Linking Cheating to Misbehaving at School
2018-05-24: Are students who cheat for financial gain more likely to misbehave at school? This question is the starting point of a study conducted by Michel Maréchal and Alain Cohn from the University of Michigan. 162 Students from Swiss Schools were asked to truthfully record the results from flipping a coin, being able to keep money if the coin came up as heads. The outcome was cross referenced with teacher’s evaluations of those student’s behavior. Futurity gives a short overview on the setup and outcome of the Study and talked to the researchers.
The Psychology of Poverty
Five Professors receive the AER Excellence in Refereeing Award
2018-05-22: The American Economic Review announced their list of awards for referees who provided exceptional service to the Review by a large number and quality of referee reports in 2017. This year, Björn Bartling, Lorenzo Casaburi, David Dorn, Marek Pycia and Joachim Voth received the AER Excellence in Refereeing Award for the dedication and time they devoted to the advancement of the field of economics.
Sendhil Mullainathan holds Departmental Seminar Talk
2018-05-14: Sendhil Mullainathan (Harvard) came to the Department to talk about “Economic Applications of Machine Learning”. During his talk he discussed in which situations (e.g. when predictability itself is of economic interest) machine learning is a stronger tool than the traditional approach of econometric regressions.
Reread Dina Pomeranz’live tweet feed from the presentation with slide shots.
More about Sendhil Mullainathan.
Jay Clayton in Zurich
2018-05-07: An exclusive event organized by the Department of Economics and the American Swiss Foundation (Swiss Advisory Council) offered 100 people the opportunity to hear Jay Clayton, chairman of the US Securities and Exchange Commission (SEC) speak at the University. In his presentation, he explained the U.S. regulatory agenda and the underlying strategy.
Talk im Turm: tax justice
01.05.2018: In the «Talk im Turm» at the UZH, educational scientist Katharina Maag Merki and economist Florian Scheuer discussed equal opportunities in education and a tax policy based on performance incentives instead of redistribution. Taxes are considered the instrument of choice to balance the differences between rich and poor. However, increasing taxes alone will not make the world a fairer place, Florian Scheuer explains. The focus of tax policy still remains too strongly on redistribution. From an economic point of view, it makes more sense to see tax policy as an instrument to provide incentives for productive activities.
Watch the Video here (in German)
Redistributing for the Sake of Democracy
24.04.2018: The German edition of Forbes interviewed Florian Scheuer on the polarization of income and wealth distribution and appropriate tax policies. In contrast to previous advances in automation, robots will increasingly also perform cognitive tasks. This has unforeseeable consequences for the labor market and income distribution. What is certain, however, is that polarization will continue to increase. In order to strengthen democracy and avoid the dystopia of a divided society in which the super-rich define politics, income redistribution is necessary. In this context, regional economic policy will become increasingly important in the future, says Scheuer.
Article (in German)
Newsletter: ECONtrack out now
2018-04-08: ECONtrack, our relaunched Newsletter is out. ECONtrack will keep you on track with the many activities at the Department. We have stripped the boring stuff and only present some of our most interesting output, well aware that not everything we find mouthwateringly exciting exerts the same reaction in our readers. Nevertheless, much of what we do is relevant, thought-provoking, and noteworthy, so please enjoy a browse through the latest edition.
Download here (PDF, 4614 KB)
Ghost Houses and Wealth Taxation in Italy
2018-04-17: The Italian Corriere della Sera takes a detailed look at the feasibility of the promises made by the political party M5S. On the idea of a wealth tax, the article points out that a wealth tax would create liquidity problems for most households who might have to sell their homes or their businesses to pay for it. Also, it would hit the wealthy North more than the South, especially as the South has a significant quota of houses not registered in the land register. On this topic, the article refers to a paper by Lorenzo Casaburi, «Ghost-House Busters: The Electoral Response to a Large Anti-Tax Evasion Program».
Michael Kremer at the CCWD Annual Conference
2018-04-17: Prior to the annual conference of the Center for Child Wellbeing and Development (CCWD), the Tagesanzeiger spoke with Michael Kremer, development economist at Harvard University, about the topic of his lecture, the effects of deworming on child health, and what motivates him in his research. Since travelling to Kenya for the first time in 1985, he wants his research results to create the basis for effective and meaningful development work, which he illustrates with a few simple but successful project examples.
