Surge pricing, anyone?

One social contribution that I tentatively attribute to Uber is popularisation of the concept of surge pricing. That is, we try to call an Uber and all-too-frequently get told that we have to pay a premium at this particular point in time, due to high demand. On the other hand, recent shortages of toilet paper, paracetamol, and certain foods were not accompanied by any kind of surge pricing, and the limits imposed on how much stuff you can buy, were not so effective in keeping these goods available. At this point, things have improved, although I have not been able to buy flour recently: the shortage of flour in the supermarkets I visit seems to be chronic.

Now I appreciate the objection to charging to charging a premium to allcomers, rich and poor alike, in the context of vital food and medicine. (Although, limits on purchases can also be criticised as being unfair to a single purchaser buying for a large family, or a key worker who is short of time and doesn't want to search excessively for a desired item.) In trying to advocate surge pricing, let me turn instead to possible examples less controversial, such as hairdressers and garden centres. When these establishments are allowed to reopen, it seems reasonable that they should charge a premium (temporarily). Not only do they need the money, but it would help to control a flood of customers all causing long queues and infecting each other at close quarters. To be honest, I’m not optimistic that this will happen, since they will still worry about accusations of price-gouging, plus there’s the question of how big a premium is appropriate.

An article in the Economist highlights a related problem, which is the difficulty of measuring the rate of inflation, at a time when various goods and services (whose prices get used to measure inflation) are unavailable. Coming back to flour, it may be felt that some of it (not all!) should be sold at market price, meaning one that some people will pay, but where it stays on the shelves for a few days, at least. There is a moral case against selling goods too cheaply, which is that it becomes an attempt to hide a problem — a successful attempt, if inflation cannot be measured.

Finally, the problem discussed here touches on a defect at the heart of traditional economic theory, which is the celebrated existence of “correct” prices, unaccompanied by a means of arriving at those prices. The Algorithmic Game Theory community has quite rightly worried about price discovery and its computational obstacles. But the obstacles are also social, and status quo bias plays a big part.

Microeconomics and machine learning

A couple of recent article in The Economist discuss that in the age of big data, microeconomists may be able to gain some of the prestige that mainly goes to macroeconomists. A long way from dismal: microeconomics is fingered as the way forward in applying large data sets to the challenge of making economic predictions. Quotes:

But technology is lending them [microeconomists] clout. Armed with vast data sets produced by tech firms, microeconomists can produce startlingly good forecasts of human behaviour

The success of micro is its magpie approach, stealing ideas from psychology to artificial intelligence.

Another article: Meet the market shapers discusses examples of Silicon valley firms using microeconomic models to learn from data.

Can the golden triangle learn to share, just a little?

According to The Economist, Cambridge leaves Oxford trailing in its wake. The names refer to the cities rather than the universities. Over the past few years, Cambridge has attracted substantially more highly skilled people and jobs, and has built a lot more houses. It’s the shortage of housing in Oxford, and vested interests that resist building new houses, that are blamed for stifling Oxford’s growth.

I’ve lived in the North of England for long enough to find it repugnant that cities like Oxford and Cambridge should be encouraged to compete with each other to attract highly-skilled jobs. It’s not long ago that Astra Zeneca decided to move its research lab from Cheshire to Cambridge, at a time when there’s a valid concern that London (and the South-East) are sucking the economic life out of the rest of the nation. The article states: “Companies [in Oxford] complain that the exorbitant cost of housing is making it hard to hold onto workers.” The challenge is to translate this market force into action, and move some of these companies northwards.

(added 19.1.15:) See Cities Outlook 2015, newly released by the Centre for Cities, for more details on the importance of addressing the North-South divide, and how bad the problem has become.

(added 22.1.15:) Article with a strange message:

Universities minister Greg Clark has called on leading universities in the Midlands and North of England to do more to tackle a north-south divide in the number of school leavers entering leading universities.

Fine so far.

Analysis of government figures by the Sutton Trust for The Times has shown that all but one of 20 local authorities that send the most pupils to the most selective universities are from the London and the south east of England. The 20 sending the fewest school leavers to top universities are predominantly in the most deprived areas in the north and Midlands regions.

Well, since the selective unis are in London and the SE, to the extent that students are biased by locality, that disparity ought to exist.

Mr Clark said he wanted leading universities, particularly those in areas that send the least pupils into higher education, to work more closely with schools and be more creative in their efforts to raise aspirations among pupils. Citing Sheffield Hallam University as an example of an institution that is providing effective access support to schools and colleges in its region,...

