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Public Administration from a Scientific Point of View

For the latest issue of the magazine Re(a)d Square Yulia Kazakova, the journal’s editor in chief, and Saule Ismagulova asked me to share my views on Administrative Sciences and Public Administration in Russia. Yulia is also a graduate student at Higher Schools of Economics’ School of Public Administration. The interview can also be found at readsquare.ru/public-administration-from-a-scientific-point-of-view.

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– Let’s begin with some questions about you. Do you have any experience of working in public administration?

I am a scientific researcher, not a public manager. I graduated from Heidelberg University with a PhD in political science. I’ve been studying decision-making in the public sector with a focus on governmental decisions, for instance, in labour market regulation. I have been fascinated by public economic approach to public administration since then. But often, in public economics as well as in political science, public administration is a black box- we don’t really want to know what is going on inside the box. After I finished my PhD I worked as a Research Fellow at the German Research Institute for Public Administration. And there I studied administrative processes more thoroughly. In essential feature of my research is to understand how public administration works, because otherwise you will build models that can hardly explain the reality.

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Moscow Kremlin as seen from Arbat Square, Nov 2015, (c) Tim Jaekel

– Why did you become interested in public administration? What are the most attractive points for you about it?

Public sector is responsible for a large chunk of economic activities, about 30-50%, depending on the country. If we do not have an efficient, high-quality administration, we will have less well-being for citizens. This is the initial starting point: how can we manage bureaucratic processes more efficiently? And that’s one of my main subjects as a researcher. Public administration is relevant because it contributes to people’s well-being.

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New Arbat Avenue with Moscow City looming, Nov 2015 (c) Tim Jaekel

– You have written articles and books where you analyzed public administration in different countries. It can be agreed that such researching process is a time-consuming activity. What does it represent and how is it usually organized?

First, you always have to come up with a good research question- that is to explain in one sentence what you are going to analyze in your research term paper, your PhD thesis or a journal article. That might sound simple, but it is hard work. The second step is to explain in two additional sentences why your topic is relevant at all. Researchers tend to ignore the question whether their activities are of any relevance for public practitioners or the general public. If it is not relevant, don’t write about it. The underlying hard work is to review the literature, develop a theoretical model and to look at processes in public sector management – waste management or public transportation, for instance. Because normally there’s no apple that falls on your head and make you think of Universal Law of Public Administration – there are just too few apple trees located on HSE campus. If you do a comparative research project a major point is case election. Here, you should ask yourself: Why do you want to compare certain countries? Why does this make sense? It’s time-consuming, but you have to conceive the research process from its ending – what do you want to achieve? And then it’s much easier to manage your research process.

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Moscow, upper part of one of the „seven sisters“ skyscraper, this one hosting the Federal Ministry of Foreign Affairs, Nov 2015 (c) Tim Jaekel

– Does an ideal model of public management exist? I mean whether you can give an example of some countries (regions or municipals) which, to your mind, can be characterized by high standards of public performance.

There is no “one size fits all model of public management. The main objective of public administration should be to contribute to citizens’ well-being. But people have different preferences. If you have children, you want to have playing fields, high-quality public schools. Safety, recreational areas and green environment are the things that most people consider important. Others want to have a say in budgetary issues, so municipalities have to balance expenditures and inflows. A lot of goals should be achieved, but these goals are always conflicting. There is a limited amount of resources, and public sector has to decide how to allocate them (for example, how much money should be spent on building new roads?). It’s a task of managing an allocation process. A good public administration is the one which at least tries to maximize as many goals as possible and keep the side effects limited. That’s a challenging process because resources are always limited. If they try successfully, they are a good public administration. But there are different models that can succeed.

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Moscow, Metro station Arbatskaya, Nov 2015 (c) Tim Jaekel

Sweden and Switzerland are two fantastic cases for researchers. In Switzerland there is a wide range of direct democracy at all layers of government. If the municipalities want to raise their local income tax rate, they have to call people to the ballot box. This creates consensus, and at the same limits inefficiencies in the public sector.

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Moscow, Nov 2015 (c) Tim Jaekel

Sweden has an outstanding tradition of performance measurement and performance evaluation in the public sector. And they particular focus on the quality of public service delivery, and they made large steps to go beyond the common and flawed cost-per unit approach we saw in the 1990ies as part of the New Public Management doctrine. They established the notion that citizens and taxpayers have a right to receive the best quality of public services. This is why I like to do research on Sweden.