Further SNSF Grants for the Department
2018-04-17: We congratulate both Gregory Crawford and Rainer Winkelmann for receiving grants from the Swiss National Science Foundation (SNSF). Gregory Crawford received CHF 500,000 for the measurement and analysis of "Media Bias in Public Service Broadcasting" and Rainer Winkelmann CHF 180,000 for his project "Fixed Effects Estimators for Binary and Fractional Response Models."
Social Status as a Driving Force
2018-04-10: 152,400 francs: this is the sum paid last week for the Zurich license plate "ZH 987". The NZZ am Sonntag looks at why we are willing to pay so much for so-called position goods, status symbols without any immediate practical benefit. The towers in San Gimignano, Tuscany, prove that this conspicuous consumption has always existed. But is it harmful? The data show that it could be, says Joachim Voth, on the basis of an example from Canada, which shows that in neighborhoods with lottery winners, people suddenly felt compelled to spend more in order to keep up with their rich neighbors.
SRF Einstein visits the SNS-Lab
2018-04-06: Einstein, the science program on Schweizer Radio und Fernsehen (SRF), examines various possibilities of brain doping. For this they also visit the SNS-Lab and observe how transcranial brain stimulation, i.e. the stimulation of brain regions with current, influences the ability to solve mathematical tasks. Brain stimulation of all kinds is predicted to have great potential. Christian Ruff explains the possibilities of improving brain performance (neuroenhancement) and puts forward the questions that still need to be answered.
Watch here (at 24'20")
Current Challenges in International Development Cooperation
2018-04-05: Manuel Sager held a Department Lecture on March 26 to a full hall. He presented how the Swiss Agency for Development and Cooperation (DEZA) ensures that the funds for development cooperation are implemented efficiently and effectively and discussed current challenges as well as learnings from the past.
Video from the presentation.
Understanding the Economic Brain
2018-04-02: Over the past few decades, game theorists and behavioral economists have designed experiments to better understand motivation, and the decision-making process. At the same time, social neuroscientists have been studying the exact same things — just with a different approach. The two fields work in parallel. They are studying the same questions about decision-making, and they often come to the same conclusions. In his paper in the March issue of the Journal of Economic Literature, Carlos Alós-Ferrer makes the case for more interdisciplinary work. Sharing tools, methodologies, and insights can strengthen both disciplines. After all, they are fundamentally connected. “When we study society, whether or not we want to, we are studying the brain,” he says.
SNSF Grant for Carlos Alós-Ferrer
2018-04-04: Carlos Alós-Ferrer received a Swiss National Science Foundation (SNSF) Grant of 1.1. Mio Swiss Francs over four years to advance his research project "The Neuroeconomics of Conflict and Preference Strength in Decision Making".
Duel of the Champions
2018-03-29: Until recently, trade wars were a rather theoretical matter, even for Ralph Ossa, who has been researching the topic for years. With the US announcing new tariffs on aluminum and steel, this possibility has moved back into the realm of the possible. Talking to the Weltwoche, Ralph Ossa explains why the Americans' argument for the tariffs puts the WTO in a dilemma, and why many politicians mistakenly believe that exports are better than imports.
With the Sledgehammer against China
2018-03-27: Shortly after the raise of tariffs on steel and aluminum, Donald Trump makes the next move in his power struggle with China: retaliatory tariffs on Chinese imports up to 60 billion Dollars. China responded with the announcement of comparatively mild tariffs worth 3 billion dollars on selected US products. 10vor10 examines whether the threats could indeed lead to a trade war and asks David Dorn how he views China's reaction.
The End of the Bitcoin Hype
2018-03-21: A currency’s central functions are to simplify the exchange of goods and reduce transaction costs. To do this it needs to be easily and cheaply accessible for a maximum number of users and offer a stable and predictable value. “Crypto currencies such as Bitcoin fulfil none of these requirements satisfactorily”, says Joachim Voth in the current edition of the Finanz und Wirtschaft. Therefore, they will remain in the murky areas of criminal activity, where the very large gains make up for such high transaction costs.