This is the dodgy bit. It seems like Northern unis are supposed to facilitate the process of shipping the top students out to another part of the country. That is equal and opposite to what is needed to tackle the North-South divide.

article on privatisation of universities

I recommend the article Sold Out by Stefan Collini, in the London review of Books. It reviews two books about the process of privatisation/marketisation of higher education, that has taken place in the UK during the past roughly 30 years. Collini’s article provides a highly informative overview of the development and current state-of-play of private sector provision of HE, in the USA and UK. It then explains very lucidly the problems inherent in the current system of student funding, and is very convincing on why it cannot be expected to last. My only criticism: the article is passionate, but doesn’t propose remedial action. That may be because there’s a bigger picture (missing from the article) that includes, for example, the recent Royal Mail privatisation. According to this bigger picture theory, remedial action would not be specific to universities, but would involve a restoration of trust in public institutions and the public service ethic.

(added later:) ...And, this article (Economics students need to be taught more than neoclassical theory) in the Guardian looks relevant to the general topic. See also this earlier article (Economics students aim to tear up free-market syllabus). Their criticism of neoclassical economics is mainly that it failed to predict the financial crisis. It could also be blamed for an approach to student funding which takes the form of firstly, assuming all students are selfish agents, and secondly, repeatedly raising the price of higher education, in search of some kind of market equilibrium. 

RA positions in Algorithmic Mechanism Design at the Universities of Liverpool and Glasgow

This article by the BBC’s economics editor celebrates the award of the Nobel Prize for economics to Alvin Roth and Lloyd Shapley. See also this article by The Guardian’s economics editor.

A forthcoming research project at the Universities of Liverpool and Glasgow addresses topics that are highly related to those that led to the above prize. Below is a copy of the ad that went to various mailing lists.

POSTDOCTORAL RESEARCH ASSOCIATE POSITIONS IN ALGORITHMIC MECHANISM DESIGN

UNIVERSITY OF LIVERPOOL, DEPARTMENT OF COMPUTER SCIENCE
UNIVERSITY OF GLASGOW, SCHOOL OF COMPUTING SCIENCE

Start date: 1 February 2013 or shortly thereafter
Post duration: 36 months
Salary: 31,948 - 35,938 pounds per annum

Ref.: R-580873 (Liverpool), 002834 (Glasgow)

We are seeking two Research Associates to be employed for 3 years on an EPSRC-funded research project entitled “Efficient Algorithms for Mechanism Design without Monetary Transfer”.

The aim of this project is to find new approximate and optimal, truthful mechanisms for combinatorial auctions, matching problems with preferences and facility location problems, in each case in the absence of monetary transfer. This will involve theoretical research, to include the design and analysis of new algorithms, and also practical implementation and experimental evaluation of these algorithms.

This is a multi-site research project which involves the Universities of Liverpool and Glasgow (EPSRC grant refs EP/K01000X/1 and EP/K010042/1).

One Research Associate will be based at the University of Liverpool and will be supervised by Dr Piotr Krysta. The other will be based at the University of Glasgow and will be supervised by Dr David Manlove. Other members of the project team include Prof Paul Goldberg and Dr Giorgos Christodoulou (co-investigators, based at the University of Liverpool), and identified overseas researchers.

Applicants should have a good first degree in Computing Science or a related discipline, a PhD in the area of Algorithms and Complexity, and typically two years of postdoctoral experience in this area, or equivalent research / industrial experience.

Research experience in one or more of the following areas is desirable:
- algorithmic mechanism design
- combinatorial optimisation
- approximation algorithms
- matching problems with preferences

Applications for each post should be directed to the University of Liverpool or Glasgow as appropriate. Applicants are welcome to apply for both positions.

For further details of the Liverpool post, see http://www.csc.liv.ac.uk/~piotr/EPSRC-postdoc.html. Informal enquiries may be made to Dr Piotr Krysta (email: pkrysta@liverpool.ac.uk). To apply, visit http://www.liv.ac.uk/working.

For further details of the Glasgow post, see http://www.dcs.gla.ac.uk/~davidm/postdoc.html. Informal enquiries may be made to Dr David Manlove (email david.manlove@glasgow.ac.uk). To apply, visit http://www.gla.ac.uk/jobs.

The closing date for both posts is 12 November 2012.

Disappearing money

This post relates to a minor gripe about academic life, and since it has not arisen for me very recently, now is a good time to air it. While money always tends to disappear, there’s a certain kind of money that disappears automatically, much like the leprechaun gold in Harry Potter. By way of example, some time ago I had some cash, or rather my employer owned the cash on my behalf, and it was available to be spent on business travel or equipment. Then one day my employer said: you must spend it all by such and such a date, after which you lose the money¹. So, I bought a laptop that I didn’t really need, and underused it subsequently. The result of slapping a use-by date on the money was that it was used less effectively.

