (naveen) — Thu, 11 Jan 2007 14:23:00 -0800

Infatuated guy: I think you are the most beautiful person in the world!
Research gal: I think you have a biased sample.

Himalaya view from Kausani

naveenmblogs@gmail.com (naveen) — Sun, 7 Jan 2007 01:05:00 -0800

This is a picture from a recent trip to Kausani in Uttaranchal. This pic was taken from the balcony where we were staying. Look closely at the upper portion of the pic (click it) and you can see the Himalaya peaks.

Once you take in the whole landscape, nothing beats the creeping feeling of the "massiveness" of the Himalayas!

Car ride with a sexologist - 2

naveenmblogs@gmail.com (naveen) — Fri, 5 Jan 2007 13:13:00 -0800

Two distinct events confuse me.

The first is the flashing of breasts that happen at an event like the Mardi Gras. Apparently men dole out beads for flashing here. And greater the number of beads a woman has, the higher is the recognition and attention. Much of it is done in fun and mirth.

The second event is the flashing of breasts that happens on a TV show like the Jerry Springer show here. Here some members of the audience often flash their breasts at the prime participants in the show. But here it has a different take altogether. Here it is intended to convey insult.

What could be erotic in one scenario could also be insulting in another scenario!

Much of the ideas of eroticism are culturally conditioned ones and that often dictates what parts of the female body should be covered. For the Arabs probably the whole female body is one huge walking erotica. For us Indians, even the shoulder of a lady (even a bra-strap) would be considered erotic. The Europeans have a lesser erotic idea of the breasts compared to the Americans who are relatively more prudish about it. Even a simple anatomical part like the navel assumes erotic significance in various cultures.

Expatriates intuitively respond to this cultural signals. Maybe because of this husbands are often okay with their wives wearing anything she wants in US but not the same in India.

What often surprises me is the depiction of clothing in Indian mythology (atleast the Amar Chitra Katha that i was exposed to :-) and how Indian women's clothing has become more conservative than before. This seems quite different compared to other cultures.

Car ride with a sexologist - 1

naveenmblogs@gmail.com (naveen) — Fri, 5 Jan 2007 04:35:00 -0800

After being down in overtly analytical ideas for quite some time I finally hit a fresh way of looking at some things. This is courtesy an intense discussion with a sexologist on course a car trip from San Francisco to Los Angeles. I can see enough fodder for two-three posts on the discussion but first, an innocent question.

"Mommy, I love you."

In the 4-6 Indian langauges that I am aware of I couldnt find the equivalent of the above sentence. A literal translation was possible but not a culturally suitable one, if u know what I mean.

Do all the major Indian languages lack an ability to express that feeling without sounding literal?

I will be darned if it is so.

This reminds me of an interesting behavioral observation by a US colleague of mine.

We went to a big shot IAS guy's home in Varanasi. A pleasant couple and definitely elite. Their son is about my age (late-twenties). He walks into the drawing room where I was speaking with their parents, sits near his mother and puts his arm around her and converses with us. It didnt strike me as anything un-natural. Later the US colleague observed that he found that kind of action (where the son sits like that with his mother) to be rare in India. And it is true. I dont recall seeing anything like it.

It is not as if some cultural expressions of love are better than others. But it definitely points out that the mother-son tactile expressions of love are more expressive and comfortable in some cultures than others.

The 300 dollar man

naveenmblogs@gmail.com (naveen) — Sat, 9 Dec 2006 22:34:00 -0800

Here is a neat little nugget of historical incidence that illuminates the funda of insurance. I learnt about this while watching the movie Gangs of New York. You should watch it if nothing else than simply for Daniel Day Lewis who is a rocker!

This dates back to the time when US would conscript (also called "draft") citizens for its war purposes. Conscription is not your usual voluntary enlistment practised in India. Onto the nugget from Wikipedia.

