Over $200 a barell of oil, oil-pipe dreams

Image via WikipediaI like Jeff Rubin a lot. He is a very sensible economist and is up there with David Rosenberg. There are not many celebrity economists in Canada to begin with, thus criticizing one of the very few does not make much sense to me. But I can't help it.

Jeff has been arguing for the past few years that the price of oil will stay in triple digits, and it may pass the previous highs recorded in mid-2008. Now other forecasters have also joined the club and are forecasting the possibility of over $200 a barrell.

While oil is essential for the economy, still it is not as necessary for our well-being as water is. If oil prices rise were to such prohibitive levels, it would not be because of Libya, which accounts for a fraction of global oil supply. There may be other serious systematic issues, much more grave than resulting from the toppling of the western-backed dictatorial regimes in the Middle East.

Lastly, if the price increases to such highs, one may see a decline in demand. Consider my own example. I sit in my basement office in shorts when the temperature outside is -10 degrees Celsius. I can certainly put on warmer clothes and turn the furnace down.  I can also not buy an SUV, even though as a North American with a toddler and an infant, I feel entitled to owning at least one.

I can certainly stop demanding exotic fruits that no longer go out of season, thanks to global logistics that bring fruits and vegetables from around the globe to my local grocery store.

We can all significantly reduce our oil consumption to keep the price of oil in check. Or better, we can reduce our oil consumption to ensure we leave a healthy planet for our future generations.

Related articles

• Quote of the Day: Jeff Rubin On Alternatives To Oil (Or Lack Thereof) (treehugger.com)
• Jeff Rubin On How Shale Oil Might Be Like Sub-Prime Mortgages (treehugger.com)
• North Africa, Middle East drive up oil prices (abclocal.go.com)
• Libyan uprising pushes oil higher (theglobeandmail.com)

US Housing starts still in the dumps

The recession might be over, however, the housing starts in the United States are still in the dumps. The annualised housing starts in January were significantly lower at 596,000 than any other January since late 1950’s. These numbers suggest that the housing market recovery in the states has not yet started.

China and Colombia announce 'alternative Panama Canal'

Image via WikipediaColombia has announced it is negotiating with China to build an alternative to the Panama Canal.

The proposed transport route is intended to promote the flow of goods between Asia and Latin America.

The plan is to create a "dry canal" where the Pacific port of Buenaventura would be linked by rail, across Colombia, to the Atlantic Coast.

Trade between Colombia and China has increased from $10m in 1980 to more than $5bn last year.

The announcement came from the Colombian president, Juan Manuel Santos, who told the Financial Times that the project was "a real proposal... and it is quite advanced".

BBC News - China and Colombia announce 'alternative Panama Canal'

Related articles

• China in talks on rail rival to Panama Canal, report (telegraph.co.uk)
• Panama Canal rail alternative built by China considered by Colombia (telegraph.co.uk)
• China Wants To Set Up A Rival To The Panama Canal In America's Backyard (businessinsider.com)

Q: A new software for analyzing survey data

Q is a new market research software from Australia that specializes in the analysis of market research surveys. Q has been designed for analysts who primarily work with survey data. I test drove the professional edition of Q and found it to be a welcome addition.

I downloaded Q from http://www.q-researchsoftware.com/download.aspx and obtained a free 30-day trial license, which offers full functionality, including importing one’s own data for analysis. I imported a few data sets into Q without any hassle. Q reads SPSS as well as CSV files.

Q has a tabbed GUI with four distinct tabs. The opening tab is called Table, which by default presents the summary statistics of the first numeric variable in the data set. The second tab is called Variables and Questions, which in fact is the most important tab because here variables are designated a particular type, i.e., categorical, continuous, etc., which then determines what analytics could be performed using a particular
variable.



Since Q is specifically designed for analysing survey data, variables are also designated by the type of answer solicited in the actual survey instrument. Thus variables are categorized as ‘pick one’ in instances where respondents were presented with multiples choices from which they had to pick one choice. Similarly, other types include ‘pick any’, ‘number grid’, or ‘ranking’. The type ‘experiment’ refers to variables that capture conjoint analysis data in a stated preference choice experiment.

The Data tab presents a tabular view of the underlying data and the Notes tab allows one to review notes related with the data set. The Q GUI also informs the analyst if the data were filtered or weighted using a weight variable. The filtering option allows simple as well as complex filtering that may involve one or more variables.

The first variable in my data set was the ID variable that identified each respondent in the data set. Q by default computed descriptive statistics for the ID variable. Since I was not particularly interested in determining the average value for the ID variable, I selected a categorical variable from my data, and Q quickly displayed the frequency table as percentages. When I changed the Summary option and instead opted for another categorical variable, Q quickly displayed a crosstab between the two variables.

