Indexing of Technical Change in Aggregated Data

November 29, 2017

My latest publication is forthcoming in Computational Economics and can be accessed here: The abstract:

The Baltagi–Grifn general index of technical change for panel data has earlier been applied to aggregated data via the use of period dummy variables. Period dummies force modeling into estimation of the latent level of technology through choice of dummy structure. Period dummies also do not exploit the full information set because the order of observations within periods is ignored. To resolve these problems, I suggest estimating the empirical equation for all possible structures of the dummy variables. The average over the different dummy coefcient estimates provides an index of technical change. More generally, the method estimates a general, model-free trend in linear models. I demonstrate the method with both simulated and real data.
The paper is essentially a real simple idea that works well in many situations and solves a difficult problem. I came up with this idea while working on this paper, and can as such be viewed as a spin-off from that. I gather that methodological papers seldom are spin-offs from empirical apply-this-different-method-to-this-data papers, but that is what happened here. I am quite proud of this paper and regard it as my most innovative and important contribution so far. What surprises me most is that, from what I can tell, no-one seems to have thought of this simple idea before.

A bridge between continuous and discrete-time bioeconomic models: Seasonality in fisheries

November 2, 2017

I recently published a paper together with good colleagues in Spain and Norway. The paper is published in the journal Ecological Modelling and is on the problem of setting up corresponding fisheries economics models in continuous and discrete time. Here is the abstract:

We develop a discretization method to construct a discrete finite-time bioeconomic model, corresponding to bioeconomic models with continuous-time growth function, but allowing the analysis of seasonality in fisheries. The discretization method consists of three steps: first, we estimate a proper growth function for the continuous-time model with the Ensemble Kalman Filter. Second, we use the Runge-Kutta method to discretize the growth function. Third, we use the Bellman approach to analyze the optimal management of seasonal fisheries in a discrete-time setting. We analyze both the case of quarterly harvest and the case of monthly harvest, and we compare these cases with the case of annual harvest. We find that seasonal harvesting is a win–win optimal solution that provides higher harvest, higher optimal steady state equilibrium, and higher economic value than annual harvesting. We also demonstrate that the discretization method overcomes the errors and preserves the strengths of both continuous and discrete-time bioeconomic models.

For some time, the paper is freely downloadable here: The paper is part of the ARC-Change project, and is the first in a string of papers on interconnected issues.

Churchill on the passive

February 21, 2017

I just read a book of quotes by Winston Churchill and came across this great quote on the passive. It is rather famous and well-known, I gather, but because of my periodic preoccupation with all things writing, and because this blog partly substitutes for my thought archive, (and because it is fun) I post it here:

What if I had said, instead of “We shall fight on the beaches”, “Hostilities will be engaged with our adversary on the coastal perimeter”?

– Winston S. Churchill

A summary of ‘Improved Learning in a Large-Enrollment Physics Class’ by Deslauriers, Schelew & Wieman

February 17, 2017

Deslauriers et al. (2011) measured learning outcomes from research-based instruction in a university introductory level physics class. The outcomes were compared to outcomes from tutoring the same material in traditional lectures by an experienced and highly rated instructor. That is, the latter was used as control in a purportedly controlled experiment.

science332Deslauriers et al. (2011) found that students subject to research-based instruction scored more than twice as well as students subject to traditional lecture tutoring (74% vs. 41%). Both attendance and engagement reportedly went up. The authors were seemingly puzzled by the increased attendance (‘reason not known’), while it seems obviously a case of rubbernecking or something similar but more sophisticated. (Google awaits!)

The research-based instruction in question (it could be almost anything) was designed to have students engage in deliberate practice at thinking scientifically. Thinking scientifically was taken as making and testing predictions and arguments about relevant topics, solving problems, and questioning their own reasoning and that of others, presumably after the appropriate reasoning was revealed. Multiple (unspecified) ‘best instructional practices’ were incorporated, but the educational benefit was believed to derive from the overall, integrated deliberate practice framework rather than any particular practice. Class schedules were mostly an alternating sequence of discussions in small student groups, clicker questions, and instructor feedback. That the measured engagement in such classes surpasses the measured engagement in traditional lectures comes as no surprise.