Read the pro and con statements here (PDF, 98 KB)
2018 Conference of the Center for Child Well-being and Development (CCWD) on Child Health
2018-03-23: The CCWD third annual conference took place at the University of Zurich on Friday March 16. About 70 delegates from Europe, Africa, and the U.S. –comprising scholars and university students, UNICEF representatives, development practitioners, and some government officials –gathered to hear world-class experts on child development discuss their work and major issues in the field. The conference concluded with a closing keynote speech by Michael Kremer, Gates Professor of Developing Societies at Harvard, on “The Long Run Impacts of Improving Child Health: The Case of Deworming”.
Watch the Keynote
Reports and presentations from the conference can be found here
How Trump’s Protectionism Could Backfire
2018-03-23: A recent New York Times article takes up the "China Shock" paper. This groundbreaking work by David Dorn, David Autor (MIT) and Gordon Hanson (UCSD) shows that workers in countries whose industries were exposed to competition from China have lost jobs and suffered wage declines, with far-reaching social consequences.
Uncomfortable Developments in Wealthy Countries
2018-03-23: The wage ratio, i.e. the share of wages and salaries in national income, lies at 68.7 percent in Germany today. In 2000, the figure was still at 72 percent. In addition, real wages have fallen in many sectors since the 1990s. As a result, around 40 percent of the population has no savings at all. Taken together, these factors "mean that many people and households are in debt or have only a very modest account balance," says David Dorn in an interview with Business Insider. In this respect, the situation in Germany is not much different from that in the USA and points to a disturbing trend.
Article in German
Donald Trump and Import Tariffs
2018-03-18: This week Donald Trump introduced the new tariffs on steel and aluminum imports. The NZZ am Sonntag takes a look at the power struggle between the USA and China, and how Europe is drawn into it. A comparison of the import tariffs of the USA and the European countries shows what consequences the new increase could have and with what promises the USA is looking for allies against "unfair Chinese trade practices". Ralph Ossa explains why he pleads for the preservation of the existing free trade agreements and what an escalation of the situation would mean.
"Bonus Criteria are Often Easy to Manipulate"
2018-03-21: In an interview with Wirtschaftswoche, Ernst Fehr talks about why bonuses make sense for managers, but are usually too high these days. He believes that there should be a link between a company's performance and bonus and explains why today, this is often no longer the case. Read more about his suggestions for alternative compensation systems and why he is against a limitation of management salaries here.
Discussing Solutions for the US Economy
2018-03-16: The New York Times takes David Dorn and David Author's paper The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade as a starting point to explain the impact of China joining the World Trade Organization (WTO) on the US economy and discuss possible scenarios to counteract it.
Paper by David Autor, David Dorn and Gordon Hanson
Mercator Award to Bruno Caprettini
2018-03-15: Bruno Caprettini has been awarded a Mercator Award for his research on Structural Change and Agricultural Technology. The Mercator Awards for Junior Researchers give recognition to the outstanding scientific achievements of advanced PhD candidates and early postdoctoral researchers from the University of Zurich. Every year three prizes are awarded to researchers for their scientific quality, originality, societal relevance and inter- or transdisciplinary approach. The Award Ceremony will take place 3 July 2018.
Article from UZH News (in German)
More about the Mercator Awards
Video (MOV, 40063 KB) with Bruno Caprettini
Fighting Poverty via SMS
2018-03-14: In Brazil, three out of four parents do not know whether their child has homework, and about half of them do not know whether their child has problems at school. This led Guilherme Lichand to the question: How can parents be encouraged to follow their children's school life more closely? Starting from the premise that poverty and a consequent lack of attention leads to bad decision-making, he wanted to know whether attention could be directed. Different ways of informing parents about their children's school attendance were investigated: one group received regular detailed information directly from the teachers, the other group received a text message twice a week reminding them of the importance of attending school. The SMS resulted in reduced absences, increased learning speed and reduced repetition rates. In an interview with Swissinfo, Guilherme Lichand talks about the significance of technical conditions, how the state benefited from the reults and why the same experiment would not work in Switzerland.
Article (in Portugese)
Is Capitalism Abolishing Itself?