For stated preference data, Q uses the wide data format where each respondent is represented in a single row. Most econometrics software use the long format for stated preference data because it prevents one from managing a large number of variables. Consider working with a stated preference data about the choice of airlines where the survey respondents are presented with five alternatives (i.e., airlines). Let us further assume that each alternative is identified by three attributes, such as airfare, flight duration, and on-flight amenities. Let us also assume that each attribute, such as price, has three levels: low, medium, and high. And lastly, let us assume that each respondent is presented with five sets of choices, which Q refers to as tasks.

This experiment will generate 225 variables (5 x 3 x 3 x 5), which are sometimes hard to manage, though Q offers a sophisticated environment to setup the experiment as described above in the Variables and Questions tab. Also, when the raw stated preference data are recovered from computerized survey instruments that automatically populate the database, such as Sawtooth or web-based survey tools, the data are already in wide format, which Q can handle with ease.

Strengths

Q offers certain unique features that are not available in other software. When it presents crosstabs, it adds arrows to suggest statistical significance such that the blue arrow represents positive significance and a red arrow suggests negative significance. In the choice experiments, the software presents estimated coefficients from the model in tabular format representing different coefficients for explanatory variables. A crosstab between airline brand type and trip purpose is presented in Figure 2. The significance test reported by Q is not testing the null hypothesis that the estimated coefficient equals 0. Instead, Q compares the significance of the estimated coefficient for one trip purpose against its compliment. Notice the last row which shows a blue coloured upward arrow for the price coefficient for business travellers against the red coloured downward arrow for the price coefficient for holiday travellers. The coloured coefficients suggest that they are statistically different from each other, where the business traveller appear to be less price-sensitive than the holiday travellers.



While most econometrics software allow one to test if the estimated coefficients for different groups are statistically different from each other, the process requires several extra steps. Q on the other hand does it on the fly.

Another unique feature is called Banner, which allows complex crosstabs involving more than two categorical variables. For instance, consider one wants to determine if the preference for a particular brand differs by gender, age groups, and country of residence. Q would present these differences in a single table whereas most other statistical analysis software would generate multiple crosstabs. Furthermore, Q permits one to aggregate categories by clicking on the output in a crosstab, thus eliminating the need to first recode the variable.

Q is also well integrated with Excel. I was able to export tables from Q into Excel with a simple mouse click. Q automatically formatted the same table in Excel and generated a graph from the same table a separate sheet. This further simplifies sharing results with colleagues who may not work with Q and therefore can review the results in MS Excel. Q also comes with a free version that allows one to review Q’s output.

Weaknesses

Q is distinct from other software in many ways. However, some features in Q are very unique and do not conform to the intuitive base knowledge, which most analyst have usually accumulated by working with other software in the past, such as SPSS and Excel. One key distinction is Q’s unique nomenclature. Q calls a simple regression model with a categorical explanatory variable ‘split cell experiment’. The main disadvantage of its unique nomenclature is that most new users of Q, who may have worked with other similar software or have taken courses in statistics/ market research, would have no exposure to Q’s unique terminology, which therefore has to be learnt afresh.

Q supports a point and click environment and does not generate a log or a syntax file. This makes reproducing results or repeating the analysis a more cumbersome task. Perhaps the developers may want to include this feature in a later version.

Q is rather expensive for the analytics it offers. Q professional costs $1,499 per license. A transferable license costs three times as much. Within advanced analytics Q supports OLS, Generalized least squares, logit models, cluster analysis, and principal component analysis. There are whole host of other advanced econometric tools, which are available in other competing software that cost much less.

Final word

Whereas Q has many unique features, most of its advanced core competencies are readily available in other software, such as SPSS, and Stata, Eviews, and R. It does stand out in offering advanced data managing capabilities for survey data. Q will be a preferred tool for those market researchers who rely more on cross tabulations. For others who subject their data to advanced econometrics, such as nested logit models, testing for self-selection biases, or post-estimation tests, Q offers a rather restricted set of tools.

Most New York Graduates Are Ill Prepared

February 7, 2011

Most New York Students Are Not College-Ready

By SHARON OTTERMAN

New York State education officials released a new set of graduation statistics on Monday that show less than half of students in the state are leaving high school prepared for college and well-paying careers.

The new statistics, part of a push to realign state standards with college performance, show that only 23 percent of students in New York City graduated ready for college or careers in 2009, not counting special-education students. That is well under half the current graduation rate of 64 percent, a number often promoted by Mayor Michael R. Bloomberg as evidence that his education policies are working.