While I am personally convinced that active learning and deliberate practice better provide learning than traditional lectures, I have doubts regarding size of the reported effect and both internal and external validity of the experiment.

Could other factors influence the measured learning outcomes and reduce the real effect of research-based instrution? Two obvious factors are that the research-based instruction was more resource intensive (the instructor had an assistant in class throughout the experiment; materials were pilot-tested before used in class) and contrbution of the Hawthorne effect (‘where any change in conditions is said to result in improved performance’). Regarding the latter, one may add temporarily. The Hawthorne effect is, interestingly enough, dismissed by Deslauriers et al. (2011) because the effect could not be detected in the original Hawthorne data. But that the effect was not present in some data does not mean that the effect does not exist.

How well was the experiment controlled? The experiment group (subjected to research-based instruction) was instructed by two of the authors of the study, and not the usual instructor. This is presented as something that should reduce the measured effect because the authors had less teaching experience and background knowledge in physics. Clearly, the experiment would be better controlled if the usual instructor was trained and assisted (outside of class) in research-based instruction. The experiment would also be better controlled if the experiment and control group had had the same instructor prior to the experiment. Alas, they did not. Both of these improvements would have been readily achievable.

Can the findings be generalized outside the experiment, like tutoring in other subjects, and at all university level tutoring? The experiment lasted for one week, so the foremost concern is whether the research-based instrution would provide a similar effect on the full-scale course level. I am sure it would, but research-based instruction, as argued above, does require more resources than the traditional lectures. A ‘twice as well’ effect is probably unlikely, however (Hawthorne again, and temporality).

In a subsequent survey of the students subjected to the research-based instruction, students express satisfaction with the alternative form of instruction. This finding is taken as evidence against concerns of student opposition towards changes in the instruction. But not all students answered the survey, and measures were taken within the experiment group to avoid resistance against the instructional approach. The survey evidence is thus questionable if not useless.

It amazes me that a study with so many obvious weaknesses is published in one of the most prestiguous scientific journals.

Deslauriers, L, E. Schelew, C. Wieman (2011), Improved Learning in a Large-Enrollment Physics Class. Science 332, 862 – 864.

Quote of the day

December 7, 2016

Frank Ramsey (1903 – 1930), one of the greatest intellectuals of the 20th century, is often quoted on using his size to illustrate his world view:

Where I seem to differ from some of my friends is in attaching little importance to physical size. I don’t feel the least humble before the vastness of the heavens. The stars may be large, but they cannot think or love; and these are qualities which impress me far more than size does. I take no credit for weighing nearly seventeen stone […]

The New York Review just reviewed a biography on Ramsey that I am unlikely to read, but I would want to read a biography more in line with what the reviewer wants, one that ‘describe and place in intellectual history his important contributions to economics, mathematics, and philosophy’.

ARC-Change web page

October 26, 2016

Earlier this year, I posted on a new research project, ARC-Change, on climate change in the Arctic and its consequences for governance and resource industries. The project is now underway, and recently the project web page went online (click logo below to go to the site).


Up the ante on bioeconomic submodels of marine food webs

September 20, 2016

My new paper is available for free download for 50 days (until November 9, 2016). The paper is published in the journal Ecological Economics and discusses modeling of marine food webs such that economic analysis is viable. At the core of our approach lie the ensemble Kalman filter, something I have used earlier. In this new application, we go further in reducing model parameter dimensionality and move beyond the filtering routine to estimate certain structure parameters. We also apply a data transformation that deal with previously overlooked endogeneity in stock level data. We use all this to estimate a model of the largest pelagic fish stocks in the Norwegian Sea. The abstract:

