Statistics Canada needs guts

Industry minister Tony Clement has asked Canadians to trust Statistics Canada for his decision to scrap the mandatory long census form and replace it with a voluntary questionnaire. The Canadians would trust Statistics Canada if they knew where it stood on this matter.

Dr. Munir A. Sheikh, Canada’s chief statistician who was handpicked by the Harper government in 2008 to lead the agency, has refused to speak on the matter.  He has declined an interview request from The Canadian Press. His silence on the matter has made Minister Clement the de facto chief spokesperson for the agency.

Canadians expect strong leadership from their chief statistician. The former chief statistician of Canada, Dr. Ivan Fellegi, has told The Canadian Press that he would have quit his job in protest had the government tried to pull this stunt during his tenure.

Statistics Canada has already lost the trust of most Canadians by following an executive order instead of first consulting with those who rely on its data. Dr. Sheikh must speak directly to Canadians and explain why he believes the unanimous opposition by Canadian academics, businesses, charities, and medical professionals to scrap the mandatory long census form is misplaced.

Data Visualization

As the computer's became cheaper, and the Internet became ubiquitous, data have transformed from being scarce to abundant.  With gigabytes of data available on almost everything that one can think of, the new challenge facing analysts is how to analyze and present data.

Data visualization has emerged as a key tool to present synthesized data to a larger audience.  The World Bank through Google has made significant strides in opening up its databases and, more importantly, developing tools to present animated data that have been held in digital and paper format in the Bank’s archives.

The British News magazine, The Economist, has also been at the forefront of creating innovative graphics.  The latest is a dynamic interactive graph depicting housing price indices in most developed economies. 

Please click here for the interactive graph.

NY Times: Do computers improve academic achievement?

A very insightful article in the NY Times asking the question, do computers improve academic achievement. The answer, NO.

July 9, 2010

Computers at Home: Educational Hope vs. Teenage Reality

By RANDALL STROSS

MIDDLE SCHOOL students are champion time-wasters. And the personal computer may be the ultimate time-wasting appliance. Put the two together at home, without hovering supervision, and logic suggests that you won’t witness a miraculous educational transformation.

Still, wherever there is a low-income household unboxing the family’s very first personal computer, there is an automatic inclination to think of the machine in its most idealized form, as the Great Equalizer. In developing countries, computers are outfitted with grand educational hopes, like those that animate the One Laptop Per Child initiative, which was examined in this space in April. The same is true of computers that go to poor households in the United States.

Economists are trying to measure a home computer’s educational impact on schoolchildren in low-income households. Taking widely varying routes, they are arriving at similar conclusions: little or no educational benefit is found. Worse, computers seem to have further separated children in low-income households, whose test scores often decline after the machine arrives, from their more privileged counterparts.

Ofer Malamud, an assistant professor of economics at the University of Chicago, is the co-author of a study that investigated educational outcomes after low-income families received vouchers to help them buy computers.

“We found a negative effect on academic achievement,” he said. “I was surprised, but as we presented our findings at various seminars, people in the audience said they weren’t surprised, given their own experiences with their school-age children.”

Professor Malamud and his collaborator, Cristian Pop-Eleches, an assistant professor of economics at Columbia University, did their field work in Romania in 2009, where the government invited low-income families to apply for vouchers worth 200 euros (then about $300) that could be used for buying a home computer.

The program provided a control group: the families who applied but did not receive a voucher. They showed the same desire to own a machine, and their income was often only slightly above the cut-off point for the government program.

In a draft of an article that the Quarterly Journal of Economics will publish early next year, the professors report finding “strong evidence that children in households who won a voucher received significantly lower school grades in math, English and Romanian.” The principal positive effect on the students was improved computer skills.

At that time, most Romanian households were not yet connected to the Internet. But few children whose families obtained computers said they used the machines for homework. What they were used for — daily — was playing games.

In the United States, Jacob L. Vigdor and Helen F. Ladd, professors of public policy at Duke University, reported similar findings. Their National Bureau of Economic Research working paper, “Scaling the Digital Divide,” published last month, looks at the arrival of broadband service in North Carolina between 2000 and 2005 and its effect on middle school test scores during that period. Students posted significantly lower math test scores after the first broadband service provider showed up in their neighborhood, and significantly lower reading scores as well when the number of broadband providers passed four.