A colleague of a colleague (OK, this is like “friend of a friend” but never mind) had to urgently find a PhD student to fill a place he or she had; due to time pressure the CoaC would accept even a weak candidate. More time would presumably let the CoaC find a stronger candidate. Funding agencies impose onerous time constraints on grants — researchers rush to spend against grants that are about to expire, or make suboptimal hiring choices due to time limits.

This is not to argue that funds should be held by researchers on a completely open-ended basis. Presumably such funds were awarded at a time when there was evidence that the researcher would use them effectively, and the longer you wait, the less certainty there is that the usage will be effective. But there is scope for discussion about the length of deadlines, which would probably result in longer deadlines. Better yet would be an acknowledgement that these kind of deadlines result in an unnecessary all-or-nothing situation, where there is scope instead for a smooth transition between one extreme and the other. An institution could tax unspent money at some fixed rate, if inflation is not depreciating it fast enough. How about using Chiemgauer notes... see this recent article in the FT, or from this web page:

The "Chiemgauer" currency (named for the Bavarian region of Chiemgau) is the most successful to date. The project was started by Christian Gelleri, a Waldorf school teacher, and six of his students in Bavaria in 2002. The regional currency's annual turnover climbed to an impressive €1.5 million ($2 million) last year. About 90,000 Chiemgauers are currently in circulation. Unlike the Urstromtalers, they can be converted back into euro for a fee. "Our currency circulates three times more rapidly than the euro," says Gelleri. But in order to achieve this, the system puts pressures on currency holders to spend: The Chiemgauer loses two percent of its value every three months and has to be "topped up" by purchasing a coupon.

The idea for a so-called "depreciative currency" was pioneered by Silvio Gesell, a German merchant and social reformer. Gesell witnessed a serious economic crisis in Argentina at the end of the 19th century. He explained it in terms of excessive hoarding and insufficient monetary circulation. His solution was to make money perishable like other commodities -- bank notes, he believed, should "rust."

There’s an analogy with the way we impose deadlines on students to hand on coursework. There are two ways to penalise students who are late, both of which I have experienced. One of them is to give them zero credit if they miss the deadline. The other way to penalise at the rate of (say) 5% per day of lateness. Of course, the first of these leads to tedious disputes about whether a coursework submission should be deemed to be handed in on time. Under the second regime, if a student is slightly late and has a weak excuse, he takes the 5% penalty and hopefully notes that the way to be sure to make a deadline is to get the work done some time in advance, without getting pushed into making excuses in order to avoid wasting the work he wanted to turn in.

¹Of course, it doesn’t really vanish; it reverts to the employer/funder, which hopefully puts it to some good use. But there’s a widespread —and rather regrettable— attitude that it vanishes entirely.

ICEC, ACE

I went along to some talks at ICEC 2011 here at Liverpool, including an interesting invited talk by Robert May on Stability and Complexity in Banking Ecosystems, along with some others in the general area of agent-based computational economics (ACE). A lot of this research is experimental: you set up a virtual marketplace along with traders who compete in it, then “The modeler then steps back to observe the development of the system over time without further intervention” (to quote the wikipedia page).

Of course, current economic problems serve to motivate this topic a great deal and perhaps will cause it to attract a bigger share of research funds, over the next few years. Robert May's talk reported on some experiments involving models of interbank lending aimed at predicting the spread of bank failures, along with some basic (by the standards of most theory people, I would guess) calculations of how the probability of systemic failure is affected by the extent to which banks diversify their assets. Another talk that I went to, compared two markets in which traders bought and sold a single good: one version was a centralised market in which a single price was maintained, while the other version worked by bringing together pairs of traders at random, and a trade would go ahead if the trader with higher value, could afford to buy from the other one. The latter version does not perform “price discovery” so effectively, since trades can take place at the same time at different prices, but there’s apparently a sense in which it’s more stable. Also, incompetant traders get “weeded out” in the decentralised version since they get ripped off, while in the centralised version they can free-ride on the wisdom of the crowd, due to the single current price. You may or may not consider that to be a good thing. The trading strategies were produced by some kind of evolutionary algorithm in which the poorly-performing ones get eliminated while the good ones prevail (and maybe get mutated, I can’t remember).

