Wednesday, December 31, 2003

1. The verdict has been reached, finally. Had a long meeting with JBB. Have to really complete this dissertation by early January, and that means ... in two weeks from now! He's leaving for sabbatical terms in Colorado and some European countries. If I can't finish early, that would be problem for both of us to communicate the research effectively. This is tough, so tough. But I understand his constraint. And I'm still strugling with my programming. Have to leave anyway. Insha Allah.

2. Friends debated about interest rates and inflation. Was inspired to write about the economics of riba'. Hold it, still have number one in the to-write-list: the economics of drinking coffee (have postponed this many times).

3. Music: Ahmad Jamal. This master is still powerful in his 70s. (Drums by Idris Muhammad, bass James Cammack). Great. No wonder even Miles said he was influenced by Jamal.

Sunday, December 28, 2003

1. An article in the NYT tells a story of the economic impact of smoking ban in NY city. As its title suggests, the result is "clear air", but "murky economics". Mayor Bloomberg was one of the pioneers in pushing the antismoking law in NY city. Banning smoking? I don't get it. If the goal is to protect non-smokers from the danger of being passive smoker, I think I could understand the banning policy. But, if you could use one bullet to kill two birds (my apologies to Jan Tinbergen -- this is just an expression, Professor!), why don't you do that? That one bullet is higher tax: Put high tax on cigarette, it will discourage consumption, both active and passive smokers will be reduced in number. Some anti-tax economists would disagree. But here's the story:

Friends asked me how I could quit smoking so easily. I told them, it's simple: cigarette is so expensive here in the U.S. Me the student could only afford smoking for the first year of my living in this country. The sharp difference between prices here and at home finally *forced* me to quit -- well to be exact, I *voluntarily chose* to exit. (And yes, I did it without all those pathetic patches, nicotine subs, etc). So, it's the high price. So, it's the high tax. The retail sellers inevitably raised prices due to the high tax imposed by the government. Message read. So, as far as discouraging smoking is concerned, high tax would work. What about generating income? Not really. For the latter, there would be a tax rate below which tax revenue could rise but beyond which tax revenue would fall. Becker in his eloquent book wrote that the treshold level of cigarette tax is about 95c per pack. Above this level, tax revenue will just fall. Why? Reduced consumption, disincentives for new smoker, and smuggling. (In this article, Becker argues against higher tax on cigarette. I agree, if the only objective is income generation. I disagree if it's to discourage consumption. In other part in the book, Becker agues for higher tax on alcoholic beverages. So I see a contradiction.)

How do we explain this? In theory of taxation, we know that taxes on cigarette, alcoholic beverages, and other "bad" products are called "sumptuary" taxes: the main objective of their imposition is to discourage consumption, NOT to generate revenues. The demand for goods like cigarette is usually inelastic, so quantity does not change significantly due to tax change. Harberger has proved that if income is your objective, tax the elastic good. But I would believe that you don't want to use cigarette tax as your income machine. Tax it for sumptuary reason. Banning smoking is useless, so is putting that stupid label: "Smoking is bad for your health".

1. Dede's column in Kompas couple of days ago somehow has a parallel spirit with Barro's column in BusinessWeek two weeks ago. The Indonesian government, reported Dede, is going (or forced) to give up the export quota for TPT (Indonesian abbrev. for textile and textile products, the country's export primadonna for decades). This is not a news, it should have been expected. The industry's czar has long been known as one of the strongest lobbyists in the government. There is now a hope, however, knowing that Rini Soewandi, the Secretary of Industry and Trade is in favor of the quota removal, despite the strong resistence -- even from her own department. Barro in BusinessWeek echoed the liberalization sentiment on the U.S. long time protected, textile industry. In Both cases, not very surprisingly, China seems to be the winner. As it is so, in regards with the growing exasperation toward the efficacy of NAFTA, as reported in the NYT today.

2. It's the U.S. economy's turn now to fear the economic impact of the Mad Cow. And it is so ironic that Secretary of Agriculture Vaneman has refused to meet with Dr. Prusiner, the Noble laurate (!), when the latter was trying to convince the Administration to do special meat inspection, due to his prediction on the coming disease to U.S. farms. Vaneman chose to listen to Bush's crony, instead, . And now, the $2bn cost is on the door. By the way, hey, come to think of it, why Mad Cow? A quick Wikipedia search would tell that the disease is most likely caused by the practice of feeding the cows with ground-up animal parts, mainly meat and bone meal from butchered animals. Wait a minute, animal? No wonder! Brazilian and Argentinian farmers keep feeding their cows with grass (as what Nature does). Now these two countries, along with NZ and Aussie, will takeover U.S. beef market happily. Force your cows to become carnivores, and they will be "mad". Eat their meat, and you will damage your brain. And you say it's about economic efficiency?

3. Can't remember exactly where I read this, but most likely it was Chicago Tribune two days ago. A report says there is an increasing number of suicides among the U.S. troops in Iraq. So far, 20 cases have been identified. This is sad. Those young guys might not stand the pressure of war. Somehow, two movies came into my mind: Kubrick's "Full Metal Jacket" and Reiner's "A Few Good Men". The former is more likely to represent what has been going on. Stress. Don't ask me why the latter.

4. Music for the last three days: Cannonball Adderley's Somethin' Else. (Listen to "Autumn Leaves", and you will understand why I still keep the CD inside. Listen to the duel of Cannonball and Miles in "Somethin' Else" and you might not understand why I should ever replace it).

5. According to Political Compass, I am a moderate Leftist (-1.00) with a tendency to Libertarian group (-1.25). Hm, so close to Center, eh?

6. Work so far: trying to write a code to calculate the confidence interval for the welfare measures.

Thursday, December 25, 2003

1. In a place where Christmas day means empty town. When 25th of December means only one car left in the parking area of Healey Apartment. Sitting on the couch chatting with Miles Davis and Duke Ellington. Miles doesn't like coffee: he wants drugs. Duke only wants hot water. Both play the time, beyond the time. Miles trumpet blowing fills my cold room and Duke sends pianical tone to the ceiling. Me, coffee: as usual, as normal as it has been, for the past four or five years. A knock on the door, excuse me. It's Sir Past. Come on in. What do you play?

2. Bovine spongiform encephalopathy (BSE) or also known as Mad Cow disease is invading America. Only one case so far, i.e. from Washington State, but the impact on the U.S. economy is approaching fastly. A friend's comment really represents a popular view: "I won't eat beef for a month". Financial Times reported, shares of McDonald's fell more than 4 percent yesterday. Korea and Japan have decided to ban beef imported from U.S. Ten years ago more than 100 people died in U.K. after attacked by the disease (in the form of what so-called Creutzfeldt-Jakob disease, in their brains). Canada was attacked 6 months ago and by now has suffered $2bn loss in it's economy. Beef export of the U.S. amounted to $3.7bn last year. This case of BSE would definitely hurt its market so much. (Somewhere out there, Australia and New Zealand will gain a windfall profit -- Argh, economy).

3. A friend from Boston sent a pastime through email. It's an old Makassarese song. Last time I heard this is when I was 10 or so. It is really sad, I don't want to translate it : Kukanga tu nipela // Tu nibuang ri tamparang // Tu nianyukang ri je'ne' // Narappung tau maraeng // Ca'di ca'di dudu inja // Nanapela'ma' anrong ku // Mantang mama kale kale // Tu'guru' je'ne' matangku // Aule, sare sarena ikukang sayang // Sare tea ta kucini // Empo tena mate'nena // Aule, sare sarena ikukang sayang // Sare tea ta kucini // Empo tena mate'nena...

Wednesday, December 24, 2003

1. Completely demoralized by a rejection from one respected journal. Too depressing to tell. But anyway, the bottomline is, the reviewers are not happy with the use of only-first-stage hedonic model with attitude as anchor. They also allude that my use of embedding tehnique is not really strong to claim novelty. Others are related to endogeneity, bias from variable omission, etc. I have an impression that one of the reviewers is a pure econometrician. He/she is bothered by the use of terms like "instrumental variable", "calibration", etc. for referring things not necessarily in econometric context.