But New York City is still doing better than the state’s other large urban districts. In Buffalo, Rochester, Syracuse and Yonkers, less than 17 percent of students met the proposed standards, including just 5 percent in Rochester.

The Board of Regents, which sets the state’s education policies, met on Monday to begin discussing what to do with this data, and will most likely issue a decision in March. One option is to make schools and districts place an asterisk next to the current graduation rate, or have them report both the current graduation rate and the college ready rate, said Merryl H. Tisch, the chancellor of the Board of Regents.

The move parallels a decision by the Regents last year to make standardized tests for third through eighth graders more difficult to pass, saying that the old passing rates did not correlate to high school success.

“With three through eight, we ripped the Band-Aid off,” Dr. Tisch said in an interview last week. “The thing we said then, in looking at the business world, is that if you sit on this, you become the Enron of test scores, the Enron of graduation rates. We need to indicate exactly what it all means, especially since we’ve already said that college-ready should be the indicator of high school completion.”

State and city education officials have known for years that graduating from a public high school does not indicate that a student is ready for college, and have been slowly moving to raise standards. But the political will to acknowledge openly the chasm between graduation requirements and college or job needs is new, Dr. Tisch; David M. Steiner, the state education commissioner; and John King, the deputy state education commissioner, said in interviews last week.

With President Obama making college readiness and international competitiveness a top national goal, and federal and philanthropic money pouring into finding ways to raise national education standards, that equation is changing, they said. “It is a national crisis,” Dr. Steiner said.

Statewide, 77 percent of students graduate from high school. Currently, a student needs to score a 65 on four of the state’s five required Regents exams to graduate, and beginning next year, they will need a 65 on all five.

Using data collected by state and community colleges, testing experts on a state committee determined last year that a 75 on the English Regents and a 80 on the math Regents roughly predicted that students would get at least a C in a college-level course in the same subject. Scores below that meant students had to often take remediation classes before they could do college-level work. Only 41 percent of New York State graduates in 2009 achieved those scores.

In the wealthier districts across the state, the news is better: 72 percent of students in “low need” districts are graduating ready for college or careers. But even that is well under the 95 percent of students in those districts who are now graduating.

The data also cast new doubt on the ability of charter schools to outperform their traditional school peers. Statewide, only 10 percent of students at charters graduated in 2009 at college-ready standards, though 49 percent received diplomas. The state has not yet calculated results for every district and school.

State officials have also begun a series of meetings in local districts to introduce this data and ask local officials what they want to do about it. A common reaction, Dr. Tisch said, is shock and hesitancy. There are fears of plummeting real estate values, as well as disagreement, particularly in rural areas, with the idea that all students need to be prepared for college.

Jean-Claude Brizard, the schools superintendent in Rochester for the past three years, said that while he was surprised by the data, he welcomed the effort to move the conversation away from simply graduating. In an effort to improve, Rochester has closed half its high schools and opened new schools, including its first high school that allows students to earn credits at several local colleges.

“We are behind the eight-ball a bit, but we are pushing,” he said. “It’s shocking, I know. It’s low. But for me, it is going to support my initiatives.”

In New York City, roughly 75 percent of public high school students who enroll in community colleges need to take remedial math or English courses before they can begin college-level work. City education officials said the 23 percent college-ready rate was not a fair measure of how the city would do if graduation requirements were raised to a higher standard, because students would work harder to meet that new bar.

While it has not gone so far as to calculate an alternative to graduation rates, the city has already begun tracking how each high school’s students fare in college, and in 2012 it will begin holding principals accountable for it. “Last year, well before the state announced this plan, we told schools we would begin including robust college readiness metrics in school progress reports,” said Shael Polakow-Suransky, the chief academic officer.

One thing that is helping districts get over their shock, Dr. Tisch said, is the opening of a broad discussion about how to improve things. On their tour, which has visited Albany, Buffalo and Rochester and will visit New York City, Westchester County and Long Island in the coming weeks, officials are presenting a menu of options.

One idea is to simply report a college-ready graduation rate as an aspirational standard and leave it at that. Another is to impose tougher graduation standards — like requiring that all students in the state take four years of math and science, or permanently raising the passing score on high school Regents exams to 75 in English and 80 in math.

But they are also discussing increased flexibility for districts and students, so that they can spend more time on the subjects they are interested in. For example, students might be permitted to choose at least one of the Regents exams they must pass to graduate — currently all students have to pass math, English, science, global history and American history. Students might be able to substitute foreign language, economics or art for one of the five. Or students could replace one Regents with a vocational skills test in an area like carpentry or plumbing.