I would conjecture that there is scope for the theory community to contribute to this research area, somewhat by analogy to Ingo Wegener’s work on genetic programming: genetic and evolutionary algorithms was purely experimental, and he and co-workers contributed the first proofs of performance guarantees for some of these. Such a contribution could help to guide experimental design in computational economics, or address concerns about the realism of the models used in simulations.

Here is a video of an earlier similar talk by Robert May.

Academia and the deterioration of jobs

A recent article in the New York Review of Books, The Grim Threat to British Universities makes interesting reading since it discusses a UK problem from a US perspective. It highlights the key difference between the British and American systems, namely the vulnerability of the British one to central control and manipulation, and seeks to draw lessons that could be learned within the American one. It blames certain US business schools for generating the managerialist ideas that have subsequently beset British universities. It goes on, via a critique of research assessment, to study the growth (in the USA) in use of short-term, untenured faculty to provide teaching.

Some thoughts on the article:

It makes a mistake that is common to most polemics against the decline in academic working conditions, namely that the author has not tried to place himself in the position of his adversary, and consider how it looks to the opposition. Consider the following quote:

The growth of the contingent academic workforce brings the labor economics of the call center and the Wal-Mart store to higher education. With these contingent academics, few of whom have firm contracts, managers now have at their disposal a flexible, low-cost workforce that can be hired and fired at will, that can be made to work longer or shorter hours as the market dictates, and that is in a poor position to demand higher pay.

The problem with this observation is that the situation it describes looks pretty good to anyone whose job is not university teaching. Taken out of context, it could pass for high praise for the trend that it criticizes. I can't see call-centre workers, or most other people, losing much sleep abut the problem being highlighted. Furthermore, many jobs and professions have suffered from debasement over the past few decades. I have heard from a flight attendant about how the growth of low-cost airlines has led to poorer working conditions, poorer safety training, and more disagreeable passengers. And, a general background story of the past few decades, both in the USA and Europe, is the decline of the steady, well-paid, blue-collar job.

In the presence of a working public who have their on-the-job performance being measured and assessed in various onerous ways, it is pretty hard to rail against research assessment. And that does not mean we should not criticize excessive performance monitoring and managerialism, but let's not do it in the name of “scholarship”, and expect to be taken seriously. The following cri-de-coeur quoted from the article is not helpful:

The bureaucratization of scholarship in the humanities is simply spirit-crushing. I may prepare an article on extremism, my research area, for publication in a learned journal, and my RAE line manager focuses immediately on the influence of the journal, the number of citations of my text, the amount of pages written, or the journal’s publisher. Interference by these academic managers is pervasive and creeping. Whether my article is any good, or advances scholarship in the field, are quickly becoming secondary issues. All this may add to academic “productivity,” but is it worth selling our collective soul for?

If a flight attendant used the word “flightmanship” the way we use “scholarship”, they would be laughed out of the room. And by the way, I don't know what “good” is being used to mean in the phrase “whether my article is any good”. None of which is to say that we should give up trying to defend our working conditions, only that we should do so using the levels of intellectual rigour that we urge on our own students.

Added 1.3.11: This article is very relevant: it gives a bigger picture to the problem, explaining the general threat to “middle class” jobs in Western countries.

Added 15.3.11: just spotted this review of The Global Auction: The Broken Promises of Education, Jobs, and Incomes a book that studies this problem. Rahul Savani pointed me to this new-ish article by Paul Krugman that also considers it. Both of these seem to be about people going to university, expecting it to be their ticket to a middle-class lifestyle, and getting disappointed by the outcome. This new post at the Fortnow/Gasarch blog has relevant links, including the Krugman article, but focuses on the impact of CS/AI on future jobs.

Peer to peer lending

I've been reading about Funding Circle in
this article in the Guardian (Funding Circle's home page also contains links to other news articles that have featured it). It's a new internet-based market that allows individuals to lend money to small businesses. So, it is similar to Zopa, which supports lending of money amongst individuals.

I've not tried it myself but am tempted... you just need a few hundred pounds to make available for loans, and your money gets divided amongst 20 different businesses, so as to spread the risk, and then the claim is that you make on average about 6% on your savings, as opposed to about 2-3% as you currently make in a savings account. Interesting features include: lenders can bid their interest rate, resulting in a trade-off in that if you set a higher rate, it may take longer for your funds to be accepted. You can also set up or join a "circle" (see the help centre) to specialise which businesses you lend to. If you want your money back, you have to sell your outstanding loans to another lender (I assume that effectively results in a penalty for early withdrawal). The system supports "autobid" which manages the division of your funds amongst distinct businesses, and recycles repayments into new loans so that your funds continue to earn interest. Finally, on the downside, my impression from reading the help page is that the tax treatment of income is not very lenient.