2. The day as it is ending sadly:: Breakfast: Panera's house blend coffee, cinnamon roll. Lunch: pizza topped with chicken, pinneaple, apple, and pesto. Dinner: indomie, egg, vegetable "egg"rolls, tangerine. Work: completing tables, agonizing with the rejection. Readings: Chicago Tribune (Get Fuzzy: Satchel the dog got christmas gift, a bug. He's so happy), Wall Street Journal (a short bio of an extremist-turned-moderate -- very biased report).

Tuesday, December 23, 2003

1. Got back from a long trip to Washington, DC for seminar on Indonesia hosted by one of the running parties of the 2004 general election. The seminar was interesting, DC was cold, but overall, we had fun. Riding a 15-passenger van was quite an experience: 700+ miles East felt shorter with all the fun talks, teases, and even self-mockeries. Food were more than enough: chicken satay, lontong, plantain, chocolate chips, tangerines, etc. Departed at midnight on Friday, we arrived at Washington on Saturday afternoon, after two small detours to Lafayette, IN, and Pittsburgh, PA.

2. Visited SMI in Bethesda, MA. She was the Director of LPEM when I joined that research institute back in 1996. I also had assisted her in Microeconomics course (1995?) in Univ. of Indonesia while completing my college years. SMI is one of the Indonesian top economists, now serving as one of the Executive Directors in the IMF. It's been a while we haven't met again. Last time, she came to Champaign-Urbana, IL with her family to visit her alma mater before starting the new role in the IMF headquarter. Had breakfast with her family: nasi uduk, krupuk udang, tahu goreng, and rendang! It was so good, especially after all this years consuming American food. Thanks a lot, Mbak Ani!

3 Now, back to office.

4. The day as it resumes:: Breakfast: salmon, boiled eggs, rice. Lunch: indomie and lontong. Dinner: not yet, will go to dinner farewell of two friends later this evening. Work: checked simulation result at home, now trying to assemble with the previous ones. Music: J. Coltrane, Cannonball Adderley, Miles Davis.

Saturday, December 20, 2003

1. It's freaking cold outside. Snow is not that much, but oh my, why is it supercold like this? Those weather guys said it would be 27 F this afternoon with wind chill of 14 F. But it feels like 20 F, really. God, I miss Jakarta. (No, I miss Makassar more.)

2. Campus is quiet. Those happy undergrads have left for homes. Most faculty members are travelling to South, seeking warmth. Good for them. Only a few people are left. And of course those few people are mainly... us grad students. Finish, finish, finish!

3. The day as if it is ending (it's Friday, c'mon!):: Breakfast: Costa Rican, medium bodied roasted coffee plus choc croissant. Lunch: catfish and salad. Dinner: has yet to come. Reading: none (what a wasted day). Work: writing up summary estimates, done with fixed parameter model, now on limited random parameter; still running one at home. Radio: none (actually, they are still talking about George Ryan. Boring). Music: Hillary Hahn (Bach Concertos), Herbert von Karajan (Forever), Benjamin Britten (Bach's Brandenburg Concertos 1-6).

Friday, December 19, 2003

1. It feels good when you find a plausible answer to what you thought was anomaly. Good that I discussed the problem (yesterday, # 1) with YC and JBB. Now things fall into places. Have run separate smaller regression and got identical results leading to the "anomaly" yesterday -- now in quotation, since as it turns out, it is no longer anomaly. Here's the story. Those respondents who claimed that lot size is "very important" factor when buying a house happen to already have larger-than-average lot size (compared to the overall sample mean). Same thing with house size. That is why, despite the fact that they expressed greater importance of lot size, the variable itself, as shown by the estimate, doesn't have big effect on their buying decision.

2. A reporter from Chicago Tribune contacted JBB, asking to make appointment for extended interview regarding our report on the Project W. He wrote to JBB that "people keep citing your study" and "it was very influential". Let's see how the coverage plays out.

3. The day as it is crawling:: Sahoor: indomie, egg, chips, tangerine. Ifthar: pita, hummus, chicken, salad, pepsi. Coffee: Guatemalan. Music: Branford Marsalis, Wynton Marsalis, Weather Report. Reading: NYT (Tom Friedman's column. He is still a liar! Lexus and Olive Tree time is over, buddy). Radio: George Ryan's bribery scandal (and he was nominated for a Nobel? Give me a break). Work: discussed the strange result with JBB via email (see # 1 above); extended models as to include dummies for family size; interacted with each main attributes; running another set at home with OxGauss (letting the parameters lot size, house size, public areas, and class size to be random); cross-checked matrix order (Gauss is poor when it comes to data manipulation, Stata is better. But Stata is not good for simulation -- Gauss is), JBB reminded me to send an abstract for Colorado workshop -- due Dec 31. Others: compressed old files to create more space in this lovely old machine: yeah I have been abusing it forever; light but constant snow: now 2 inches outside; Mumford Hall is quiet: people are having holidays? What, holidays?

Thursday, December 18, 2003

1. Burnt out. At first, you think you get great results after waiting so long before your econometric model converges. Then you start making sense out of the obtained estimates. Then before long, you realize: many of them are plainly non-sensical. What will you do? I was happy to find out that all variables for school quality are in expected signs and significant. Households prefer buying a home close to public school with smaller class size. Those who speaks English reveal this effect stronger. So as those who live in W. Furthermore, those who stated that school quality is a very important factor in house buying decision reveal stronger effect. Great. I expected all this. But what is going on with lot size and house size? As standalone variables, they are good: houses with bigger lot and larger living areas are preferable. But why are these effect LESS strong on those who actually think that these attributes are very important? I am confused. Also a little surprised that family size and child(ren) presence are insignificant. Environmental-related variables are so far less complicated. So are income and price variables.

2. Moore wrote a satirical column on Saddam. He analogized Saddam with Frankenstein (he of course meant Frankenstein's monster). Unfortunately Moore wasn't careful. Did he ever read that Frankenstein novel? He mixes up the analogy like almost everybody else. True, the accidental creator of the monster in the original Mary Shelley's novel is Victor Frankenstein, but the crature never has a name! and Victor Frankenstein is NOT a doctor, he's a graduate student who likes to experiment in his own scince room. I bet Moore only watched those misleading movies.

3. The day as it is ending: Breakfast: self-brewed Arabica coffee, macaroon, ginger bread, tangerine. Lunch: grilled chicken sandwich topped with Swiss cheese and green pepper. Dinner: salmon, salad, tortilla chips (yes, getting bored, but still alhamdulillah), Starbuck's coffee ice cream. Reading: AlterNet (Moore's column). Work: see # 1. Radio: Gov. George Ryan's and Attorney General John Ashcroft's corruption scandals. Music: Modern Jazz Quartet, Mahavishnu Orchestra, George Benson. Others: 21-32 F.

Tuesday, December 16, 2003

1. Honestly, I had mixed feeling when I saw the TV coverage on Saddam capture Sunday morning. I always hate him (as much as I do to Hitler, Idi Amin, Pol Pot, Pinochet, and Milosevic). There was a relief in me knowing that he's going to pay for what he had been doing to the Iraqis. This man is powerful, yet evil. But, when the camera showed him in that Karl Marx look but with deemed eyes, he looked so powerless. Fine, he's paying up. Then it was shown how the US officer "checking on his health condition". This is when I felt something bothering me. Why do the media show that to the word? Is it just me: or is it not anywhere in Geneva convention or whatever that enemy should not be humiliated in public? But maybe I was wrong.... Another thing: what if that scene invites even more misundestanding, more bloodshed?
So to make long story short, I was having coffee this morning at Panera. I picked up USA Today, and came across this piece by Stan Weintraub. He can't describe what I felt better.