A military manpower shortage occurred in the Union during the war. Congress passed the first conscription act in U.S. history on March 3, 1863, authorizing President Lincoln to draft citizens into military service who were between the ages of 18 and 35. Copperheads (Democrats opposed to the war) were dismayed by the news. Their main objection was to national service of any kind, but in terms of rhetoric, they attacked the provision allowing men drafted to pay either US$300 or supply a substitute as a "commutation fee" to procure exemption from service, which led to the derisive term "300 dollar man". However, in practice, men formed clubs whereby if one was drafted the others chipped in to pay the commutation fee.

That is a fascinating historical example of mitigating risk through insurance!

Importance of "Utility"

naveenmblogs@gmail.com (naveen) — Fri, 8 Dec 2006 15:06:00 -0800

A government department G with 10 sub-departments complains to a consultancy C about the overwhelming documentation. C does a survey of five documents that the department usually deals in. Based on inputs from the various sub-departments, the five documents are presented in increasing order of importance. One document prepared by one department is specifically targetted for unimportance and its huge contribution to workload. So it is recommended by C to be chopped off from the documentation process. Turns out that document is actually a Right to Information one. Its utility to the various departments may be low when applied on a department-level scale but it has huge systemic utility.

Moral of the story: Blind application of survey to order utilities means missing out on an important component of economic logic. Utilities are intrinsically subjective and difficult to capture across various sets of people. That is a huge limitation of surveys.

SWOT analysis

naveenmblogs@gmail.com (naveen) — Sun, 3 Dec 2006 09:23:00 -0800

Prof: What is SWOT?

Student: ?

Prof: Strength is your wife; Weakness if neighbor's wife; Opportunity is when your neighbor is away; Threat is when you are away!

25 differences I wish I knew earlier!

naveenmblogs@gmail.com (naveen) — Wed, 29 Nov 2006 11:09:00 -0800

Causality versus Correlation
Strategic versus Tactical/ Operational
Possible versus Probable
Absolute versus Relative
Output and Outcome
Risk and Uncertainty
Experiment and Observational
Point estimates (average/mean) versus Distribution measures (median/ variance)
Understanding versus Justifying
Economic profit and Psychic Profit
Average versus Marginal
Variable costs and Sunk costs
Models versus Reality
Reality versus Counterfactual
Data versus Opinion
Credible data versus Non-credible data
Process versus outputs
Design and Evolution
Stock versus Flow
Internal validity and External validity
Random and Randomized
Statistical significance and Physical significance
Principle and Degree
Rule of law and Rule by law
Sex and Making love!

Any additions?

Update:
26. Urgent versus Important
27. Efficienct versus Effective
28. Explain versus Explain away
29. Mutually exclusive issues/ functions and those not so...

Hypotheses

naveenmblogs@gmail.com (naveen) — Wed, 22 Nov 2006 11:29:00 -0800

Hypotheses are as important in academic research as in business consulting.

What diseases can tell us about making girlfriends

naveenmblogs@gmail.com (naveen) — Fri, 17 Nov 2006 12:42:00 -0800

Lunchtime. Somebody into mathematical modelling of epidemiology floated a neat idea.

The most fatal infectious disease is not the most dangerous one.

Dangerous in terms of number of people dying. Think of yourself as a virus in Surat. You initially infect 10 people. Now those people die too soon (let us say in one day) without infecting others. Your fatality number is very limited though your rate may be high. Another case. You infect 10 people and you kill them over 10 days. Now those infected people infect so many others and the fataility is so much more higher. Makes intuitive sense! Go ahead ... think about the case-fatality rate (percentage of infected people dying in a particular time frame) of Ebola virus (90%) and the Dengue fever (20%).

All of use were impressed. And then one chap worked further on it.

You want to have a girlfriend. You have two ways.
Either you propose every girl you meet with a 50% chance of acceptance.There are no friends after rejection of a proposal.
Or you make friends (not girlfriend in the usual sense) with every girl you meet. You dont propose her. Instead you propose her 2 female friends. Again a 50% chance of acceptance.

