Glorifying poverty?

It's an inevitable part of economic development: as infrastructure is improved, and capital is accumulated, and production processes and markets become more efficient, old ways of doing things disappear. There is a nostalgic Irish song that puts it quite well:

By trade I was a cooper;
lost out to redundancy;
like my house that fell to progress
my trade's a memory

The song played through my mind all the time when we saw what was left of the floating market of Cai Be, in the Mekong delta. Our guide told us the once famous floating market was disappearing rapidly in favour of the land-based market now that infrastructure in the region has been much improved. That is perhaps a shame, but perhaps it's also shameful that we think it's a shame.

Like the wooden barrels and casks they used to make, there are few coopers left in our modern economy. We store our beer in aluminum kegs now: much more durable, much more hygienic, much more efficient. But as tourists, we lament the demise of the old ways, for they make our holiday destinations 'charming' and 'exotic'. We curse progress when floating markets are replaced by supermarkets, when thatched roofs turn into corrugated iron, or when small-scale fishers get a job at an industrial-scale purse seiner.

But much of what we find charming is in fact a sign of poverty. Many people in developing countries prefer a corrugated iron roof over a thatched one, and they will get it as soon as they have the money to buy it. Floating markets emerged due to lack of good road infrastructure. Those men playing Chinese chess in a local Vietnamese coffee shop? You may call it the good life, but you might as well call it unemployment.

Yes, as developing countries get richer they start looking more like us: there will be more shops (more chain stores, also, unfortunately), more cars, fewer street stalls, better infrastructure, cleaner streets. Prosperity is often accompanied by a certain cooling of interpersonal relations as people become busier, more efficient, and more business-like. Some of these changes are to be welcomed (better health care, cleaner streets), some changes may be a necessary price to pay for the welcome changes (more efficiency, less surprises), some changes are to be lamented (loss of traditions, old professions that become folklore at best).

But honestly, should they stay poor so you can make pretty pictures?

The Prisoner's Dilemma in traffic

Witnessing the traffic in Vietnam, whether it was the madhouse on the streets of Hanoi or the exasperating driving style of motorists on the highway, I realized that traffic is very much a Prisoner's Dilemma. The overall motto in Vietnamese traffic is every man for himself. Drives prefer the left lane and adamantly refuse to let others overtake them. Be careful when you cross the street, even at green pedestrian traffic lights: red traffic lights are considered no more than suggestions so you might still be run over by one of the countless motorbikes.

It made me realise that in everyday traffic there are a lot of occasions where you can gain some benefit at the expense of other road users: cross a red light, overtake somebody on his right side, don't let others pass or enter the highway. On the short term you may benefit from this behaviour, but if everybody behaves this way we are all worse off than if we would just show a little courtesy. You can see the result in many of Vietnam's streets: congested roads, traffic accidents, aggressive drivers. A game theorist would say that Vietnamese traffic is somewhere in or near its Nash equilibrium (nobody has a reason to change his or her individual behaviour, given the behaviour of others), but the Nash equilibrium is not Pareto optimal (everybody would be better off if everybody behaved differently): the textbook definition of a Prisoner's Dilemma.

In countries like Norway or the United States, however, the traffic seems much more organised (Dutch drivers, I must confess, are less courteous, but yet more so than Vietnamese drivers). Why don't Norwegian drivers and American drivers obey our microeconomic models by behaving more aggressively? (I don't mean to insult Vietnamese motorists, so let's call it driving assertively.) I believe hefty fines are only part of the explanation. It is also that Norwegian and American motorists consider it bad behaviour: in other words, there are social norms that keep them from driving more assertively.

Another interesting observation is that a Norwegian wouldn't get anywhere in downtown Hanoi unless he drives like a Hanoian. So once this assertive way of driving becomes the norm it will be very difficult to change it to a more courteous norm. Assertive drivers may get somewhere in Oslo, but perhaps their friends would tell them off for their driving style. In any case many Norwegians consider it bad form, and people have a natural tendency to conform to the dominant norm. So there are self-enhancing mechanisms that keep the dominant social norm in place.

So to understand Elinor Ostrom's work you don't have to go to the irrigated rice fields of rural Bangladesh: just get a driver's license.