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– What is special about Russian public administration? Does it have definite peculiarities that differ it from that in other countries? Can you give some examples of its advantages and drawbacks?

The strength of Russian people is that they are able to adapt to any circumstances. I see that in Moscow the city government is willing to adopt new practices. There are a lot of things changing in everyday life: new time tables and public transportation, which are better compared to the old ones. The city government is open-minded, willing to try new things. A drawback of Russian public administration can be given from everyday life experience. Sometimes frontline staff is unfriendly – or let us say – rude. If you go to a public museum and ask a staff member where is this and that, they might look at you in a way like ‘what do you want from me?’ Another potential drawback is that too strict hierarchical thinking limits the opportunities offered by thinking and doing things differently. But these are just some examples. Russia is an extremely multifaceted country.

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Moscow Nov 2015 (c) Tim Jaekel

– They say that innovations are becoming a significant part of the successful public service performance. What innovations have been introduced in the practice of public service in the last several years? Does innovative public management have limits?

Firstly, E-government is a large trend in innovative behavior. To deliver more public services online is a common trend in the US, in England or Germany alike. Another innovation is the adoption of citizens’ service centres and one-stop agencies. The relevant question is why some public organizations innovate while others do not. Prior research found for instance that innovative organizations staff includes externally hired professionals, and that the organization offers knowledge and skill training which in turn increases encouragement on innovative behavior. But we have limited evidence on how policy-choices from other organizations affect decision making. In my own research I for instance analyze how the performance of an organization and strategic interaction among jurisdictions contribute to innovative behavior in Public Administration.

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– It’s not surprising that when local public servants give an account to higher organs, they can embellish their reports with more positive results of their work. What do you think: why do they prefer telling about positive things rather than problems and how can this gap in local public sector be solved?

This is kind of human behavior: everybody wants to be successful and achieve goals- I do not know anybody who wants to showcase his own failure. But this is not reasonable for any modern public sector organization. You have to communicate shortfalls and the underlying reasons properly. Organizations have to find a balance between reporting the very last digit of available performance data – open data do not has be a fetish but a tool for holding bureaucrats to account – and reasonable non-disclosure. To identify potential performance gaps and the underlying reasons is important for improvement. From interviews with practitioners in different countries I found that most of them will only share their experiences and knowledge behind closed doors with peers they consider to be trustworthy. An organization thus has to establish a culture of internal trust, a positive culture of error tolerance and channels for knowledge transfer without any fears of being blamed – but this is different from merely sweeping things under the carpet.

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Pictured: Moscow, Residence of an Embassador (bottom left), and Appartment complex that looks like an open book (located in Kompozitorskaya ul.)

– At HSE day you gave the lecture called «Blame games and risk avoidance: how decision making is linked to relative performance and potential peer effects». Please, share your impressions about the lecture.

I enjoyed delivering the Lecture in Gorky Park very much. Russian students are respectful to teachers and interested in learning new things. At the same time they are also keen to try out new things. If they want to solve a problem, they’ll find a way to do it. This is a good combination.

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Pictured: Moscow, Khram Spasa Preobrazheniya Gospodnya na Peskakh, Nov 2015 (c) Tim Jaekel

– Which qualities and skills should a rational public manager possess, to your mind?

A modern public manager hates blind obedience; she is keen to deviate from the ‘good old tradition’ for the sake of citizen’s well-being. She is sensitive to performance gaps, that is, she intends to maintain an acceptable level of performance, or to improve performance. She is used to learn and to share knowledge with her peers in other jurisdictions. Finally she is open-minded, and highly motivated.

Thank you for the interview!

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Picured: Head of one of the seven sisters skyscrapers, this one located at Smolenskiy Chausee, Nov 2015 (c) Tim Jaekel
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2nd international student‘s conference “Welt und Wissenschaft” will take place April 12, 2016 in Moscow

Don’t believe the Zeitgeist: Despite current High Politics tensions Germany and Russia share centuries-old ties, from dynastical and social linkages to economic and cultural links: The German Kaiser Wilhelm II. and tsar Nicolaus II were cousins to each other. Unique German terms like Butterbrot, Kindergarten, and Sturmangriff (not so nice) have diffused into Russian language. A nice example of mutual fusion is the Russian word почтaмт (pictured above: почтaмт, Myasnitskaya ul. Moscow), post office, which is a combination of почтa, mail delivery service, and the German word for bureaucracy, or bureaucratic agency, Amt.