eeWhile economists have discussed ecosystem-based fisheries management and similar concepts, little attention has been devoted to purposeful modeling of food webs. Models of ecosystems or food webs that make economic analysis viable should capture as much as possible of system structure and dynamics while balancing biological and ecological detail against dimensionality and model complexity. Relevant models need strong, empirical content, but data availability may inhibit modeling efforts. Models are bound to be nonlinear, and model and observational uncertainty should be included. To deal with these issues and to improve modeling of ecosystems or food webs for use in ecosystem-based fisheries management analysis, we suggest the data assimilation method ensemble Kalman filtering. To illustrate the method, we model the dynamics of the main, pelagic species in the Norwegian Sea. In order to reduce parameter dimensionality, the species are modeled to rely on a common carrying capacity. We also take further methodological steps to deal with a still high number of parameters. Our best model captures much of the observed dynamics in the fish stocks while the estimated model error is moderate.

The paper is part of the EINSAM project.

Harvest control rules in modern fisheries management

August 5, 2016

My latest paper is joint work with a rather large group of people. We met at a workshop two years ago, and after interesting and fruitful discussions, we decided to write a paper based on our work there. After a long and winding process, the paper is now published in the open-access journal ElementaThe abstract reads as follows:

Harvest control rules have become an important tool in modern fisheries management, and are increasingly adopted to provide continuity in management practices, to deal with uncertainty and ecosystem considerations, and to relieve management decisions from short-term political pressure. We provide the conceptual and institutional background for harvest control rules, a discussion of the structure of fisheries management, and brief introductions to harvest control rules in a selection of present day cases. The cases demonstrate that harvest control rules take different forms in different settings, yet cover only a subset of the full policy space. We conclude with views on harvest control rules in future fisheries management, both in terms of ideal and realistic developments. One major challenge for future fisheries management is closing the gap between ideas and practice.

The paper is part of the special feature Climate change impacts: Fish, fisheries, and fisheries management:

The atmosphere and oceans are warming, seasonal sea ice is retreating and salinity and ocean circulation patterns are changing, all of which can impact fish populations. Largely using comparative analyses, this Special Feature examines some of the effects of climate changes on fish stocks in the northern hemisphere, particular in the Northeast Atlantic and around the continental United States. It considers what marine ecosystems may look like under anthropogenic climate change and how existing fisheries management strategies, such as Harvest Control Rules, may fare in the future. It also notes some potential economic and societal consequences of climate change.


Technical Change as a Stochastic Trend in a Fisheries Model

June 3, 2016

Right, I have a couple of things forthcoming. One is, as the post-title suggests, on technical change in fisheries, where I, in my first sole-authored paper in five years, suggest a state space approach to measure technical change in fisheries. The approach is applied to data from the Norwegian Lofoten cod fishery, a data set that previously has been analyzed with other, more typical methods (linear regressions).

The paper has a long history. It started in 2008, when I was a visiting grad student at the economics department of the University of California, San Diego (UCSD). There, Dale Squires, who I am proud to call my friend, presented an analysis of the Lofoten data. During my visit to UCSD, I had spent considerable time studying state space models and the Kalman filter, and during Dale’s talk I wondered whether a state space model would do a better job in estimating technical change. Dale’s analysis was published in 2010, at a time when I already had acquired the data and had started to develop a model and an algorithm. In 2011, during a train trip, I started to get promising results. Progress was doomed to be slow, however, because the entire project was a side project that I only worked on in short stints every now and then. At some point in 2012, I nevertheless had a manuscript ready for submission. I sent it to the same journal where Dale’s analysis was published. After an interesting and instructive review-process, the manuscript was rejected. In the years that followed, the manuscript was sent to a handful of journals (the manuscript took various forms over the years; condensed into the letter-format at one point), but the verdict was always the same: rejection. Over these years, Dale, who I kept in touch with, was always optimistic and encouraging, suggesting alternative journals. Early in 2015, the manuscript was finally sent to Marine Resource Economics, where it was accepted after no less than three rounds of revisions. In the last round, I had to pull out my initial version, written more than three years earlier, and add discussion that was revised out at some point along the road but which obviously had its place. The manuscript was formally accepted early this year (2016), eight years after I had the initial idea.