It turns out that your chances of having atleast one girlfriend in the latter case is 75%.

Working moral of the story. Just like diseases, it doesnt pay to "kill" the relationship with your "host" too fast. So make lots of friends.

And you are right. PhDs dont have a life!

A class without a board!

naveenmblogs@gmail.com (naveen) — Tue, 14 Nov 2006 21:46:00 -0800

If ever I become a professor, this is what I would use to teach in my class ... sketch in mid-air!

Randomness, Sex and the Survey

naveenmblogs@gmail.com (naveen) — Mon, 13 Nov 2006 17:37:00 -0800

A little understood issue is randomness in determining either public opinion or treatment effects.

The India Today, November 13 issue "Secret Desires" uses an invalid method to generalize the survey research for their section on male sexuality "Men in a Muddle." If one goes by the method stated on their webpage, they use street-corner sampling which is basically, convenience sampling and not random sampling. Only random sampling can give rigorous generalizibility. Random sampling would imply that everyone in the target population has to have an equal chance of being selected to participate in the survey or at least a known chance of being selected. Even if we think of their technique as purposive sampling, it still is not generalizable.because they form nonrandom/nonprobabilistic survey methods.

For a succint understanding of why convenience sampling or purposive sampling wont be appropriate read Populations and Samples.

Sample a couple of passages in the article.

In attitudes and values, we stumble across the great hypocrisy reef of India. The modern Indian man-as many as 80 per cent in Hyderabad and Chennai-expects the woman he marries to be a virgin. ... The survey probes further, trying to understand where the sex appeal of a woman lies. The answers go beyond the predictable notion of beauty and identify other factors like intelligence and sexual skills. Chennai and Hyderabad produce a smacker with 12 per cent identifying sex appeal with submissiveness. Small deviations can be seen in Ahmedabad and Ludhiana, where 32 per cent and 40 per cent, respectively, are ready to date or marry a much older woman. ... Most men confess to some homosexual experience-37 per cent have had at least one such experience-but rarely talk about it. ... Most are happy with their sexual experiences but feel upset about sex when it gets repetitive with the same woman or if the woman shows emotional expectations. A large percentage feel they can impose their need for sex regardless of their girlfriend's mood. Men are content with penis size and insist that a majority of their women have orgasms. A large fraction seems to have engaged in group sex and 11 per cent seem bisexual, with Hyderabad revealing a high of 24 per cent. Men prefer long foreplay with different towns itemising different priorities. A happy unity in diversity, not really kinky, but may be a bit too content about performance.

One cannot generalize the results to the target population (the young urban Indian male or even the young urban Indian males for the particular city) based on their convenience sampling method. I am not sure if there are any statisticians at India Today or reporters who understand statistics or can understand what ORG-MARG-AC-Nielsen has been briefing them. Hence the possible mismatch between the performed research and the narrative theme. This is exploratory research at best. Even if they employed highly rigorous methods to make their street-sampling random, all their estimates need caveats like response rate, sampling error and confidence intervals of the stated percentages.

Definitely convenience or purposive sampling is hugely cost-effective but no way generalizable, not one of those stated percentages in the article. The article provides extremely biased information to its readers because it uses non-random sampling methods to provide generalizable findings. Admittedly we are still in an infancy stage in terms of high-quality conducting and reporting survey research but a respected mag like India Today can take the lead on these issues.

Why workers compensation is worth understanding?

naveenmblogs@gmail.com (naveen) — Wed, 8 Nov 2006 19:14:00 -0800

Adequate compensation for injured workers can present quite a puzzle. Especially if one is interested in the ability of markets and is against government intervention. A little background on the issue might help. I have given a short intro to it earlier here. This blog-note updates my recent understanding of the issue. I will mention some of the concepts and realities that are driving the system. More detailed info on workers comp in USA can be found here.

The trade-off between "average justice" and "individual justice". Given that there are huge costs and uncertain benefits in litigation for an injured worker especially (when he is injured) the system tries to provide a certain comp upfront and the rest based on admin rules like calculation of the disability. This approach tries to capture systemic efficiency rather than efficiency in justice at the individual level.