2. The day as it finishes: Breakfast: Panera's hazelnut coffee plus choc croissant. Lunch: Indomie plus sun chips and two tangerines. Dinner: mackerel, salad, salsa plus chips. Readings: DI (a story of local taxi driver), NYT (Krugman on Halliburton-Cheney scandal in Iraq), Morey and Rossman 2003. Work: Consulted with Rossman of BSC. She sent her Gauss code for bootstrapping confidence intervals. Simulating main effects plus attitudinal variables in one set, letting the environmental parameters to be randomly drawn from normal distributions. Got frustrated with Excel (it can only handle 254 variables!). Music: Armstrong-Ellington-Bechet. Bads: Got ticketed for illegal parking (oh, $20). Others: Today is 100th anniversary of the Wright Brothers invention (Google logo is cute).

1. Woke up with anxiety. Been like that for quite some time. This time pressure is overwhelming. Maybe not. Maybe it's just me, always procrastinate when it comes to academics. Then have to pay it up with panic everytime the promised due dates are approaching fast. Have tried to always remember JBB's advice: Write, Do Not Wait Until Get Perfect Result. But I just can't. A friend also gave good suggestion: For Now, Finish Quick Not Finish Well -- I wish these two were complementary for my case. Apparently not. Maybe, I have to lower my expectation. Am in denial: I am Pinocchio. Where's Jiminy Cricket?

2. Conclusion: Life is still the same. Wake up at 6: then daily errands to do. Get to office at 8 or 8.30, preceded by: coffee and something (if Panera: Colombian blend or Costa Rican conquistadores plus chocolate croissant; if Espresso Royale: Ethiopian or Mexican plus chocolate muffin). Oh, on the way from coffee shop to Mumford Hall, grab the Daily Illini, skip most of the news but not the Boondocks. Or forget about newspaper, if NPR is more interesting. Then, office. Wake the mouse up. Enter password on the screen. Check emails. Browse the New York Times. If time permits, look quickly to any Conservative media, just to make sure not to be too Liberal-influenced. (BTW, William Safire's column today is about Saddam's capture. As usual, Safire with his insider-information-type-of-showoff like Friedman, lies). Then really start working from 9. And time flies. Lunch at 1 or 2 (Bevier or Red Herrings or any chinese restaurant on Green St; or simply some indomie of course). Get back, resume the work. And time flies. It's 4.30 or Maghrib time, whichever comes first. Go home grab some quick dinner. Relax a little bit with BBC or PBS or The Simpsons or Everybody Loves Raymond. Until 7.30 or Isha whichever comes first. Then come back to office. And time flies. Go home at around midnight. Sleep and wake up. See, life is still the same. But that's OK, I tell myself...

3. Today as it flows: Fasting. Music: Miles-Coltrane-Bechet. Reading: DI (Saddam, Boondocks), NYT (Safire: of course, biased), Train 1998 (focused on the WTP/CV), Morey et al 2003 (focused on interaction terms). Research: OxGauss (random parameter logit, singular Hessian again! oh), Stata (clogit to test standard estimates, now including attitudinal responses, converged, but what's the rationale?). Dinner: salmon-salad-tortilla. Coffee: Espresso's House. Bad(s): illegal parking twice.

Monday, December 15, 2003

1. Saddam captured. Euphoria shown on TV, broadcast through radio, printed on papers. Question: so what? It took too long and too many lifes to get this one man? Even by the "most powerful, mighty nation" in the world? Something is so fishy. Especially near the election. As for some, Saddam seizure is "one down, three to go" sort of thing. And that three is Bush, Blair, and Osama. Say what?

Friday, December 12, 2003

1. Publish or perish. This has been the adagium I would like to believe until not long ago. Until I learned that publishing your work in academic journal could actually cost you a fortune. Maybe because I have few times made money by publishing popular article in newspaper, I wrongly do not anticipate that when it comes to scientific article for academic journal, there is an awful lot of page charge, correction fee, plus additional charge if you want some color plates involved! Sent a manuscript to a high profile, specialized journal about a month ago. Got a response from the Editor. The attached documents there asked us the authors to sign an agreement to pay charges of about more than $2,000. That's only for page charge (it's $60/page). Then there was $1 per correction on the page proof, and finally $1,000 if a colored paper (for graphs, etc) requested. [Long sigh here]...
This is discouraging. How can you publish if you don't have enough fund? How can you not perish? An overoptimistic view, however, would be: publish once (is alright, but only) in Number One Journal! Then enjoy the fame afterward... [Sigh, once again]... Should the adagium really be expanded to: Publish or Perish or Pay Up?

Wednesday, December 10, 2003

1. Media today center on the death of US Senator from Illinois Paul Simon. I heard he's a great guy. But I have no idea about his political life (nor do I know of general politics). Pity my ignorance, to hear everybody talks about him: NPR, USA Today, Chicago Tribune, Sun Times -- all headlines. This gentleman was something, at least I can conclude. If my quick skimming on the Tribune this morning was accurate, he happened to run for presidency. Also, back in Reagan's USA, Democrats were beaten everywhere, except Senator Simon from Illinois.

2. While I have to admit, my grief this morning goes more toward Record Service. This is a local music store on Green Street. It is closing as an inevitable response to coming bankruptcy, today's Daily Illini reports. I remember, every once and a while, I go there. Not necessarily to buy CDs (student, student!). Just browsing around, updating myself with recent releases, or simply to check if somebody is crazy enough to sell his/her used Duke Ellington or Sidney Bechet (in which case, I woudn't think twice to forego a take-out dinner), is more than enough to balance out the torture from some econometrics. Or, sometimes, as I pretend that I can enjoy classical music, too, as I do with jazz, I go there, and proceed to the second floor: Figaro -- its classical music separate section.
Now they're closing. They can't compete with the Internet.... I checked my membership card in my wallet: soon this will become a memorabilia....

Tuesday, December 09, 2003

1. Frustrated with slow progress in research, I spent 15 minutes of my morning with coffee, bagel, and news. Happened to check Guardian Unlimited (my favourite UK-based mag - linked on the side), I got across this news. It tells about an FM jazz radio in Manchester that has to change its name, because it is "literally turning people off". And it will not only change its name from "Manchester Jazz FM" to "Smooth FM", but it will also "play a broader mix of music". I feel sorry whenever reading this kind of news. When identity has to be given up to whatever market dictates.

Saturday, December 06, 2003

1. There is this small neat restaurant at the corner of Fourth and University. It sells Thai, Chinese, and Vietnamese food. Prices are reasonable, food is delicious. And what I like the most is, all the food come in real, decent serving dishes. (I hate eating in a Chinese restaurant where, when I order "big meal" like fish, it comes in that soft, styrofoam "plate", or even worse: paper plate). This restaurant is recommended, both in terms of food served an in the way it serves its customers. Not to mention the clean and convenient room.

But it had been closed for more than a week. What happened? I had been coming there several times only to meet the same notice on the door: "Closed". Luckily, today it's finally open. I went there this afternoon. The nice lady who co-owns the restaurant and also serves as one of the cooks looked so sad. I asked the waitress what had happened that made them closed for many days. And she told me this sad story. The husband of the sad lady is in the hospital. He was hit on the head by a drunkard some night. Really hard, he now can not retrieve a single memory. Poor man. This is the same nice man who always offered me fried eggs, sunny side-up with two eyes, whenever I asked for combo fried rice. Now he is lying in the hospital not able to remember anything. God, please let him have his memory back. If all is too much, at least the good ones: about his wife and his cute little girl.

2. As usual, stopped by Espresso Royale to buy a cup of coffee. And as usual, looked up to today's coffee list. Two kinds served: Peruvian and Sumatran. Funny thing is, they wrote: "Frank Sumatra". I like the humor. I told the waitress, I am from (the country where) Sumatra (is). She stamped my club card twice.

Thursday, December 04, 2003

1. Gloomy and rainy again. It's December, I can't believe. My sixth December in this country. Hopefully the last for this long term period. Many things have happened, many are still slowly moving. Expectation is still up there. Can't even jump to reach it. Got three to five months left to end this significant part of the journey. Choices: finish well or finish quickly?