2018-03-13: Productivity growth has slowed notably in the last decades, compared to the pre 1970ies. This has an impact on the entire economic process and society’s prosperity, says Joachim Voth in his opinion piece in Finanz und Wirtschaft : "As much as new IT products enthuse us, the progress of recent decades seems to be insubstantial in comparison with previous breakthroughs such as electrification, cars or penicillin". He explains why productivity growth has slowed, investments in basic research are declining, and how the capitalist logic has fueled this development.
Article (in German)
Which Norms Support Cooperation in a Society?
2018-03-09: The current edition of nature features a study on how a simple moral rule suffices to drive the evolution of cooperative behavior within societies, where interactions are often indirect and complex. Ernst Fehr and Charles Efferson, discuss the findings and summarize: The relatively simple norm of stern judgement, i.e. cooperate with people you have seen or heard to be cooperative and do not cooperate with people who you have seen or heard to be uncooperative - goes a long way explaining the evolution of cooperation in society. However, in reality there is variation in the levels of subtlety people use when interpreting actions they see or hear about. In such experiments, Fehr and Efferson also point out, strategies and mechanisms are often regarded to be mutually exclusive. In reality however, we probably have a combination of multiple mechanisms, which is especially potent at promoting the evolution of cooperation.
Comment in Nature
Original Article in Nature
Poverty Affects Cognitive Function
2018-02-28: “If we want to find a way out of poverty we need to understand how it affects our brains and cognitive ability”, says Guilherme Lichand, “as evidence from the field clearly shows that it does”. Our brains have limited bandwidth and poverty absorbs a lot of our attention, leaving less for more long-term and strategic thinking processes. Interventions need to be appropriate, timely and simple enough so they do not need a lot of cognitive energy on the part of the recipient, as they often simply do not have enough left. Part of his research focuses on cost-effective ways to increase school attendance of disadvantaged children in Brazil and, based on his findings various initiative have been implemented.
Article in UZH Magazin (in German)
Fat Cats, Profiteers, Superstars
2018-02-27: Income is not equal to income, says Florian Scheuer, and suggests a tax system that takes into account its origin. He distinguishes three categories of top earners: fat cats try to eat as much cake as possible, without contributing to the baking. Profiteers, such as high frequency traders, make profits from a system through technical optimizations. They too contribute little to the economy. And finally the superstars, top managers in large companies who, through leverage effects, generate productivity and income for the whole economy. Tax systems should consider these differences and provide incentives to promote activities that benefit the economy as a whole.
Article in UZH Magazin (in German)
Research Paper: The Taxation of Superstars
New Research Centre on the Long-term Effects of Early Childhood Nutrition and Breastfeeding
2018-02-23: Thanks to a donation of ten million Swiss francs from the Larsson-Rosenquist Family Foundation, the Department is opening a Centre for Economics of Child and Youth Development with a Focus on Breastfeeding. The Center with its associated professorship is a valuable complement to the Department’s existing research field of child and youth development.
Research into the influence of early childhood nutrition on health, cognitive and social skills in adulthood has its own challenges. It requires a long-term research horizon, interdisciplinary approach and complex methodological approaches.
Article in Neue Zürcher Zeitung (in German)
Welcome Prof. Dr. Carlos Alós-Ferrer
2018-02-23: Prof. Dr. Carlos Alós-Ferrer joins the Departement as of March 1, 2018, as Professor for Decision and Neuroeconomic Theory. Prof. Alós-Ferrer studied mathematics at the Universitat de València, Spain, and holds an MSc in Quantitative Economics from the University of Alacant, Spain, where he received his doctorate in 1998. Before joining our Department, he held Assistant and Associate Professorships at the University of Vienna and a professorship in microeconomics at the University of Konstanz and, most recently, at the University of Cologne.
A Good Year for the SNS Lab in the Media
2018-02-16: The current issue of the UZH Journal lists the top ten of all media releases by the University of Zurich in 2017. Research topics with a link to personal experience are most often taken up by the media. With its research on the different reactions of the brain to generosity between men and women, the SNS Lab ranks second and accounts for three of the top ten releases.
Flexible Work on the Fast Lane
2018-02-14: In the current issue of Finanz und Wirtschaft, David Dorn looks at the changes in employment types. Switzerland plays a pioneering role regarding part-time positions. Due to the relatively high wages, part-time work is much more popular here than in the surrounding European countries. Dorn notes that, when assessing flexible forms of work, it is important to consider whether flexibility primarily benefits the companies or the employees.