Regulations could turn undesirable at either end of the spectrum. Too much of workers comp (especially insurance premiums) has firms shopping for states with low premiums and injured workers (with little impairment) unduly benefiting. An example of excessive workers comp is the low cost it provides on the worker's mistakes and consequent perverse incentives. A section from a book review is presented here

Price Fishback writes a five-page essay entitled, “Does Workers' Compensation Make for a Safer Workplace?”

Prior to workers' compensation laws, liability for workplace accidents was based on common-law standards of negligence. Fishback summarizes the legal notion of “due care” on the part of the employer, and explains that the employer often escaped liability because the injured worker had accepted the risks involved, had himself been negligent, or was harmed by a fellow worker's negligence. These doctrines “encouraged common-sense prevention of accidents by the parties with the lowest cost of prevention”—often the workers on the scene. And jobs with high risks commanded high wages.

But between 1910 and 1930 most states passed workers' compensation laws that tended to hold employers liable for all serious accidents “arising out of employment.” Fishback explains that, besides driving down wages and job opportunities, these laws sometimes even increased workplace hazard! In coal mining, accidents actually increased. “Since coal loaders and pick miners were paid by the ton of coal, they saw that by working a little faster and taking more risks they could get higher earnings— even though a roof fall injured or sometimes killed miners who tried to finish loading cars before setting new props for the roof.”

From his detailed learning, Fishback serves up a sort of historical bumper-sticker—workers' compensation had high costs and sometimes did not achieve even its primary goal of inducing workplace safety—and shows how this pertains to current liability issues.

On the other hand there are empirical studies and adequate economic theory explaining the deleterious effects of low workers comp. What interests me is that even libertarians have not gone the whole hog on this issue and have instead asked for state-based decentralization of policy bodies and allowing workers to file cases directly against gross safety negligence by employers (akin to the realm of tort law). Their approach has been to take into costs and benefits of a system including the value of a statistical life.

Workers comp based on economic loss and not non-economic loss. As of now most workers comp is based on compensing the lost ability to compete in the labor market. The evaluation of non-economic costs forms a small part of the overall calculus. And yes, It may be disturbing to Indians that the calculation of compensation is based on a formula that rates the disability (scale of 0-100) caused to your body by the injury.

Given the "what to do" is limited, we turn to the "how to do" ... here is where benchmarking and metrics become important to measure and compare systems. System metrics include adequacy, equity and efficiency. The equity issue is especially interesting. It encompasses both horizontal (similar losses should receive similar benefits) and vertical (different losses should receive benefits proportional to those losses).

Once again, the big picture is the movement (in this case) away from "whether the state or the market should do it" to a more research and empirics based approach to policy-making. Maybe that captures the present state of my thinking drift! Also, I havent been able to find much data or studies in India on this front. I would be glad if somebody passes along a few leads.

Yaad rakhna...

naveenmblogs@gmail.com (naveen) — Fri, 3 Nov 2006 10:48:00 -0800

1. Involve Clients in research process and review
2. Involve Stakeholders in findings
3. Distribute findings to opinion leaders before media gets to them so that atleast they dont belittle your side!

All hate being surprised!

How opportunity cost is the mirror side of causation?

naveenmblogs@gmail.com (naveen) — Fri, 3 Nov 2006 10:24:00 -0800

Aha moment! Turns out that op-cost and causation are related to one another through the counterfactual.

Must-reforms for civil aviation in India

naveenmblogs@gmail.com (naveen) — Wed, 1 Nov 2006 22:02:00 -0800

Not unexpectedly, airlines are in cut-throat competition and bleeding each other with the government stepping in to set the house in order. Ajay Shah has written a good insightful piece on the need of competitive markets in Indian aviation sector at Revel in Competition. Read other related articles at his blog here.