2. It's always a pleasant excitement to meet old friends. And I just met an old mate through the web. He happens to live in the other side of the Atlantic. "Notes from Ronver Road", Tomi named his weblog, after his apartment street somewhere in London. Reading his nicely written notes in the blog -- he is a well-known Indonesian journalist -- makes my mind travelling back through the time tunnel. About my beloved country (as problematic as it is), about my hometown, about my childhood...

Tomi was my classmate in high school, 15 years ago in Makassar. We became closer as we both joined a karate club in our school. We managed to go to regional competition. Together, with different results. Tomi won something, I was knocked out by a big guy in the very first round of the competition.... (I was in Jakarta 4 years later when I heard Tomi had become one of the karate instructors, while pursuing his college years doing mechanical engineering.)

While doing economics, I spent most of my college years playing around. Not (really) the bad ones. I was excited being involved in campus journalism. Making friends with so many people. Including those from other departments. One of those young journalist fellows was Karin....

I was surprised -- and happy-- to hear couple of months ago: Tomi and Karin got married! What a small little world. Congratulations once again, fellas.

And, nice to meet you again.

Tuesday, November 25, 2003

1. Makassar, twenty years ago. Eid Day -- the end of Ramadhan festivity -- had always been awaited big time, especially by children. Even schools were closed for the whole month prior to the Eid Day, the day of glory. Evening time was always paradise to children. It was the time for the toy of the month: explosives. No, nothing to do with terrorism, mind you. This is simply child's play, amid a little danger content: but who likes to play with safety? Those boys cut some bamboo trees then used the pipe as a cannon to explode some kerosene or gasoline put inside it, lid by a small fire on the other end of the pipe. It exploded with banging sound. The louder it was the happier those lads were. We competed on who could come up with the loudest cannon. We tried to be up all night, just to be able to fire our cannon at four o'clock in the morning. Yes, to wake up adults from their sleep. So they could have their sahoor on time. Wasn't it good? A ten year old boy thought it was.

2. Makassar, fifteen years ago. Some teenagers always thought that Ramadhan was the time for motor racing on the beach. Who could resist the temptation to motorskiing between cars, buses, and trucks? Ramadhan was perfect since many people broke their fast on the beach while enjoying the sunset. They were captive market. To show up our "talent" to. Of riding motorcycle at 100 kmph in a crowded traffic. The happier you were when your bike could roar very loud. Or you could simply came with glaze-machined motorcycle. Girls liked it. You would be the star. Danger is not to worry.

3. Somewhere across the ocean, thousands of miles away from Makassar. The then-ten-year-old-boy- turned-racing-teenager is now twice his adrenalin-junky age. He just learned the true meaning of Ramadhan. Now, the night of Eid Day he is contemplating. He wants to go back...

4. To fix things up. Would that be...

5. Possible?

1. Snow. Really cold. It's 25 degrees outside, with wind chill of 9 degrees. Can hear the wind banging on the windows...

Monday, November 24, 2003

1. Thanksgiving Week. Started with rainy, gloomy day. Works ahead: no holidays deserved.

Wednesday, November 19, 2003

1. Have to go home-office back and forth. Am doing simulation with PC at home -- have to, since computer at office is slow and doesn't have enough memory. Using laptop is no solution, too, since it gets heated quickly. Well, this is the cost you have to pay for playing with huge data set, amid doing simulation. The data set is 15,000 by 30 cells. The simulation needs at least 10,000 repetitions per observation, with at least 100 iterations. This is taking so much time. Not to mention I am a novice in GAUSS programming. Hope everything works.

2. Urbana has been wet for 3 days. But rain is beautiful.

3. Happened to turn on the TV last night (after abandoned sooo long). PBS was airing a documentary on the Kennedys. It was good and very informative (am considering to purchase the DVD). I learned something *new* about that famous dinasty. That Joe, JFK's father, was FDR's main campaign donor. That JFK was nicknamed Jack (hey, I'm no American, don't laugh at my ignorance!). That JFK plagiarized but got Pulitzer for that. That RFK was small and thin. And Ted was problematic drunkard. But Jackie was always the same: Beauty.

Monday, November 17, 2003

1. It has been a superhectic week. Had to present the research at the Second Annual ACE Graduate Student Research Celebration (my god, why do they use such a long, terrible name?). The presentation was fine, but not as good as I had expected. (And hey, no evaluation form this year?). It was just a report of previous results plus some motivation for the next stages. I was so hoping to include some welfare calculation based on a simulated estimation, to compare with the classical, non-simulated previous result. But, what could I do, the program did not converge until 10 hours before the presentation! In fact it has not converged till now, for crying outloud.

2. DSB raised an interesting point in my presentation. I mentioned a study by Lichtkoppler and Blaine for Ashtabula County as a comparison to my estimation. Their welfare figure, after being scaled up to community level-- is well below ours. I was alluding that it might be due to the form of their survey: they used a tax-referendum contingent valuation, asking directly how much tax increase respondents are willing to bear in order to enjoy a better particular condition. I am afraid that kind of survey invites protest responses, for I have found such sentiment all over the comment/suggestion box in our returned surveys. But DBS implicitly contended that WTP as espressed through referendum might be the unbiased one. Well, I think I would disagree. As JBB said afterward, the central issue here is who should pay for the cleanup of legacy pollution. Confronting respondents with referenda would definitely induce protest bids -- and thus downward biased welfare measures. However, I agree that our numbers might also be overestimated since embedding effect might have played some role. Need to check on this further.

3. MK and AA questioned my stepwise elimination of insignificant parameters in order to get the most parsimonious specification for welfare measurement. Their main concern was the possibility of bias from variables omission. Admittedly, I had overlooked this issue. The reason I eliminated "unimpotant" variables one-at-a-time was to avoid obscuring the log sum formula of probabilistic welfare calculation. But, yes, I should have addressed this issue, too.

4. Urbana-Champaign gets colder. Wildly colder, though with no snow yet. One day the weather changed so extreme. In the morning it was 60 but it dropped to 23 in the evening.

5. Out of tiredness and boredom came desperation for new environment. To Borders I went (where else in this town, given limited time -- as tight as it can be?). No particularly interesting new books found. But got so tempted to buy Hilary Hahn's new album . And failed the temptation: In fact not only bought Hahn's, but added two more: Royal Philharmonic Orchestra interpretation of Andrew Lloyd Webber (have been loooongg time of waiting) and Best of von Karajan. Hope these new babies will help me speed up the dissertation, to say the least :-)

Sunday, November 09, 2003

1. Bush said he wants to "export American democracy to the world". Hahaha.
2. Subhanallah. Total lunar eclipse! The Earth was standing right in the middle of the Sun and the Moon, blocking the sunshine to reflect on the latter. We observed this great phenomenon, embedding it into the taraweeh.

Tuesday, November 04, 2003

1. Yesterday he asked us to kindly pray for her mother's recovery. She was in Pakistan, in critical condition after surgery following a heart attack. Just this evening he again asked us, his friends, to pray for the mother. She died this morning. Azeem, may your mother find a better home up there.

Monday, November 03, 2003

1. Refreshing on Bayesian. Two boxes of balls. First box has 10 red balls and 30 green balls. The second one has 20 reds and 20 greens. What's the probability of a person (randomly) choosing the first box? Yes, 50%. That's true if you haven't observed anything prior to answering that question. But, suppose you saw a person randomly chose a box (either one) then randomly picked a ball (either one), and as it turned out he got a green. Now, I ask you again: What's the probability of that person (randomly) choosing the first box? Now you become subjective. Conditional on your having seen him got a green, you will go: "Ehm, I guess it is more likely that he chose the first box, not the second box". That is, you're saying: it's more than 50% (because you know, the first box has more greens). Indeed, using Bayesian approach, it is 60%. Why? The conditional probability of randomly picking up a green from the first box is 75%, and from the second box 50%. The prior probability of randomly choosing each box is 50%. Bayesian Theorem says, the posterior probability (or, subjective probability, if you like) of choosing the first box, given that you saw him hold a green is the joint probability of (a priori-ly) choosing the first box and getting a green out of it, divided by the sum of both joint probabilities. That is, 60% = (50%*75%) : [(50%*75%)+(50%+50%)].