Article (in German)
Should Robots pay Taxes?
2018-02-13: With robots replacing many of the mid-tier jobs, the gap between the highest and lowest wages increases. Should robots show some solidarity and participate in taxes paying for unemployment benefits? Florian Scheuer believes we should at least think about it, but need to consider the consequences of a tax on «automate workers»in an international context. Interview by local Radio32.
10 Things to Read to Understand America
2018-02-09: Since the turn of the century, different social, cultural and economic developments have changed the USA to its core: Rising diversity and racial division, inequality and the discontents of a free-market world, political polarization, and the threats of foreign competition and slowing growth, present the country with new challenges. Noah Smith, Columnist at Bloomberg View, has compiled a reading list addressing these subjects to help deepen the understanding of modern America. The paper "The China Shock" by David Dorn, David Autor and Gordon Hanson made the cut and is described as a "landmark economics paper, which really deserves to be turned into a book".
Marie Skłodowska-Curie Individual Fellowship Grant for Lydia Hellrung
2018-02-06: Lydia Hellrung, received a Marie Skłodowska-Curie Individual Fellowship Grant from the European Commission for her research on Dopaminergic midbrain modulations by (adaptive) neurofeedback. With this project, she aims to understand the influence of the dopamine system on value based decision-making, such as whether a specific reward is worth enduring some kind of punishment. To date, this is a much-debated area with little empirical investigation.
Why do we Cheat?
2018-01-31: The programme "Dans la tête de" on RTS takes an in-depth look into the mind of cheaters. Why do people cheat and when? Various examples from daily life, sport and research show that the temptation to be dishonest is greater if, for example, you feel unobserved or have the feeling that the majority of others are doing the same. With interviews and smaller experiments, the programme tries to show how people define cheating and how moral values influence our actions. On the hypothesis that dishonesty in the financial world is culturally determined, Michel Maréchal talks about his research and the results of a study he carried out on this subject.
Video on RTS (in French)
Timing is Crucial for Crop Insurance
2018-01-31: Very few smallholder farmers are taking out insurance against the risk of losing their crops and thereby their entire income. Lorenzo Casaburi conducted a trial which analyzed the adoption rate of insurance depending on the timing of insurance payments. The results show that the demand for crop insurance increases from 5% to 72% if farmers are offered the possibility to delay the payment of the insurance premium.
Is the Inequality between Rich and Poor Actually Increasing?
2018-01-22: In an interview with Radio SRF, Dina Pomeranz talks about OXFAM's study on wealth distribution, which was published this week. She emphasizes the need to differentiate between income and wealth, since inequality mainly affects wealth, while the trend in income is moving in a different direction than the study suggests. Over the last decades, living standards have improved significantly in developing countries. She also explains the prerequisites to build up wealth and discusses measures to counteract inequality.
Christian Ruff on the State of Non-invasive Brain Stimulation
2018-01-09: In the current edition of Nature Neuroscience Christian Ruff and his co-authors Rafael Polonia and Michael Nitsche summarize the state of non-invasive brain stimulation research in humans, discuss some current debates about properties and limitations of these methods, and give recommendations for how these challenges may be addressed.
Michel Maréchal appointed Associate Editor to the Journal of the European Economic Association
2018-01-09: Michel Maréchal has been appointed Associate Editor to the Journal of the European Economic Association (JEEA). He is the second representative from our Department in this role, alongside David Dorn. The JEEA was established in 2003 and has meanwhile risen to be one of the top ten journals in economics. The aim of the European Economic Association is to help base economic decision-making on scientific principles, facts and economic theory, rather than on political discussions.
The Rise of China and the Swiss Economy
2018-01-08: In an Interview in Blick, David Dorn gives an optimistic outlook on the Swiss economy in the face of the rise of Chinese manufacturing power. With its history of specialization and international trade, Switzerland is in a good position to further increase exports. Dorn also argues against automation-pessimism and points out that the effects of technological change are slower than, i.e. changes in the global trade structure. Whereas changes in international trade have an immediate effect on whole sectors of an economy, advances in technology affect individual job-roles, leaving more room and time for the economy to adapt. However, not all is blue skies and sunshine: The polarization in the job-market and the loss of middle-income jobs is a challenge all societies face.