Ajay Shah has suggested three reforms which I will interpret as follows

Disband Ministry of Civil Aviation
Open-skies foreign policy
Competition (Unlimited) Commission

There are two more crucial points that could have been added to the reforms on the basis of market allocation of resources.

Dismantle route dispersal guidelines
Commercialize aviation infrastructure

Allow private airports to be set up or speed up the process of airport siting and private financing. Let the rule of law handle the issues of environment and noise. Next, commercialize the Air Traffic Control Systems. As of now, both airports and ATCs are managed and funded by the government. Let them move into the private sector. In the short term, opt for peak-load pricing at congested airports.

A lesson from the deregulation of the airline industry has been that airlines followed the hub-and-spoke model. Development of satellite airports in India can hugely increase airline performance by facilitating this model.

For further understanding of the problems affecting the civil aviation sector in India read the Road Map for the Civil Aviation Sector which does come across as illuminating.

Why did Japan lose the World War II?

naveenmblogs@gmail.com (naveen) — Wed, 1 Nov 2006 10:27:00 -0800

I dont know how I got interested in military strategy. But I picked up a book on it Wizards of Armageddon and out came a couple of gems of strategy-related thought.

In the Sixties the pattern of military thought was abolute retaliation in case of an attack. US generals thought of nothing beyond an all-out attack on USSR if war broke out. And that does seem to be a good idea. Promise all out retaliation in the hope the opponent gets deterred. And even if he as much as start a war, have complete retaliation. This was the idea until Bernard Brodie came along.

He framed the situation like this. USSR attacks a certain US base. US retaliates in toto, indulging in carpet bombing. But if USSR manages to hide even one atomic bomb and then uses it on US, it will be US who suffers. A retaliation mis-match would imply an escalated war and citizens of both nations lose through actions of belligerent generals.

The way out was to have a limited war. If USSR attacks a military base of US, then US should attack a few military bases in return, but not indulge in complete retaliation of wiping out all bases or bombing USSR cities. For if US inflicted large-scale damage on USSR, then USSR would have nothing to lose by going all out against US. In the final run, US will lose. The idea is to retaliate just enough to show the consequences of an "unlimited war" and yet at the same time not to push USSR to the brink. Neotiating through such a "limited war" and not "killing the hostage" will save the US nation from certain suicide.

At the same time one should signal the presence of a large Reserve Force that can be protected from surprise war attacks and that could signal effective retaliation. But the very act of building up a huge reserve force may force the opponent to attack. Also having a huge atomic/ hydrogen bomb base will do nothing to deter an enemey from a micro-war for nations definitely dont want to use atomic bombs for a border conflict. That means having a huge Army on the ground to stave off non-nuclear attacks.

And so the thought process went on ... till Vietnam happened where all this fancy strategising went for a toss. The enemy was not one monolithic rational thinking entity but citizen-guerillas. Then the interconnections between development and security became clear. That security was not primarily a military issue but also stemmed from development issues.

The other interesting one is about Japan in WWII!

Why did Japan quit in the WWII? Hiroshima and Nagaski got bombed. Seems simple. Actually the bombing of Hiroshima and Nagasaki did little to puncture Japan's military might and US had already exhausted its two atom bombs. So why did Japan quit?

Apparently because Japan did not know that US had finished its stock of two atomic bombs. This information gap was crucial for Japan to fear further atomic bomb attacks and quit the war. Actually this may seem obvious but I just thought it may be a good example of incomplete information.

Economists versus Operations Researchers

naveenmblogs@gmail.com (naveen) — Fri, 6 Oct 2006 10:44:00 -0700

A real case study here threw up an interesting thinking style intrinsic to economists/ statisticians and operations researchers (OR). Both had their strengths and weaknesses.

Case study: The government of Qatar gave an open-ended project to RAND to reform their primary and secondary education system. Our case study question was how would one design the research and reform models.

The economists by training in our class started associating labour market requirements with quality of schooling as part of the research phase. The OR guys by training went for the systems approach. They wanted a complete mapping of the system even before they could think about inter-relationships between components. An approach that I would support more in the initial phase.