Sunday, November 02, 2003

1. Waiting for the break of day // Searching for something to say // Flashing lights against the sky // Giving up I close my eyes // Sitting cross-legged on the floor // 25 or 6 to 4 // Staring blindly into space // Getting up to splash my face // Wanting just to stay awake // Wondering how much I can take // Should I try to do some more // 25 or 6 to 4 // Feeling like I ought to sleep // Spinning room is sinking deep // Searching for something to say // Waiting for the break of day // 25 or 6 to 4 // 25 or 6 to 4.
(Chicago, "Chicago Transit Authority", 1969)

Saturday, November 01, 2003

1. Do I need to take anger management class?
2. "Be quick in the forgiveness from your Lord, and pardon (all) men - for Allah loves those who do good." [3:133-134].
3. "But indeed if any shows patience and forgives that would truly be an exercise of courageous will and resolution in the conduct of affairs." [42:43]

Friday, October 31, 2003

1. Completely agree with Krugman for this. "Economists don't usually make good speculators, because they think too much." (The Great Unraveling, pg. 40).

Wednesday, October 29, 2003

1. Second day of Ramadhan. People are still killing each other there in Baghdad. And in many other places.
2. Yesterday was severe. Got an unbearable headache. Couldn't even turn my head down. I am sure it was not because of the fasting. But maybe of the extreme change in weather. Or, do I have too high a blood pressure?
3. And this morning, thanks to a dead battery inside the alarm clock, I failed to wake up for sahoor. Good that I ate something -- yes, it was ramen, but this time I added some corned beef in, to your relief -- last night before going to bed. (BD my friend would say: God, that's terrible. Eating ramen before night sleeping. You're gonna die soon).
4. Cold. But not that cold as yesterday. I chose to walk rather than taking a bus. I like walking. It gives me time to read 5-10 pages everytime before arriving at Mumford. Yes, non-academic stuff. I'm reading Yann Martel's "Life of Pi", an NYT bestseller and Booker prize winner. (I bought this last week along with Krugman's new "Great Unraveling" -- left me with three "homeworks", the other one being Everitt's Cicero). This novel, "Life of Pi" is about a character Piscine Patel, a boy (then, eventually a grown up) who is in search for God(s). Born as a Hindi, he came across Christianity and Islam. I enjoy Martel's style. Flowing like Ganga, the river Pi likes to talk about.

Monday, October 27, 2003

1. Attended a Sunday morning service at a Presbyterian church. John and Linda invited me to observe their church's rememberance of Marthin Luther, John Calvin, and John Knox -- all the "Voices of Reformation", fathers of Protestantism. It was a unique experience. John explained to me about how there are so many Protestant denominations: Presbyterian, Methodist, Congregationalist, Baptist, etc. How they differ each other and how they all emerged as forms of protest to then highly hierarchical and dogmatic, Catholic Church.
We then had lunch at Za's. Discussed about Islam and how muslims think about Prophet Jesus.

2. Hey, I just noticed that the street where the Virginia Theater is, is named Roger Ebert Boulevard. Since when? I knew it was either Randolph or State St. Hm, must be because Ebert has given a good name to Champaign with his yearly Overlooked Film Festival -- that always takes place at Virginia Theater. I heard Champaign City Council had also passed a bill in 2001 to name a street between Neil St. and Chesnut St, "REO Speedwagon Way". Funny, but creative.

3. Tonight is the first taraweeh night. Meaning, fasting month is starting tomorrow. I can't believe, this would be my sixth ramadhan in America. Time flies.

Sunday, October 26, 2003

1. The "Dragon Lady" died. Her name was Soong May-Ling. She passed away in New York yesterday, at age 106. May-Ling was a powerful lady, the widow of Taiwanese's Generalissimo, Chiang Kai-Shek. She, also known as Madame Chiang, was the second woman (and the first Chinese national) to address the United States Congress with her "Free China" campaign. Her longtime fight, continuing on Kai-Shek and brother-in-law Sun Yat-Sen, has rewarded her the fame. She's one of the Gallup Poll's "10 Most Admired Women in the World", and together with Kai-Shek were the Time's 1937 "Man and Wife of The Year". She was the lady who spoke for Kai-Shek --and thus for China (or, for Taiwan in that matter)-- in important meetings with Roosevelt and Churchill.
But did he ever succeed? The Mao's CPC is still there, all over the mainland. Kuomintang is history. [Learn the story from Wikipedia, click the link in the sidebar].

Thursday, October 23, 2003

1. Had a meeting with JBB. I thought it was going to be tough on my side, since I had not accomplished enough on my progress. But it turned out to be a friendly talk. He even talked more on how to become a good researcher, how to deal with journal editor, how to manage time wisely, etc. Most importantly, he pointed out my "biggest weakness", namely my inability to "stop reading". Yeah, I admit that. I tend to read on and on and on. It never stops. Good in a sense, but as he said, I will never have time to write down all those ideas in my head if I can't stop reading. That's true. I'm so not focused. Thank you, Professor.

Monday, October 20, 2003

1. "I still think [the U.S. of] America is the best nation in the whole world. If anybody finds a better want, call me collect". That is a quote from Rev. Ben Cox's appearance on NPR this morning. Cox, along with Ed Blankenheim and Hank Thomas visited UIUC last weekend. They are three survivors of the famous 1961 "Freedom Riders", a civil right movement to end seggregation. It's disheartening to even imagine how this country treated black people back then. Prior to 1961, Blacks --niggers, as they call them-- have to sit in the back seats when riding bus. Front seats were for the Whites. This segregation also applied in most public utilities. Schools, toilets, waiting rooms, sport events, etc.
Then, a group of seven whites and six blacks got together for the Freedom Rides, a non-violent act of protest in the form of bus trip from Washington D.C. to New Orleans. The plan was, along the trip, the blacks would sit in the front rows and the whites in the back. Also, whenever they stop for restrooms, restaurants, etc, they would use the facilities designated for the opposite race. Well, they never made it through to New Orleans. The bus was set on fire by a mob in Alabama. While the 13 riders were trapped in the bus, the mob held the doors closed. They were faced with only two choices: to break the bus window to get out to get beaten by the mob, or to stay in the bus to die suffocated by the smoke. They finally managed to fled the burning bus. But the ride ended there.
This morning, I heard one of those 13 heroes talking on the radio. He still loves this country, yet he sounded wounded.

Sunday, October 19, 2003

1. I'm a fan of Wynton Marsalis. But not too big. Maybe I like Branford more. Wynton is sometimes too "political". As far as the Lincoln Center Jazz Orchestra is concerned, WM and his friend, Stanley Crouch, that famous jazz critic, have been known as being very discriminative. Rumor has it, some jazzists can never reach up to the surface if they don't make friends with Wynton and his gang. And Wynton is everywhere: Ken Burn's PBS documentaries, Jazz for Kids shows, etc. I enjoyed Wynton's performance last year here at the Krannert Center. But something keeps telling me: this guy is "dangerous".
So, yes, I like Branford Marsalis more. He's cool, and he maintains a very low profile (while everybody knows, he's one of the today's sax giants). He doesn't discriminate: he plays with Sting, but it doesn't undermine his jazz authority. And he plays Satie perfectly!
I am writing this as I am listening to James Carter's "Chasin' the Gypsy". I am asking myself: Why is this guy somehow underrated? Is it because he's outside the Wynton's network? Listen to this CD, and you will understand what I am saying. He brings back Django Reinhardt -- now thru bass saxophone. This CD is amazing. Featured violinist, Regina Carter (a sibling?) also plays fantastically. I have listened to the other CD, "Layin' in the Cut", released at the same time with CtG. It's really different, but equally yummy! CtG is fully acoustic, while LitC is plugged. I usually don't like electrical/plugged, but LitC might change my mind. I've heard Carter has had jam sessions with post-Coltrane soldiers: Buddy Tate and the likes -- those whom Wynton "prohibits" to play at Lincoln, ironically. I will buy that CD.