The Duke paper reports that the negative effect on test scores was not universal, but was largely confined to lower-income households, in which, the authors hypothesized, parental supervision might be spottier, giving students greater opportunity to use the computer for entertainment unrelated to homework and reducing the amount of time spent studying.

The North Carolina study suggests the disconcerting possibility that home computers and Internet access have such a negative effect only on some groups and end up widening achievement gaps between socioeconomic groups. The expansion of broadband service was associated with a pronounced drop in test scores for black students in both reading and math, but no effect on the math scores and little on the reading scores of other students. In the report, the authors do not speculate about what caused the disparities. Neither author responded to a request for an interview.

The state of Texas recently completed a four-year experiment in “technology immersion.” The project spent $20 million in federal money on laptops distributed to 21 middle schools whose students were permitted to take the machines home. Another 21 schools that did not receive funds for laptops were designated as control schools.

At the conclusion, a report prepared by the Texas Center for Educational Research tried to make the case that test scores in some academic subjects improved slightly at participating schools over those of the control schools. But the differences were mixed and included lower scores for writing among the students at schools “immersed” in technology.

THE one area where the students from lower-income families in the immersion program closed the gap with higher-income students was the same one identified in the Romanian study: computer skills.

Catherine Maloney, director of the Texas center, said the schools did their best to mandate that the computers would be used strictly for educational purposes. Most schools configured the machines to block e-mail, chat, games and Web sites reached by searching on objectionable key words. The key-word blocks worked fine for English-language sites but not for Spanish ones. “Kids were adept at getting around the blocks,” she said.

How disappointing to read in the Texas study that “there was no evidence linking technology immersion with student self-directed learning or their general satisfaction with schoolwork.”

When devising ways to beat school policing software, students showed an exemplary capacity for self-directed learning. Too bad that capacity didn’t expand in academic directions, too.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.

Wage differentials

The Economist magazine produced an illustrative graph showing the difference in income of the rulers and those who are ruled. It appears that the worst offender is Kenya where the leader’s annual income is 240-times that of  per capita GDP. Singapore, Indonesia, and South Africa follow Kenya in the widening gap between the rulers and the masses.

US housing market to slide even further

Unlike the Canadian housing market, where mortgage delinquencies are mere 0.5% of the total outstanding mortgages, the picture in the US is bleak where estimates suggests that 14% of the outstanding mortgages are in arrears.

From David Rosenberg of Gluskin Scheff:

This is no time for complacency with regard to the outlook for house prices and mortgage defaults in the U.S.

First, here are some numbers:

Two-thirds of American homeowners have a mortgage — 56 million in total.

Around 50% are guaranteed by the GSEs, 35% are held directly on the balance sheets of the banks, and 15% are private label.

Estimates I’ve seen suggest that 14% of these 56 million mortgages are already in arrears or in the foreclosure process. This means that about eight million Americans have stopped paying their mortgage. Staggering.

Other estimates suggest that over 90% of these late-paying/non-paying debtors will never get back to being current. So what we are looking at is something like 7.2 million mortgages that will inevitably go into foreclosure in the near future.

Meanwhile, the pace of foreclosures has been slowed via loan modifications brought on by government pressure and the simple fact that banks do not want to take deflated property onto their books. What does not get reported often enough is that the rate of non-foreclosure on delinquent borrowers is surging — 24% of the people who have not made a single mortgage payment in the last two years have still not been foreclosed on. The banks don’t want to take the hit and in the meantime the foreclosure pipeline is completely clogged up. (It has to be said that the banks are content in kicking the can down the road since homeowners are making good on their second lien — $842 billion outstanding, most held at the big four banks, and they are holding these at par even as the first lien has already gone bad!)

When this foreclosure pipeline gets unleashed, I fear that the wave of supply is going to precipitate another leg down in home prices.

Also, keep in mind that the loan modifications are not even working — half of them are re-defaulting within 12 months (and this is happening even after monthly payments have been cut 50%). The principal reason is the negative net equity position most of the homeowners in arrears find themselves in (the amount by which mortgage balances exceed the true value of real estate for those in default or near-default could be as much as $2 trillion).