Alternatively, the state could grant flexibility to districts to give credits based not on how many hours students sit in a classroom — currently 54 hours per semester per credit — but on whether students show competency, based on examination or online course work.

To press their case, state officials said they hoped to get political support from Gov. Andrew M. Cuomo. The political environment was particularly challenging now, because the state will roll out a new system in July to evaluate teachers that has the potential of strong opposition from teachers’ unions.

“I would consider it irresponsible, quite frankly, to hold back information at this point, considering that we have already moved in that direction on the three through eight,” Dr. Tisch said, adding, “The obligation at the end of the day is to make sure that when youngsters graduate, that graduation means something from New York State.”

Most New York Graduates Are Ill Prepared, Data Show - NYTimes.com

What price should one put on democracy and freedom?

Experts claim that the unrest is costing the Egyptian economy upwards of $300 million. I think it's to a steal for being liberated.

BBC News - Egypt crisis 'costing economy $310m a day'

Is MBA worth your time and money?

Image via Wikipedia

"Most of the world’s top hedge funds prefer seasoned traders, engineers and mathematicians, people with insight and programming skills, to MBAs brandishing spreadsheets, the latest two-by-twos and the guilt induced by some watery ethics course. "

Set your heart on an MBA? Philip Delves Broughton suggests a radical alternative: don’t bother

The problem is that these days it doesn’t work like that. Rather, more and more students are finding the promise of business schools to be hollow. The return on investment on an MBA has gone the way of Greek public debt. If you have a decent job in your mid- to late- 20s, unless you have the backing of a corporate sponsor, leaving it to get an MBA is a higher risk than ever. If you are getting good business experience already, the best strategy is to keep on getting it, thereby making yourself ever more useful rather than groping for the evanescent brass rings of business school.

Business schools argue that a recession is the best time to invest in oneself. What they won’t say is that they also need your money. There are business academics right now panting for your cheque. They need it to pad their sinecures and fund their threadbare research. There is surely no more oxymoronic profession than the tenured business-school professor, and yet these job-squatting apostles of the free market are rife and desperate. Potential students should take note: if taking a professional risk were as marvellous as they say, why do these role models so assiduously avoid it?



Harvard Business School recently chose a new dean, Nitin Nohria, an expert in ethics and leadership. He was asked by Bloomberg Businessweek if he had watched the Congressional hearings on Goldman Sachs. He replied: “The events in the financial sector are something that we have watched closely at Harvard Business School. We teach by the case method, and one of the things we’ll do through this experience is study these cases deeply as information is revealed over time so we can understand what happened at all these financial firms. I’m sure that at some point we’ll write cases about Goldman Sachs because that’s how we learn.” He could have stood up for Goldman or criticised it. Instead he punted on one of the singular business issues of our time. It is indicative of the cringing attitude of business schools before the business world they purport to study.

Over-qualified?

When you look at today’s most evolved business organisms, it is obvious that an MBA is not required for business success. Apple, which recently usurped Microsoft as the world’s largest technology firm (by market capitalisation), has hardly any MBAs among its top ranks. Most of the world’s top hedge funds prefer seasoned traders, engineers and mathematicians, people with insight and programming skills, to MBAs brandishing spreadsheets, the latest two-by-twos and the guilt induced by some watery ethics course.

In the BRIC economies, one sees fortunes being made in the robust manner of the 19th-century American robber barons, with scarcely a nod to the niceties of MBA programmes. The cute stratagems and frameworks taught at business schools become quickly redundant in the hurly-burly of economic change. I’ve often wondered what Li Ka-Shing of Hong Kong or Stanely Ho of Macao, or Rupert Murdoch, for that matter, would make of an MBA programme. They would probably see it for what it is: a business opportunity. And as such, they would focus on the value of investing in it.

They would look at the high cost, and note the tables which show that financial rewards are not evenly distributed among MBAs but tilt heavily to those from the very top programmes who tend to go into finance and consulting. Successful entrepreneurs are as rare among MBAs as they are in the general population.

They would think to themselves that business is fundamentally about two things, innovating and selling, and that most MBA programmes teach neither. They might wonder about the realities of the MBA network. There is no point acquiring a global network of randomly assembled business students if you just want to work in your home town. Also, they will recall that the most effective way to build a network is not to go to school, but to be successful. That way you will have all the MBA friends you could ever want.

They might even meet a few business academics and wonder. Then they would take their application and do with it what most potential applicants should: toss it away.

Philip Delves Broughton is the author of “What They Teach you at Harvard Business School” (Viking) and a Harvard MBA.

Which MBA? | Think twice