Friday, October 17, 2003

1. I don't give a damn to football. And I know little about baseball. But on the latter, this whole Chicago Cubs fans' and media's scorning on this guy named Steve Bartman is driving me nuts. What's wrong with you people? When you lose, you lose. Why blame it on somebody else? Here's the story.

After a really long, long period of wait, the baseball team Chicago Cubs finally made it to the NL Championship Series, after beating Atlanta. Next target: World Series. But first, has to beat Florida Marlins to become the NL Champion.

In the Game 6 at Wrigley Field, Chicago, with standing score of 3-2 for the Cubs, the Marlins' Luis Castillo hit the ball very hard. The Cubs' Moises Alou tried to get the ball, making a leaping catch at the wall. And entered Steve Bartman, a 26-year old Cubs fanatic. He catched that "foul" ball from his supporter paid seat. This is normal, I see it on TV so many times: anyone would have done that. And, mind you, Steve is no Fantastic Four's Reed Richards who can elongate and extend his body elastically!

Now, the umpires didn't call it "fan interference" -- they ruled the ball was not in the field of play. The Marlins then won the game 8-3, made the score 3-3 and forced a seventh, deciding game. Instantly, most Chicago fans, newsmedia, players, manager, and even the Illinois governor blamed Steve for that loss. WHY? Do you think, if he didn't manage to catch it, you would have won? You guys just need some scapegoat. Yesterday the Marlins finally beat the Cubs 9-6. And of course, more curse on poor Steve. My full sympathy for him. He, infact, has posted an apology (which I don't think he needed to):

"...I've been a Cub fan all my life and fully understand the relationship between my actions and the outcome of the game. I had my eyes glued on the approaching ball the entire time and was so caught up in the moment that I did not even see Moises Alou, much less that he may have had a play. Had I thought for one second that the ball was playable or had I seen Alou approaching I would have done whatever I could to get out of the way and give Alou a chance to make the catch. To Moises Alou, the Chicago Cubs organization, Ron Santo, Ernie Banks, and Cub fans everywhere I am so truly sorry from the bottom of this Cubs fan's broken heart. I ask that Cub fans everywhere redirect the negative energy that has been vented towards my family, my friends, and myself into the usual positive support for our beloved team on their way to being National League champs"

Poor Steve. And shame on those who blame him. Double shame on Chicago Sun-Times who committed a cheap journalism by revealing Steve's identity, giving access to many Cubs idiot fans. Double shame on Governor Blagojevich who alluded that Steve "did something stupid". No, make it triple, since he also said "I hope he made it home, but I'm angry at the guy". Rod, it's baseball, stupid!

Thursday, October 16, 2003

1. Went to see a concert at the Krannert Center. It was the "Drummers of West Africa", the world famous percussion big band from Dakar, Senegal led by the legend, Doudou N'Diaye Rose. He's fantastic. I especially enjoyed "Les Rosettes". He orchestrated about 30 musicians playing traditional Senegali drums. The beat was trancelike. When he cited Al-Ikhlaas from the Qoran, I felt an aura of sufism were all around -- not like Rumian's soft sufistic movement, but more of African agressive beat. Different. Spectacular.

Monday, October 13, 2003

1. On clarifying the oft-confused terms Multinomial Logit Model (MLN) and Conditional Logit Model (CLM):

The standard source for CLM is McFadden's "Conditional Logit Analysis of Qualitative Choice Behavior" (1973 -- there are some citation confusion in the literature: sometimes it is stated as 1974, e.g. by Louviere et al, 2000 or by Long, 1997. But in fact the true citation year is 1973, I downloaded the original paper from McFadden's website. This very important article appeared in a book edited by P. Zarembka, "Frontiers in Econometrics" pg. 105-142).

I believe, McFadden was the first one to derive this econometric model from theoretical RUM model of Thurstone (1927, A Law of Comparative Judgement, in "Psychological Review" journal). The term RUM (Random Utility Model) itself was coined by Marschak, 1960 referring to Thurstone's model. On the other hand, MLN was a mere extension of binary logit model, first used by Theil (1969)'s Int's Econ. Review paper, "A Multinomial Extension of the Linear Logit Model."

When I was writing my proposal last year, my main source was Louviere et al, 2000. They never mentioned the term Conditional Logit Model. But, as I found later, what they discuss in the entire book is McFadden's Conditional Logit Model. This using of the term MNL while referring to CLM is also shared by many other sources, including Ben-Akiva and Lerman (1985). To be precise, I should have used the term CLM instead of MNL in my proposal. In fact, I have made a clarifying footnote in the paper I presented in Montreal (footnote number 5, page 6). I copy:

"The difference between the MNL and CLM is that in the latter case, the values of the choice characteristics vary accross choices, while the parameters are common across choices. Here, the likelihood of a choice decision is calculated conditional on the nature of the choices that defines the choice sets. In the former case, however, the values of the variables are common across choices for the same person, but the parameters vary across choices". Note: the term "conditional" has a rigorous rationale econometric-wise, see McFadden's 1984 article in Handbook of Econometrics.

The main different between the two is that the standard, original MNL assumes that the choice probabilities are dependent on individual characteristics only, while the CLM considers the effects of choice characteristics as well (Maddala, 1983). Powers and Xie, 2000 put it this way: "In the standard MLN, explanatory variables are invariant with outcome [or, "choice" in our case - AAP] categories, but their parameters vary with outcome. In the CLM, explanatory variables [may - AAP] vary by outcome as well as by individuals, whereas their parameters are assumed constant over all the outcome categories".

2. On why alternative-specific constant(s) is(are) needed in CLM specification:

Take Earnhart's 2001 study (or why he doesn't encounter problem like we do): He has 3 alternatives for each choice set. They are generic: House 1, House 2, House 3. However, he associates each of these alternative with particular natural feature: respectively "Water-based amenity", "Land-based amenity", and "No amenity" --yes, this last one sounds funny. So, e.g. his House 1 is always water-based amenity. He actually has subdivison of these three amenities. For example, "Long Island Sound", "Saltwater Marsh", "Freshwater Marsh", "River/Stream", and "Lake/Pond" are all in the "Water-based amenity" group. He uses pictures to represent these different amenities. It seems that he uses generic labels "House 1" etc to avoid the more specific "Water-based amenity" etc, i.e. to minimize strategic behavior of the respondents (there is literature on generic vs non-generic labels, related to cognitive response). Now, in his ASC specification, since he has 3 alternatives, he should include 2 ASCs. He uses "No amenity" as the base, and creates two dummies for "Water" and "Land". Next, for the SP part, Earnhart only includes hypothetical houses. In his RP part, he has one house actually bought by the respondent, plus two other houses sold in the town in the same month and year -- picked at random.

Our problem: we cannot attribute the generic house labels to some other inherent attributes that are choice-specific. We can only use "Hypothetical Home" versus "Status Quo Home." Thus, the culprit when combining RP and SP, since in our RP set, the chosen home is always -- again, always -- the actual home. Thus, perfect collinearity with th eoutcome variable.

Louviere et al's book doesn't mention explicitly that ASC is a must. However, in all models and examples, they include ASC. So does McFadden's 1973 pioneering article. I believe Ben-Akiva and Lerman (1985) and Ken Train (1986) are among the first to recognize the importance of ASC, econometrically, i.e. to ensure that the error term still has zero mean. Intuitively, the ASC serves as indicator of the difference in utility between alternatives, all else equal.