Late in 2014, more than six years into the process, I had another idea for how to carry out the analysis. I decided to pursue this new idea in another side project. This spin-off project had much faster progress, and less than six months later, a letter-form manuscript was already rejected. After some further work, expanding the manuscript to the more typical article form, the manuscript was submitted again, and I am now awaiting its review. This much faster progress on the second side project is partly taken, by me, as evidence that I have become better at what I do. The lower degree of complexity is, of course, also an important factor in the progress.

‘Technical Change as a Stochastic Trend in a Fisheries Model’ will appear in Marine Resource Economics during the fall. The abstract reads as follows:

mreTechnical change is generally seen as a major source of growth, but usually cannot be observed directly and measurement can be difficult. With only aggregate data, measurement puts further demands on the empirical strategy. Structural time series models and the state space form are well suited for unobserved phenomena, such as technical change. In fisheries, technical advances often contribute to increased fishing pressure, and improved productivity measures are important for managers concerned with efficiency or conservation. I apply a structural time series model with a stochastic trend to measure technical change in a Cobb-Douglas production function, considering both single equation and multivariate models. Results from the Norwegian Lofoten cod fishery show that the approach has both methodological and empirical advantages when compared with results from the general index approach, which has been applied in the literature.

UPDATE: The article is now available here:
DOI: 10.1086/687931

Schizophrenic Work Ethics

May 10, 2016

In the big picture, I think of my work in two ways. First, the world’s resources are scarce and often mismanaged. There exist a seemingly constant conflict between want of development and necessity of conservation. My research into environmental and resource economics are small but potentially important contributions towards these issues. My work will almost certainly have no effect in the short run but may have a some effect in the longer run. Devoting my admittedly limited intellectual powers to this end form a motivation to put up with the many irrational incongruencies of present day academia and, according to some, low pay. (My view towards the latter vary, largely in phase with the size of my bank account.)

Second, we are just small, insignificant critters basking in a soup of organic chemistry on a speck of dust in an enormous universe that we hardly understand. My work has no significance, but I sometimes like doing it.

It is in the latter way I often understand art. Life is utterly meaningless, so why not make something beautiful.

New Research Project on Climate Change and the Arctic

April 5, 2016

I will take part in a new research project on climate change in the Arctic. The project carries the long name “ARCtic Marine Resources under Climate Change: Environmental, Socio-Economic Perspectives and Governance,” or ARC-Change for short. From the project description:

As we enter the Anthropocene, climate change moves the parameters we live within. First and foremost, these changes will take place in Arctic regions, regions that already are subject to substantial, large scale natural variability and where higher temperatures and retreating sea ice will redefine boundaries of biological life, ecological structure, and commercial and social opportunities. Complex interactions and causal mechanisms exist from the physical impact, in terms of temperature, ocean currents, via biological and ecological adaptations, in terms of habitat expansion, growth conditions, species interactions, via social and business enterprise, in terms of new fishing areas, trade routes, mineral wealth, to governance implications, in terms of pressure on existing agreements on fishing, surveillance, and commercial activity. A cross-sectorial and cross-disciplinary perspective is needed to investigate and understand climate change impacts. ARC-Change will study some of these interlinkages, from the physical and biological to the economical and governmental, while brining together expertise from an array of disciplines and institutions.

More in the press release.

Update: The ARC-Change webpage.

Optimal maintenance scheduling for local public purpose buildings

April 1, 2016

New paper forthcoming, something other than fish this time. The abstract:

We formulate the maintenance scheduling decision as a dynamic optimization problem, subject to an accelerating decay. This approach offers a formal, yet intuitive, weighting of an important trade-off when deciding a maintenance schedule.