Currently, over 17% of homeowners are “upside down” on their mortgage and another 10% decline in home prices would take that share up to 27%. This, in turn, would dramatically lift mortgage default rates. If the banks ever do a “short sale”, which the Administration clearly wants them to do, then the entire second lien is wiped out — cutting deeply into bank capital (if not wiping it out entirely).

I only bring this up because I heard Dick Bove (and other bank analysts) talk about how the banks are a huge buy now that the financial regulation bill is behind us and the uncertainty gone. Maybe that’s true for non-consumer, non-mortgage lenders, but we have to be aware that the problems with housing finance are very likely to remain a huge overhang for many U.S. banks in coming months and quarters.

If Congress is no longer extending jobless benefits and State governments are now attacking public pensions, then it stands to reason that additional support for the housing market out of Washington is not forthcoming. This public backlash against more deficit finance is going to pose a big roadblock for any company linked to the housing sector, especially since whatever revival we experienced in the second half of 2009 and the opening months of 2010 was due to government intervention.

HOV lanes and car jockeys

To arrest the sharp increase in single occupancy vehicles in North America, transport planners and engineers devised the High Occupancy Vehicles (HOV) lanes dedicated for those vehicles that carry two or more passengers.

The HOV lanes have met limited success in North America in mitigating traffic congestion. Their utility in other parts of the world has been largely unpredictable. Consider the following photograph where a mother and child her standing on a freeway in Jakarta offering their services as car jockeys for a pittance to affluent drivers who would otherwise be not allowed to drive on less congested HOV lanes.

Transport policy, like all other policy domains, is sensitive to local norms, cultures, and economic frameworks. What may work in an American city may not necessarily work in an other city in a developing country.

Photo: BEAWIHARTA/REUTERS

A jobless mother holds her child as she offers to be a car jockey in a main street in Jakarta. Many unemployed Indonesians find work as car jockeys, for which they are paid around 15,000 rupiah to be car passengers, allowing the driver to use a lane dedicated to cars carrying three or more passengers.

Canadian housing inventory building

From Gluskin Sheff

Another piece of strong housing data out of Canada yesterday with April housing starts edging up 1.3% MoM, to 201.7k annualized units (though slightly missing analysts’ expectations of an increase to 205k). The details were mixed with single-family starts (a good baramoter for underlying demand) dropping nearly 13% while multi-starts (ie, condos) jumped 27% on the month.

If we take a step back from the monthly volatility, what is interesting to note is that household formation rates are at about 175K annualized and housing starts have been running at-or-above that level for the past seven months, suggesting that inventories of new homes are building. Using a different approach, housing starts (ie, supply) were up at whopping 80% YoY in April and existing home sales (ie, demand) are running at less than half that rate on a YoY basis. Using this approach, we estimate that supply as been outrunning demand for about 2-3 months, another indication that inventories may be building. In fact, the latest data release for existing home sales showed, on a seasonally adjusted basis, months’ supply in March were higher than in the previous four months.

We are likely to see more inventories build, especially as the frenetic demand seen in the first half of the year dries up in the second half due to higher mortgage rates, a more restrictive lending environment and the impending HST — all of which will ultimately pressure home prices downward.

Whereas Statistics Canada reported the following:

Residential sector: Higher intentions for multi-family permits

Municipalities issued $1.5 billion worth of multi-family permits in March, up 53.6% from February, its highest level since July 2008. Ontario and British Columbia accounted for most of the increase, although six other provinces showed higher intentions for the construction of multiple dwellings. In contrast, Quebec posted a large decline following an increase in February.

The Canada value of building permits for single-family dwellings remained unchanged at $2.7 billion. Provincially, increases in eight provinces offset declines in Alberta and Ontario. Quebec and Newfoundland and Labrador posted the largest advances in single-family construction intentions.

Nationally, municipalities approved construction of 19,469 new dwelling units in March, up 21.1%. The gain was largely attributable to multi-family dwellings, which rose 46.0% to 10,038 units. This was the first time since July 2008 that the number of multiple units surpassed 10,000. The number of single-family dwellings approved increased 2.5% to 9,431 units.