My earlier note (response to SC's question):

"Variable HH --hypothetical home -- in our model serves more like a "constant" (by construction, conditional logit does not have "the usual constant" like MLN, since it
cancels out, mathematically. However, we have to somehow include alternative-specific constant to ensure that the estimation sample for each alternative exactly equals the proportion of decisionmakers in the sample that actually chose that alternative). What this ASC gives us when included is three-fold. First, it provides a zero mean for unobserved utility, and second as noted by Train (1986, pg. 25) it can mitigate inaccuracies due to IIA property. For this second issue, we don't need to worry because we ask respondents binary choice.). What's the interpretation? The minus sign there indicates that in general, respondents are reluctant to changes (they don't like to move to the so-called hypothetical homes). This is also confirmed when I calculated the probability of choosing alternative HH;
e.g. for base model, average Prob(HH is chosen) is 0.17 and average Prob(SQ is chosen) is 0.83. This estimates are close to actual frequency of HH and SQ -- status quo home-- chosen in the survey. I don't have the figures for the completed 954 survey handy now; but the figures for 908 survey were 22% HH and 75% SQ"

Saturday, October 11, 2003

1. Attended an interesting talk by Vernon Robbins, a professor of comparative sacred text studies in Emory University. His research is on comparing the New Testament's 4-Gospels (Matthew, Mark, Luke, and John) and the Qoran. Among all, he compared the number of referrals to Jesus in Gospels and that to Mohammad in the Qoran. He found that the Gospels refer to Jesus more than 900 times, while the Qoran only refers to Mohammad 4 times. He concluded that Christian Bible is Jesus-centric, while the Qoran is not Mohammad-centric, but Allah-centric. That's is also, as he asserted, why a Jesus follower is called Christian, whereas Mohammad's follower is not called Mohammadian. Hm, I found his research less convincing. He just counted the number of appeareance of the names. He didn't consider pronouns. What if the Gospels mainly use third-person narratives, and the Qoran second-person?

Friday, October 10, 2003

1. Driving early this morning, I listened to NPR's Morning News. The news said: "The library of the University of Illinois at Urbana-Champaign is celebrating their acquisition of it's 10 millionth volume." The campus' News Bureau said: "[This library] is the largest public library in the world." Wow. Then I realized how so many students really don't appreciate this superfacility. I know one student who got his Ph.D without ever visiting library! I know some advance graduate students who have no idea how to find books in the main stacks. I know many students who never check books online. Who don't know that there is this thing called "interlibrary loan". Who don't know that the library has fun stuff: novels, videos, etc. Who don't know there are interesting seminars every now and then in the underground level of the main building. Who don't know there are art movie series and talks once and a while. Very sad. For sure this -- our beloved library-- is the biggest thing I will miss when I go home. Well, some people just don't care. Some people don't even read.

2. Good, the former governor of Illinois, George H. Ryan failed to win the 2003 Nobel Peace Prize. How come someone so corruptive like him ever got promoted in the first place?

3. While in West, the craziest state of America, California has elected it's new governor. He's the Terminator: Arnold Schwarzenegger. What to say?

4. Had a meeting with JBB. I proposed my idea on capturing the warm glow effect. Basically what I want to do is:

4.1) Settle on the definition of "warm glow" that I will analyze. My standpoint is that agents prefer regarding themselves as socially responsible individuals. So this is not exactly similar to "altruism" where an agent's utility function include that of another's. In fact, I believe, an agent can get a moral satisfaction simply from the act of giving and not necessarily out of, say, environmental concern -- in a case of environmental public good.

4.2) It follows, with regards with our survey, I am offering three propositions:
4.2.1. If an agent thinks that the harbor pollution is not important at all, while she reveals a higher-than-average willingness-to-pay for cleanup, then she has purchased some amount of moral satisfaction, i.e. warm glow. 4.2.2. If an agent agree that the harbor area is environmentally safe, while she reveals a higher-than-average WTP for cleanup, then she has purchased some amount of moral satisfaction.
4.2.3. The relevant value to be associated with an environmental improvement is therefore the total value minus warm glow value.

4.3) To operationalize those propositions, I'm offering the following steps:
4.3.0. Derive the model: Direct Utility Function to Indirect UF to Compensating Surplus. 4.3.1. Identify who reveals warm glow effect using the previously calculated WTPs as filter. 4.3.2. Create dummy/effect to distinguish between households w/ and w/o warm glow. 4.3.3. Interact the dummy/effect with choice-specific variables to avoid cancellation. 4.3.4. Reestimate the WTPs with full model that includes the added, warm-glow dummy/effect interaction. 4.3.5. Calculate the difference between WTPs here and the one calculated before. Hypothesis: The new WTPs are higher than the old ones. 4.3.6. Test the significance of the difference, if any. This difference is the warn glow effect. 4.3.7. Assess the warm glow effect based on geographic, income, or ethnic groups.

JBB raised an important concern: Is it alright to use WTPs as the filter for categorizing the respondents, where the WTPs were calculated using previous estimation? That is, he was concerned with the problem of endogeneity. My first reaction was "maybe it's OK". Why? Because we won't use the same WTPs in the next estimation: they are just some filtering mechanism. We will reestimate everything and recalculate WTPs with warm glow dummies taken into account. Need to dig further on this issue.

Alternatively, JBB suggested, try to create new indicators to serve as the proxy of warm glow. Still vague, but he was wondering if we can somehow lump some attitudinal statements and generate a composite index. We'll see how it plays out.
1. Warm glow feeling, altruism, paternalism, moral sentiment.

I'm stuck with this paper. No significant progress after almost two weeks struggling with incorporating warm glow effect proxy into my model. I hypothesized that some part of households' willingness-to-pay for harbor cleanup in Waukegan , IL are in fact due to some warm glow feeling, i.e. not purely out of concern about environment as public good.

Problem is, we didn't specifically address direct questions for this in the survey. Nunes and Schokkaert (JEEM, 2003), for example, have attitudinal questions like "Our family admires the individuals who, on voluntary basis, participate in collecting donations for national programs for social aid and solidarity", or "There are some funding campaigns to which my family and I feel very close and therefore we do not hesitate to contribute a donation", etc. These questions obviously relate to detecting warm glow feeling and can be used for that purpose accordingly.

Unfortunately, all we have in our survey instrument is a set of attitudinal questions that do not directly address this issue. We asked respondents their Likert-type agreement on statements such as "Harbor area is safe", or "Harbor area is economically enhancing", etc. In addition to that, we have perception questions, also in Likert-scale, namely "Harbor pollution is not-at-all-important; or somewhat-important; or very-important". Hm, now I have a vague proposition: "If a household reveals a higher-than-average willingness-to-pay for harbor cleanup, while in fact it stated that harbor pollution is not-at-all-important, then warm glow effect is present". OK, how to model this?

Another complication is due to this whole debate on the definition of "warm glow effect". An article forthcoming in J. Economic Psychology (2003) by Elias Khalil actually addresses this. But it's a little too broad and descriptive without formal model proof (well, I guess that's what I am supposed to pursue). He divides theories of altruism into rationalistic and normative. The first one is further decomposed into egoistic, egocentric, and altercentric perspective. The second one into Kantian, socialization, and warm glow. (There you go...)

Further, summarizing Khalil's rationalistic theories of altruism: "egoistic" altruism (e.g. Axelrod) says that "altruistic assistance would be offered if one expects future benefit". "Egocentric" altruism (e.g. Becker's rotten kid theorem) argues that "donor's utility function includes [that of] potential recipients". While "altercentric" altruism (e.g. Frank, Simon) views benefactor's action as "stemming from a personality trait that arises from artificial selection". Phoohhh...

Enter normative theories. Kantian perspective (e.g. Etzioni) resembles the altercentric approach. However, Kantian cannot distinguish between altruism and "honesty": humans should not deceive others. Socialization perspective (e.g. Mead), on the other hand, believes that agents tend to act in particular ways to gain "approval, respect, admiration, and prestige" accorded by some peer group. Now the third one: "Warm Glow" story. Since this is really my main interest, let's dedicate a separate paragraph:

Arguably, the term "warm glow" was coined by Jim Andreoni (e.g. JPE, 1989). He defines "impure" altruistic action as the act that is partially motivated by the "warm glow" and purely by the concern over the beneficiary's welfare. According to Khalil, Andreoni uses the notion of "warm glow" to explain the puzzle of "why altruists do not greatly free ride". Khalil claims that Andreoni's "warm glow" is just a "by-product of doing the right thing". -- Now, my proposistion above seems to have a rationale...