The optimal maintenance schedule reflects a trade-off between the interest rate and the rate at which the decay accelerates. The prior reflects the alternative cost, since the money spent on maintenance could be saved and earn interests, while the latter reflects the cost of postponing maintenance. Importantly, it turns out that it is sub-optimal to have a cyclical maintenance schedule where the building is allowed to decay and then be intensively maintained before decaying again. Rather, local governments should focus the maintenance either early in the building’s life span and eventually let it decay towards replacement/abandonment or first let it decay to a target level and then keep it there until replacement/abandonment. Which of the two is optimal depends on the trade-off between the alternative cost and the cost of postponing maintenance.

The paper provides a first formal inquiry into important trade-offs that are important for maintenance scheduling of local public purpose buildings.

Quotes from The Ordeal of Change by Eric Hoffer

September 27, 2015

Eric Hoffer is a very interesting thinker, and I very much enjoyed his The Ordeal of Change. If possible, I would quote large parts of the book, but have to settle for some short excerpts. Many of them demonstrate Hoffer’s deep understanding of the human psyche. I try to quote generously rather than commenting too much.

It has been often said that power corrupts. But it is perhaps equally important to realize that weakness, too, corrupts. Power corrupts the few, while weakness corrupts the many. Hatred, malice, rudeness, intolerance, and suspicion are the fruits of weakness. The resentment of the weak does not spring from any injustice done to them but from the sense of their inadequacy and impotence. We cannot win the weak by sharing our wealth with them They feel our generosity as oppression. […] Nor can we win the weak by sharing our hope, pride, or even hatred with them. […] Our healing gift to the weak is the capacity for self-help. We must learn how to impart to them the technical, social, and political skills which would enable them to get bread, human dignity, freedom, and strength by their own efforts [pp. 11-12*].

While written more than fifty years ago, certain parts feel oddly relevant for the present-day social media driven self-realization epidemic:

An autonomous existence is heavily burdened and beset with fears, and can be endured only when bolstered by confidence and self-esteem. The individual’s most vital need is to prove his worth, and this usually means an insatiable hunger for action. For it is only the few who can acquire a sense of worth by developing and employing their capacities and talents. The majority prove their worth by keeping busy. A busy life is the nearest thing to a purposeful life. But whether the individual takes the path of self-realization or the easier one of self-justification by action he remains unbalanced and restless. For he has to prove his worth anew each day [p. 25].

On creativity of the intellectual:

There is no unequivocal evidence that the intellectual is at his creative best when left wholly on his own. It is not at all certain that individual freedom is a vital factor in the release of creative energies in literature, art, music, and science. Many of the outstanding achievements in these fields were not realized in an atmosphere of absolute freedom. […] There is a chronic insecurity at the core of the creative person, and he needs a milieu that will nourish his confidence and sense of uniqueness. Discerning appreciation and a modicum of deference and acclaim are probably more vital for his creative flow than freedom to fend for himself. Thus a despotism that recognizes and subsidizes excellence might be more favorable for the performance of the intellectual than a free society that does not take him seriously. […] It is of course conceivable that a wholly free society might become imbued with a reverence for the fine arts; but up to now the indications have been that where common folk have room enough there is not much room for the dignity and rank of the typical writer, artist, and intellectual in general [pp. 31-32].

More on the intellectual:

One cannot escape the impression that the intellectual’s most fundamental incompatibility is with the masses. He has managed to thrive in social orders dominated by kings, nobles, priests, and merchants, but not in societies suffused with the tastes and values of the masses. The trespassing by the masses into the domain of culture and onto the stage of history is seen even by the best among the intellectuals as a calamity [pp. 42-43].

Ordeal is not really a book in the typical sense, but rather a collection of essays that revolve around a common theme. Thus, Hoffer ranges far and wide in topics and relations, and takes the opportunity to comment on, for example, history:

From their first appearance civilizations almost everywhere were preoccupied with the spectacular, the fantastic, the sublime, the absurd, and the playful—with hardly a trickle of ingenuity seeping into the practical and useful. The prehistoric discoveries and inventions remained the basis of everyday life in most countries down to our time. Technologically, the Neolithic Age lasted even in Western Europe down to the end of the eighteenth century [p. 48].