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Winter in Moscow Jan 2016

So it is laudable that on April 12, 2016 Higher School of Economics’ School of Foreign Languages in Moscow will host the 2nd international student’s conference “Welt und Wissenschaft”, Globe and Science. The conference is organized by Julia Pasko, an Associate Professor at HSE Language School. The event provides graduate students with an opportunity to present and discuss own research with peers and senior researcher. Working language will be German.

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Winter in Moscow, Jan 2016

The event will be divided into five thematic panels: economic policy (Chairs: Michael Rochlitz and Carsten Sprenger), legal issue, politics and public administration (Chair: Tim Jaekel), as well sociological issues (Chair: Christian Froehlich).

You can now propose a paper. Deadline for submission is February 15, 2016. To submit a proposal

  1. Please go to http://lang.hse.ru/data/2015/12/22/1132963464/Bewerbungsbogen.pdf
  2. Download and fill the application form.
  3. Submit the filled application form to welt_wissenschaft@mail.ru before February 15, 2016.

Further details (in Russian and German) can be found on the schools website http://lang.hse.ru/announcements/168712807.html

Viel Erfolg und vielleicht bis bald in Moskau!

Winter in Moscow, Jan 2016 (c) Tim Jaekel
Winter in Moscow, Jan 2016 (c) Tim Jaekel
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Living and Working in Moscow

Recently I gave an interview to Anna Chernyakhovskaya from the HSE News service. She asked me to share my experiences on working and living in Moscow. Here are her questions and my answers, as well as some related impressions from Moscow.

— You recently joined HSE. What was the most challenging aspect in making that decision? 

— Deciding to join the Higher School of Economics was not challenging. HSE is a renowned research university and provides me with an excellent research environment. But dealing with red tape, finding a proper apartment within my budget and bearing the effective costs of relocation was challenging.

— This is your first international job. What are the first impressions of living and working in an international environment?

— Living and working in Moscow broadens a person’s intellectual scope. This is why I made the decision to come here.

— What do you see as your goals for the 2015-2016 academic year at the university?

— My goals are to submit to top international journals in the field of Public Administration, deliver high-quality teaching and contribute to knowledge exchange within the university.

— What would you recommend to other international professionals who may be thinking of working in Russia?

— Learn and speak Russian wherever and whenever you can. The benefits so much outweigh the short-term opportunity costs (the usual statement is ‘I do not have time for that’ – but anybody does nowadays). Living in Moscow without acquiring any Russian language skills is useless and boring.

— What are three things that cause you difficulty in Moscow and three things that make life here attractive?

— Moscow offers a spectacular living environment. The range of astonishing architecture, from pre-1917 to modern, in all parts of the city is impressive and inspiring. Museums, events, learning and sports activities for kids – you name it.

Moscow is a hub for excellent researchers, including international ones. The pool of knowledge and thus the opportunities for spill over and cooperation are immense.

Moscow is a megacity of 15 million, but it is a green city. Moscow offers plenty of world-class and cost-free recreational areas, parks, and activities beyond the usual suspects of the Kremlin and Red Square.

Social competition is intense in Moscow. Competitive pressure and the resulting adaptive behaviour can be witnessed everywhere.

Life in Moscow is expensive. Only three things in Moscow are cheap – fuel, bread and public transportation – everything else is expensive. If you have money you can live a decent life; without money life is sad like anywhere else in the world.

The original interview can be found on HSE News Website at http://www.hse.ru/en/news/campus/163556331.html. [External Link].

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The Hungarian Sense of Beauty: Snapshots from Budapest

Some stunning examples of modern design in Budapest can be found below the surface. To get from the National University of Public Service to the City Center you will have to take Metro line 3. You might then iInterchange to Line 4, which was completed only in 2014, to see the stations Fövám ter and Kálvin ter – which have a more than impressive architecture (pictured below).

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If you climb up to Buda Castle (or use the funicular) you will get an overview of the more classical must-sees that Budapest offers its visitors (pictured below). A good chance to see visit Budapest will be the IRSPM conference in 2017.

 

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Co-production in Public Safety and Elderly Care: Empirical evidence from the US and Denmark

Pictured above: Kalvin tér Metro station, Budapest, October 15, 2015.

Day Two of the conference on Public Service Innovation and the Delivery of Effective Public Services at the National University of Public Service in Budapest (15-16 Oct 2015).

In the Plenary on Oct 15 Stephen Osborne provided an insightful conceptual framework for the study of co-production in Service Delivery (see my last post). In the Paper Sessions throughout the conference several researchers presented concrete empirical evidence on what co-production actually is and what its antecedents are.