A fun partisan statistic

This article at the BBC news web site points out that stock markets do better under Democratic administrations than Republican ones. While it seems like the evidence for this is genuine, the following observation (taken from the article) probably pushes it too far:

"Indeed, a recent study published in the New York Times showed that $10,000 (£6,263) invested in the S&P 500 in 1929 would have grown to $11,733 if invested under Republican presidents, but to $300,671 under Democratic presidents."

It sounds like a fun fact to point out to a US voter with a defined-contribution pension scheme. But, I note that it was Republican president Herbert Hoover who presided over the 1929-33 Depression, so perhaps the Democrats had a bit of a headstart in this race. (Meanwhile, share prices right now are still doing badly. But I guess Obama hasn't been sworn in just yet.)

Time for smugness?

In the movie Mary Poppins, there is a scene where the admiral asks Mr. Banks how things are in the banking industry, and his smug reply goes something like "credit has never been stronger, and the British pound is the envy of the world!"

After a quick perusal of other blogs that I occasionally read, I find little evidence that the academic community thinks anything to the contrary. This reference to the banking crisis is a rather tangential one, this link from Mitzenmacher's blog. (Conclusion: if you have tenure, sit back and enjoy as the rest of the world crumbles.) This post at Luca Aceto's blog briefly refers to financial turmoil, towards the end. (A blog based in Iceland seemed like a good place to search for comments on this topic.) (Added 15.10.08: this post at the Fortnow/Gasarch blog now addresses the topic.)

Articles here and here tell a pessimistic story, focussing on the increase in pay costs faced by UK universities, due to the increase in inflation. But the banking crisis itself is more likely to impact on the Universities Superannuation Scheme.

Like other private-sector pension schemes -- indeed, like its US counterpart TIAA-CREF -- the USS is underpinned by its stock market investments, and recent declines in share prices have opened up a hole in its finances. Plainly, the right thing to do is for USS to raise the contribution level from staff. Tenure or not, this amounts to an effective pay cut, but the only alternatives are a sudden major recovery of the stock market (unlikely), or a decline in academic life expectancy (hopefully also unlikely). (Note: the situation is different for TIAA-CREF, which is a defined-contribution scheme. For that, the value of your pension goes up and down with the stock market, and it's up to the individual to decide how much more they need to contribute to it.)

I recommend Robert Peston's blog for insightful commentary on the economy.

start of term

Time to commemorate my first lecture with a blog entry. (year 2 module: "decision, computational and language"). My Monday at 9am slot makes it the "welcome back" lecture, likely to be better-attended than most of its successors...

From meeting my tutees last week, and a few others at a reception for new students, I got the idea that our students are coming for farther afield than last year. This year we have the first cohort of XJTLU students, but I'm actually making that observation about UK/EU students. I may be wrong; my sample is admittedly too small to be statistically significant.

If it's true however, that is an important asset for Liverpool generally. In order to prosper, a city the size of Liverpool has to provide goods and services that go beyond its immediate region, and preferably beyond the UK. My impression is that Liverpool still does not have enough employers that achieve that objective.

(Unrelated: Here is a sensible take on the forthcoming vice-presidential debate.)

credit crunch

I seem to have promised to do more tasks than I have time to complete them. If my creditors catch me making a lengthy post to this blog, I would have some explaining to do.

Adam Smith

A few months ago he made it onto the twenty-pound note. Now, Adam Smith gets a statue in Edinburgh. It is ironic that this event coincides with recent government pronouncements that hold his big ideas in disrespect. Thus, Gordon Brown urges us to stop wasting food, because waste is contributing to price rises. As I see it, that's the whole point of these price rises: to stop us wasting food! We need the price rises in order to change our behaviour. A similar point holds regarding the Government's plans to ban the use of incandescent light bulbs in order to save energy (and thus, lower its cost.) It's topsy-turvy thinking. Price should be allowed to do its job.

Here's a more complex example that affects me professionally. This article attempts to explain why the Government is right to introduce the "full economic cost" regime for research grants. Essentially, the effect of this regime (by comparison with the previous one) is that when you get a grant, they pay you more money for doing the same amount of work. The rationale is that universities were trying too hard to attract under-funded research projects, which leads to infrastructure decline, and is supposed to be unsustainable. But, hang on a moment: if universities were already fighting like rats in a sack to get these insufficient research grants, why stop them? I'm not just a researcher, I'm also a taxpayer, and I like the idea of my money going further, even when it's being spent on research. And from a selfish academic perspective, if each research project only attracted half the money it ought to, it would presumably double my chances of getting one.