When the reforms part came, the OR guys would think in terms of putting in neat little blocks of functional units (like those in World Bank "structural reform" presentations) that could reform the education system of Qatar. However, the economist guys would try nail to down the incentives for each functional unit to perform. An approach that I would support more in the latter phase.

It is not a bad idea to dabble in the intellect of different modeling disciplines!

Indian Cinema

naveenmblogs@gmail.com (naveen) — Fri, 30 Jun 2006 03:59:00 -0700

Whenever there is a lull in the news cycle, the U.S. or Indian news media come out with a story about how Bollywood is on the verge of going global. Yet the simple truth is that while French and Italian films are quite easy to find in mainstream video stores in the U.S. (even in Walmart sometimes!), it can be a challenge to find even Lagaan outside of specialty Indian video stores in the U.S. And no Hindi film actor or actress has yet to achieve the same crossover success of Bruce Lee or Jackie Chan.

Yet this is all about the Bombay film industry so far. In the broader sense, Indian cinema has had some success abroad. Samsara, a foreign-produced film made with an Indian cast by an Indian director set in India, grossed $19 million worldwide before even being released in India. Monsoon Wedding, another foreign-produced Indian film, grossed $20 million. So why is it that an Indian film must be financed abroad to be successful abroad?

It could be that, traditionally, Indian film studios were cash-constrained and needed to make "safe," formulaic movies to ensure rapid cash turnover. Or perhaps Bombay film studios do not have the connections and business partnerships to work with distributors abroad. I saw film posters for Monsoon Wedding in the Prague metro when I visited four years ago. I doubt any locally-produced Hindi film has ever had such extensive marketing abroad.

Whatever the cause, it seems that if Indian film is to make inroads internationally in the future, it will be through foreign film studios taking on projects too unconventional for domestic producers. That is, unless the Bombay film industry begins to branch out and starts to take on riskier, more serious projects. There may be a broader lesson here as well. After all, why is it that Bangalore has such a long way to go before it can catch up with Silicon Valley? The fault certainly does not lie with lack of Indian talent.

Collage of Thoughts

naveenmblogs@gmail.com (naveen) — Thu, 15 Jun 2006 17:21:00 -0700

I havent spent much time with my father and mother as if they were a man and a lady separate from the fact that they happen to be my parents. Hmmm...

How do I know what I dont know that I dont know?

Learning to speak in a foreign accent is a bit akin to learning to shit like Hanu-Man with that odd freaking tail in an Indian loo.

Taste lies not in appeal but in craft.

The view from the top of Eiffel Tower looks like this. Multiply it by 30 times to get an idea of the height of Mount Everest.

Piranha like sperms.
Piranha-like sperms

Make sure your children watch a lot of cartoons. Eventually they will watch more cartoon than porn unless ...

I dont like this blogging. Today I wrote stuff in hyperlinks on my paper and spirited the defense of Shakespeare literature in SMS text.

I love sleeping nude. The only guy who saw me so was my Professor who walked into my room. He left college the next day. True! It was a tearful farewell.

I hate VS Naipaul's writing. I think he needs a lesson in causation and correlation like the incident above that could deceive.

How would it be if you found out that your mom was a drug-dealer?

Sometimes I think I hold my words more miserly than my 40 cent Big Blue Bus tokens.

The courage of the gallant soldier inspires me but it is the gutsy mountaineer that awes me.

Never hit a woman.

I slipped a straw into her wound and sipped up her blood.

How come breast milk hasnt found its way into any "mainstream" cuisine?

The secret of creating a successful shoddy product is to create a critical mass of "apparently satisfied" consumers. Such secrets lie behind the marketability of Death Metal, heh! and the motivation of Equality.

Two years back, maybe I would have laughed at a Buddhist monk for a hundred sensible reasons. Today I wont. Even though I dont have one even good reason not to.

There is something wrong with people having to work for 12 months a year.