Metro_70iesMetro station Nagyvárad tér, where the University is located next to; October 14, 2015.

In their paper Megan LePere-Schloop, Brian N. Williams from the University of Georgia in Athens, GA, and their co-authors are studying co-production of safety and security in the residential campus environment of their university.

It’s a quantitative paper. The relevance of the topic requires no long explanation: Since 2013 there have been two dozen campus mass shootings in the US. So the implicit rational behind including students in creating safety and security on the campus, is not to cut costs but to improve effectiveness of service delivery. It is not that easy: In Athens, where UGA is located in, there is an elected sheriff, a chief of policy elected by the local council, and campus police. The resulting overlap of competencies adds a level of complexity.

Using survey data from 1130 undergraduate UGA students Megan and co-authors investigate the determinants of students’ role perceptions in co-production. Using (ordered) probit models they find that civic engagement and the perception of hometown police positively impact student’s role perception. This suggests that co-production becomes difficult when negative perceptions are transferred to the campus environment.

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National University of Public Service, October 15, 2015.

Luise Langergaard from Roskilde University in Denmark and her co-author  presented their findings from an innovation project in elderly care in Copenhagen. I like this presentation because I gained helpful insights about the daily life problems and processes in Danish elderly care.

The municipality of Copenhagen initiated a project called Life Quality in Nursing Homes. The intention was to identify best-practices in nursing homes and to spread them across the sector. The project was driven by a shift from the flawed cost-efficiency focused New Public Management approach to a more trust oriented reform that give nursing homes the operational leeway that is required to improve quality of service delivery. So yet another innovation, benchlarning, you name it-project? I don’t think so.

The findings from qualitative interviews in 5 municipal nursing homes in Copenhagen suggest that performance improvement can come at almost cost-free. Resident’s perception of homeliness and self-determination heavily contributes to their level of satisfaction and thus their well-being. One female resident highlighted in an interview that she wants to be “the host in her home”, she just wants to able to invite her family to a cup of tea in the nursing home in a way as she would have done it when she lived on her own. The wish came true easily in this particular case since both the nursing staff and the facility manager supported innovative behavior.

Luise and her co-authors pointed to the changing role of relatives in elderly care in recent years. Relatives became more powerful and are more engaged in taking decisions-nowadays there are more conflicts with relatives which poses an obstacle to innovation and meaningful co-production. Or in the words on George Tsebelis: As the number of potential vetoplayers increases a change in the status quo become less likely.

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Co-production and Innovation in Service Delivery

If there was a buzzword these days in Budapest – apart from ‘innovation’ – it was co-production. Co-production is everywhere – it is day one of the IRSPM conference on Public Service Innovation and the Delivery of Effective Services, which took part 15-16 October at the National University of Public Service (pictured, the afternoon before the conference actually started).

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But innovation first: In the Introductory Plenary Session Stephen Osborne from the University of Edinburgh, and co-chair of the event started from a very broad definition that innovation is the creation of knowledge. An important feature in this knowledge-creation process is creativity, that is, divergent thinking and the ability to create multiple solutions to a similar problem.

Innovation is a buzzword, as is co-production. The moniker innovation is commonly used as a proxy for “change for the good”. Stephen’s – somewhat rhetoric, somewhat serious question – was ‘But is it really better to be innovative?’ He pointed out that previous research had shown that innovation involves risks – (and I add) which comes as no surprise since riskless choice is an outdated concept from the 1960ies – and about 3 out of 4 so-called innovations fail. So innovation, in the very broad terms of Stephen, is seemingly not a cost-efficient way to reform and change public service delivery.

Turning to the issue of co-production Stephen argued that a service perspective is needed to understand public service delivery and to design and change it properly. Because public service delivery is not just production of goods, and e.g. tax management, parks, and health care are not just manufactured goods innovation and co-production must not just be about reducing costs in times of austerity.

At this point I have to add Stephens’s definition of the term “Co-production”: co-production is “voluntary or involuntary involvement of a service user in any of the design, management, delivery and/or evaluation of public services in order to add value”. From that follows that co-production is part of the nature of public service delivery, because production and consumption occur at the same time. Taking on Stephen’s perspective co-production is just everywhere. He introduced 4 Quadrants of co-production: pure co-production, co-design, and co-construction (I missed the fourth one, but I can be found in two recent articles, one in the 2013 volume of the American Public Administration Review, and another one in 2015 in the British Journal of Public Management).

Budapest_Kalvin_ter_designIs this alreay co-production? Customers at Kalvin tér metro station in Budapest, Oct 15.