But then, this warm-glow business has been so controversial in the field of environmental economics. Started by Kahneman and Knetsch's paper criticizing contingent valuation, in JEEM (1992) that says that what people purchase in regards with nonuse values is "moral satisfaction". This paper was instantly attacked by Smith (same journal, same issue) and Anderson (same journal, next issue).

Then there goes the classic economists debate over Exxon-Valdez incident (1992, see links Oct 6 entry below). The famous book edited by Hausman documented the somewhat-mean-spirited debate. Hausman, Diamond, Desvouges, Boyle, McFadden, Milgrom, Ken Arrow, etc. versus Carson, Rowe, Kerry Smith, Rich Bishop, Hoehn, Kolstad, Bockstael, etc. [See also the 1994 heated symposium in J. Econ Perspectives between Portney (neutral), Hanemann (pro), and Hausman and Diamond (con) -- available from JSTOR). Unfortunately, only one article in the Hausman book (the one by Paul Migrom) specifically addresses this issue of warm glow. Reading the discussion, it seems to me that even the panelists and discussants have different definitions of warm glow in willingness-to-pay for nonuse values. And who am I to define it myself?

2. Having done literature review on this warm-glow-effect-business, I conclude that there has been zero attempt to analyze warm-glow share in willingness-to-pay in the context of choice experiment combined with hedonic approach. Provided that I come up with a good, convincing argument in the paper, this work will be the first of it's kind. Admittedly, Kurayama from Hokkaido University has pioneered warm-glow test in a choice experiment (e.g. his working paper, 1998). However, as it turns out, he doesn't need to use hedonic approach, as he analyzes the willingness-to-pay for forest preservation and one of the attributes in his choice sets is the amount of tax or direct contribution to the preservation effort. His theory part is standard and (therefore, should be) convincing. Using Hicksian compensating surplus (CS) concept, he goes on distinguishing between total CS, ex ante CS , and ex post CS. He claims that the pure value of environmental change is the difference between the total CS of environmental quality change and the ex post CS of warm glow. However, when it comes to empirics, I find it much less convincing. In order to capture the warm glow effect, he just adds a dummy in utility function, defined as 1 if tax is positive and 0 otherwise. Why so ad hoc?

Our study on the other hand doesn't have this "privilege" of payment vehicle that can serve as direct anchor for willingness-to-pay for change at stake. We in fact have to do some "magic" (that is, hedonic approach) to squeeze environmentally-related value out of housing buying price. This is what will make this paper contributive, I hope.

2. Reflection: Becker, 1993. Nobel Lecture: The Economic Way of Looking at Behavior. JPE 101(3): 385-409.
Quoted: [I]ndividuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic.

Wednesday, October 08, 2003

1. Time for Econometrics. This year's "The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel", also (disputedly-) known as "Nobel Prize for Economics" is shared by the dynamic duo of time-series analysis, Robert F. Engle and Clive W. J. Granger.
1. Another professor from UIUC gets Noble. This time, Anthony J. Leggett wins the 2003 Noble Prize in Physics. He shared it with Alexei A. Abrikosov and Vitaly L. Ginzburg. Go Illini!

Tuesday, October 07, 2003

1. "Asthenic personality disorder". That's what they, psychoanalists, call people with excessive dependency toward others. According to a source, this problem can sometimes be reflected by a person who suffers asthenia by copying or imitating another person constantly. She subconciously pays attention to whatever her target likes to do. And then she, again subconsciously, tries to imitates him. It is possible that she has never liked to read a particular kind of book or never liked to see a specific genre of movies. But, once she learns that the target likes to read history, for example, or say, to watch Hitchcockian movies, she will change accordingly. She becomes a history book worm and thriller movie buff. This is different with the case of imitating a, say, role model. Asthenia is obsessive imitating disorder. It is "copycatting". And in it's extreme form, it can cause the target to suffer from "agoraphobia" -- a fear to be in an open space, or get exposed (yes, it is quite the opposite of "claustrophobia"). Just like Dr. Helen Hudson (Sigourney Weaver) in the movie "Copycat" (1995, Dir: John Amiel). Now an example...

2. Ladybugs everywhere. They are invading the campus. They were imported from Japan in early 1990s, but now their population has overgrown way beyond what farmers need -- they are predators that eat pests on agricultural crops, especially soybean. Annoyingly, these ladybugs bite and they stink! This species, Harmonia axyridis is also known as MALB -- multicolored Asian lady beetle. Oh, one is on my screen. Get away!

3. Am reading the famous 1992 economists duel on Exxon-Valdez Alaskan 1989 oil spill case, edited by Jerry Hausman ("Contingent Valuation, A Critical Assessment; North Holland, 1992). Peter Diamond had an interesting caricatural comment. Quoted: If a congressman came to me and said, "I think too many birds are being killed in oil spills, and what would be a mechanism to reduce the number?" [B]eing a public economist, I would say, "Well, tax the dead bird or put a fine on dead birds" (pg. 462).

4. Still on the book mentioned above. I like the way Richard Carson commented on or asked the presenters. He surely was a master of Contingent Valuation. Jerry Hausman sounded a little emotional. So did some others, from both sides.
[I realized that Kerry Smith's style of asking questions -- building up on others' questions, which is cool -- has been like this from more than a decade ago -- at least, it is apparent in this book. This is also how he asked question to me, in North Carolina's Camp Resources XI two months ago. He built his question from Nancy Bockstael's. Nevertheless, I found his comments and suggestions very helpful].

5. A professor from UIUC, Paul C. Lauterbur wins "2003 Noble Prize in Physiology or Medicine".

Monday, October 06, 2003

1. Sometimes it's relaxing to listen to Garrison Keiller's "A Prairie Home Companion" on Sunday NPR. Today he mocked the Reps. "Ever since I became a Republican, I lost interest in politics". Good one!

2. Another really good stuff from's Dave Warsh. In his nice obituary for Franco Modigliani he also refined his categorization of economists. Quoted: "There were Keynesians (Paul Samuelson, John Hicks, Wassily Leontief, Lawrence Klein, Robert Solow, James Tobin, Franco Modigliani). There were the Moderns (Kenneth Arrow, John Nash, Tjalling Koopmans, Herbert Simon, Gerard Debreu, Trygve Haavelmo, Maurice Allais). There were Chicagoans (Milton Friedman, George Stigler, Theodore Schultz, Friedrich Hayek, Ronald Coase, James Buchanan, Harry Markowitz, Merton Miller, Gary Becker, Robert Lucas, James Heckman). And there were those who were honored in elsewhere than in Stockholm (Joan Robinson, George Dantzig, Albert Hirschman, Gordon Tullock, Janos Kornai)..."

3. Just learned today that Socrates was ugly. But why do historians care? They say: Socrates was half goat half man. Can't be more irrelevant.

Saturday, October 04, 2003


1. Can't believe I'm doing this again. A journal for the n-th time. How can somebody keeps writing a journal -- diary, as sometimes they call it -- every single day? I have tried and have failed so many times. And now, I'm starting a new one again?

2. Had an interesting discussion last night. On religions. Somebody argued that all religions are the same. I disagreed. I said no two religions are the same, because "same-ness" implies perfect substitutability. And therefore an individual can switch between two religions anytime while still in the same level of utility. I asked him if he is willing to substitute his religion with another. He said no. Why? Because he prefers his religion to any other. So, I said, religions are therefore not the same. Except for an atheist, who is of course indifferent when offered a religions-only set, but strictly prefers no-religion to any religion when the former is added to that choice set.

3. Just listened to Rev. Jesse Jackson's speech delivered two days ago (was it to a Dems' conference?). Nice, carefully worded speech. He closed it with: "...all people are precious in God's eye". Hm, actually, Mr. Jackson, even God has preference.

4. Oh, it's October already (and the 4th, for crying outloud!). Hey, I am supposed to run another series of Spearman correlation tests, am I not?