Freakonomics features the first and second installments of Rob Jensen's search for the Holy Grail of economics, the Giffen good.
Usually, when the price of a good goes up, demand for it goes down. A Giffen good--long the bane of many a Econ 101 student--is one where increasing the price for the exact same good actually leads people to buy more of it.
The only problem? No one's ever seen one. Until, that is, Rob. And his trusty partner Nolan:
About five years ago, I was using a large, publicly available data set of Chinese households to explore the link between income and health. My colleague Nolan Miller walked into my office, saw what I was doing and asked, half as a joke, if I’d looked for a Giffen good.
I looked at my data, and sure enough, there it was. Higher rice prices in southern provinces of China were associated with higher rice consumption. The same held in northern provinces with wheat (things like noodles). We giggled like idiots, and quickly wrote up the results in a short paper.
It's funny, but this is a pretty good description of how about 90 percent of economics papers get written. We do a lot of idiotic giggling.
What makes their giggling less idiotic than usual is that Rob and Nolan found a nice way around the problem that higher rice consumption could be causing the rice prices to rise, rather than the other way around.
We were on the verge of tossing out the whole project when it hit us: why not go to China, give people subsidies to change the price they pay for foods and see what happens? This way, we would know that our price change caused the change in consumption, and the identification problem would be solved.
This they did, and the rollicking adventure continued. I invite you to read the full paper here. It's quite a nice article.
But most importantly, for this feat, Freakonomics' Steve Levitt christened Rob the "Indiana Jones of Economics". This is the development economics equivalent, I would say, of the Fields Medal.
Naturally I have been secretly vying for the award for years. How else could you explain the romping about conflict zones with child soldiers?
Unfortunately, however, I look stupid in hats. Also, Jeannie will not let me carry a whip. She says it's "too colonial". (Of course, if by "colonial" she means "sexy", then I agree!)
But I digress. What I wanted to say is that Rob is actually one of the two reasons I am a micro-development economist, scampering around odd places running surveys rather than downloading my data from the Internet.
In 2000, Rob hired an eager beaver Master's student to run a survey in southern India. That eager beaver was me.
We flew to Chennai together, took the train to Madurai, and within 48 hours (by no fault of our own) the project nearly collapsed. Short story: the NGO pulled out at the last minute, and we scrambled to glue the pieces back together.
A week later, Rob had to leave me in Madurai as he flew to his next appointment, a project in Nepal. Unfortunately, a prince of Nepal decided to take that moment to massacre his royal family. Rob was stranded in Nepal (a nice Indiana Jones point in his favor), and I was stranded in Madurai without money or guidance.
Rob managed to get home, and with some difficulty I managed to pull off the survey. It involved me taking an overnight train to Bangalore to buy a book called "How to Run a Survey" (I'm not kidding) and finding ways to trick Rob into sending me money and advice (mostly unsuccessfully).
It was a tough summer. I had to pull off an 800-household survey in 10 weeks on the $7,000 I had left in credit card credit. Overall, it was the most stressful, exhausting experience of my life. I got sick every week from drinking the "welcoming juice" in every new village I entered (the upside of which, I returned home looking heroin chic). At one point I even found myself riding a camel, miles from any city, dead broke. I lay in bed every night swearing that never -- NEVER! -- again would I run another field project.
In short, I was hooked.
Several surveys later (and still no Indiana Jones award) I am now gleefully sending my own grad students to odd places and trying to evade their panicked phone calls and e-mails.
I still swear after every survey: never again. That is, right before I start the next one.
As for Rob's Indiana Jones award... well... lucky for him I am not posting my photo, taken in a remote village in India, of Rob looking nervous next to a cow.
Of course, that may only be because he's without his hat and whip...
4 comments:
Great post! You hear so many great stories from economists doing field work... I hope I get to experience it myself someday.
"It's funny, but this is a pretty good description of how about 90 percent of economics papers get written. We do a lot of idiotic giggling."
before i started procrastinating on the interwebs, i was giggling my way studying the 'substition' matrix...
I'm convinced that randomized field trials can offer answers to important questions such as how much of an impact one might expect from the free distribution of malaria nets, compared to alternatives. I think your research Chris is interesting and important.
But what have we learned from spending many thousands of dollars to seek out some desperately poor communities in China in order to establish that the price elasticity of demand for certain foodstuffs is positive!? No doubt Jensen and Miller will get many journal citations and footnote references, but policy relevance?
Jensen and Miller's paper claims in its abstract implications that are "important for the effective design of welfare programs for the poor." But as far as I can tell they really don't point to anything other than that it implies that when very poor people on the verge of subsistence they take measures to 'buffer' their caloric intake against price rises. This to me seems to be true of any desperately poor household, Giffen good or not. So what have we learned?
Is there something I am missing? Or is it that, as with the original Indiana Jones, the glamour lies primarily in the adventure of raiding of foreign spaces?
@skeptical: I think yours is a fair point. A lot of economist time is spent on research papers that are cute rather than useful. When that takes up something other than the researchers' time, that's troublesome. When it means running a survey in a poor country, questionable indeed. Rob does good work, though, and sincerely cares, so, personally, mostly I'll trust his judgment and, when that is in doubt, cut him slack. But your point is a good one.
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