In an essay on ‘the brotherhood of men’, Hoffer points out a surprisingly accurate contrast between my relationship with those close and humanity in general. (But I remain ambivalent, and my relationships are repeatedly turned up side down. Perhaps I need the maturity of Hoffer to settle.)

It is easier to love humanity as a whole than to love one’s neighbor. There may even be a certain antagonism between love of humanity and love of neighbor; a low capacity for getting along with those near us often goes hand in hand with a high receptivity to the idea of the brotherhood of men. […] The capacity for getting along with our neighbor depends to a large extent on the capacity for getting along with ourselves. The self-respecting individual will try to be as tolerant of his neighbor’s shortcomings as he is of his own. Self-righteousness is a manifestation of self-contempt. When we are conscious of our worthlessness, we naturally expect others to be finer and better than we are, and it is as if we wished to be disappointed in them. Rudeness luxuriates in the absence of self-respect [pp. 74-75].

According to Hoffer, modern man strives with self-respect, and with a certain grandeur, he connects it with global conflict.

The unattainability of self-respect has […] grave consequences. In man’s life the lack of an essential component usually leads to the adoption of a substitute. The substitute is usually embraced with vehemence and extremism, for we have to convince ourselves that what we took as second choice is the best there ever was. Thus blind faith is to a considerable extent a substitue for the lost faith in ourselves; insatiable desire a substitute for hope; accumulation a substitute for growth; fervent hustling a substitute for purposeful action; and pride a substitute for unattainable self-respect .The pride that at present pervades the world is the claim that one is a member of a chose group—be it a nation, race, church, or party. No other attitude has so impaired the oneness of the human species and contributed so much to the savage strife of our time [p. 76].

On the writer:

To the genuine writer the word is an end in itself and the center of his existence. He may dream of spectacular action and be lured to play an active role, but in the long run he does not feel at home in the whirl of busy life. […] It is only when the creative flow within him materializes in serried ranks of words that he feels at home in the world [p. 87].

Playfulness and creativity:

[…] the tendency to carry youthful characteristics into adult life, which renders man perpetually immature and unfinished, is at the root of his uniqueness in the universe, and is particularly pronounced in the creative individual. Youth has been called a perishable talent, but perhaps talent and originality are always aspects of youth, and the creative individual is an imperishable juvenile. When the Greeks said, “Whom the gods love die young” they probably meant, as Lord Sankey suggested, that those favored by the gods stay young till the day they die; young and playful [p. 93].

* Page numbers refer to the limited edition printed by Buccaneer Books, Inc. The Ordeal of Change was first published in 1963.

Related post:

Qualifications for an economist

September 25, 2015

In The Worldly Philosophers, Robert L. Heilbroner brings this quote from Keynes on the qualifications for an economist. I’ve posted parts of this before, but it is worth repeating:

The study of economics does not seem to require any specialized gifts of an unusual high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy or pure science? An easy subject, at which very few excel!  The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher – in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purpose of the future. No part of man’s nature of his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, vet sometimes as near the earth as a politician.

The Ensemble Kalman Filter for Multidimensional Bioeconomic Models

September 22, 2015

Natural Resource ModelingIn the recent issue of Natural Resource Modeling, I have an article together with my old boss. The idea is to apply the ensemble Kalman filter to fit multidimensional foodweb models to data for use in bioeconomic analysis. The abstract:

To integrate economic considerations into management decisions in ecosystem frameworks, we need to build models that capture observed system dynamics and incorporate existing knowledge of ecosystems, while at the same time accommodating economic analysis. The main constraint for models to serve in economic analysis is dimensionality. In addition, to apply in long-term management analysis, models should be stable in terms of adjustments to new observations. We use the ensemble Kalman filter to fit relatively simple models to ecosystem or foodweb data and estimate parameters that are stable over the observed variability in the data. The filter also provides a lower bound on the noise terms that a stochastic analysis requires. In this paper, we apply the filter to model the main interactions in the Barents Sea ecosystem. In a comparison, our method outperforms a regression-based approach.