 

Fingers crossed now

I presented my research vision to the "Severe Assessment Committee", i.e. the ladies and gentleman who decide on my position at Wageningen University, last Tuesday. Due to the timing of my contract their decision is a bit more complex than it would otherwise be. Usually they decide whether a candidate gets tenure as an associate professor, but in my case they need to decide whether I can become an associate in one year's time. It's a long story.

Anyway, I think the presentation and the discussion went well. You can find my slides here, in case you're interested.

Fingers crossed now.

Greetings from the delta

The last four weeks Monique and I spent our Christmas and New Year's holiday in Vietnam. We made it a holiday combined with a little bit of work: we started in the North, where we met one of my PhD students, Trinh Quang Tu, and visited such tourist destinations as the Mai Chau valley, Tam Coc, and Ha Long Bay. After a few days in the ancient city of Hué and the picturesque merchant town of Hoi An we continued to Ho Chi Minh City, from where we travelled to the Mekong Delta. In the Mekong Delta we had reserved some time to meet people at Can Tho University, visit aquaculture farms in the regions where Tu does his research, and to visit one of the research sites of another PhD student of mine, Phung Thanh Binh. In the following weeks I will post my impressions of my trip.

Vietnam is a magnificent country, with wonderful people, stunning views, delicious food, and a fascinating history. Despite the obvious traces of a millennium of Chinese domination and a century of French domination, the Vietnamese have a strong sense of independence. I think the Dutch and the Vietnamese have something in common: two relatively small countries, surrounded by big powerful neighbours and the deep blue sea. During the Anglo-Dutch wars the English called the Dutch 'frogs' because of our wet and muddy natural habitat (they later later applied the same pejorative to the French, but then for culinary reasons). I like to think there is a similarity between the Dutch frogs in their cold Rhine and Meuse delta, and the Vietnamese tortoise, a mythical specimen of which provided a magic sword to Le Loi, the Vietnamese emperor who kicked the Chinese Ming dynasty out of Vietnam, in the tropical Red River and Mekong deltas.

But Vietnam is also a country in transition from a poor communist economy to a bustling capitalist economy, with all the environmental and social issues associated with that process. You can see beautiful big houses next to crumbling shacks. Small businesses everywhere, Pepsi and Samsung billboards next to Communist propaganda posters. New infrastructure is being built, and shiny new office buildings. Streets and shores are littered with plastic bags and bottles. Both deltas are under threat from upstream dam construction in neighbouring countries, and from climate change. Large areas of mangrove forest have been cut to make room for shrimp farms. And don't forget the motorbikes. You cannot escape the motorbikes, buzzing their way through the streets like angry hornets with vehicle horns.

And no, I am not going to mention the war.

Why (for the time being) I'm sticking with R

I'm a big fan of open source software. OK, I know the Dutch have a reputation for being stingy but let's face it: much of the software we use in economics (Stata, Matlab, Maple) is terribly expensive. So the only time I can use these programs is at the office (which, I admit, should be considered a healthy thing). To be able to work on my laptop when I'm at home (or in a hotel room, or in an airplane, for that matter) I try to work as much as I can with their open source equivalents as much as I can.

One of the programmes I've been using is R (a horrible name to Google for by the way), but in a sort of on-and-off way. It is less user-friendly than Matlab, much slower than Matlab, and contains fewer possibilities for statistical analysis than Stata. So I'm still fiddling around with programming languages like C++ (probably even faster than Matlab, but rabidly user-hostile) and Python (more user-friendly than C++, and perhaps as fast as Matlab) for calculations.

Slowly, however, I'm coming round to R, in my teaching as well as in my research, for a number of reasons:

• Marine biologists use it a lot, and using the same software helps the communication - it also makes it more likely that you can ask a close colleague how this @#%! package works.
  
• By the same token: some of my students, i.e. those who have taken marine ecology modelling courses, know it already.
  
• I can use it in my environmental valuation classes (statistics) as well as in my resource economics classes (modelling), so that again, some students in one course know it from another course I'm teaching.
  
• It seems that R finally has a decent package to do conditional logit and probit (or, as others call it, alternative-specific multinomial logit and probit).
  

If only they could make it a lot faster, because it is too slow for value function iteration.