Comments from the audience pointed on two major issues: Stephen delivered a series of good and also entertaining arguments why co-production is a relevant issue. But are there any examples of successful co-production? Stephen gave a negative example of co-production effects from mental health care in Scotland. Children had a say there in the co-design of new residential homes. And what they wanted was to have the door handle at the bottom of the door – so they could leave themselves. But this is not what social workers really want.

The second issue is a lack of quantitative measures to co-production intensity and its potential impacts on organizational performance. Stephen argued that qualitative research is the only approach because service delivery and thus co-production is about processes. But in fact there is work going on to address this issue: The next day Marco Meneguzzo from London Open University presented a set of potential indicators to capture the extent of co-production activities.

And there is (even more) good news. Per Skalen from Karlstad University gave an example of successful co-production from Swedish health care. The inclusion of patients in designing the treatment increases clinical outcomes. So co-production to the innovation forefront!

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The magic of Nizhny Novogorod

Don’t call it just Novgorod, our guide advised me. You can say Nizhny, but just Novgorod is wrong. Nizhny has always been ‘the city’. The meaning is that, founded in 1211, it has always meant to be a city; it was not created just as a settlement. In 1932 Stalin decided to rename the City into Gorky, i.e. it was given the name of the famous Russian writer. Gorky himself, still alive at that time strictly opposed the idea. And believe it or not, soon after the city turned from Nizhny Novgorod into Gorky, Gorky started to fell ill. Bad Karma. Eventually the city was renamed again in 1991. (So Nizhny Novgorod = Gorky = Nizhny Novgorod; I will use both terms interchangeably).

 

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In the Great Patriotic War 1941-1945 Gorky made highly significant contributions to the production of military equipment. One out of 2 submarines, every third tank, including famous T-34, and one out of four airplanes were produced in the cities’ numerous factories. German Wehrmacht never reached the City (Plan Barbarossa to capture Moscow in a Blitzkrieg failed already in 1941 as a result of the battle of Moscow), but military planes did; the city was bombarded 43 times.

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Eternal Flame

A large chunk of the magic of Nizhny derives from the fact that the city is located on the mighty Volga River, which is the largest river in Europe, some 3,500 km long. And Volga River meets with the river Oka, some 1,500 km long. The location where they meet is a must see. You can easily do so by visiting the Kremlin.

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Due to its military importance the Gorky was a closed city until 1991, i.e. it was invisible to foreign tourist. It was not displayed on foreign maps. And cruisers on the Volga River passed the City at night, when most tourists were sleeping.

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Nizhny consists of two parts. The Kremlin, the old city, and the Higher School of Economics are located in the first one on the one side of the River Oka. The second part, industrial part of the City on the other side of the River Oka, was only merged with Nizhny in 1920. Nizhny is the 5th largest city of Russia, with some 1.5 registered inhabitants (Gastarbeiter and sans-papier come on top of that). Though Nizhny has a Metro, the public transportation system strongly relies on public buses, and to some extent tramways. In fact the first Tramway in Russia was established in Nizhny in 1896. They proudly display this fact on the railcars of a particular line. Nizhny will host some of the matches of the Soccer World Championships in 2018. This is expected to lead to a large increase in infrastructure investment in the years to come.

Until 1917 Nizhny was famous for its international fair. Back then Moscow was usually said to be the heart of Russia, St. Petersburg was the Brain (until today, a lot of senior federal decision makers graduated from St. Petersburg, just take the President, and the Prime minister as examples) and Nizhny was the pocket or the valet (because Nizhny provide so much goods, and merchants made a lot of money there). The fair was closed in 1917, reopened again 1922-1930 during a period of economic policy experiments, and then again closed.

So Nizhny is worth a trip. You can reach the City by bullet speed train within 3 h 48 minutes from Moscow Kurskaya. Fast, clean, safe, still reasonable price. And no boarding time.

Nizhny_Frau_entspannt (c) Tim Jaekel, 2015

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What’s new in econometrics? (Part 2)

Day two of the 2nd International conference on Modern Econometric Tools and Application at the Higher School of Economics in Nizhny Novgorod.

Mikhail Zitlukhin from Steklov Mathematical Institute in Moscow addresses a question which is relevant for any actor in the financial market: How to invest money optimally? The common approach is to compare scores assigned to different investment strategies. From that you choose an optimal portfolio. Now, investment decisions face a tradeoff between profit and uncertainty. The objective of financial market research has been to provide a good answer to the question how to measure the trade-off. The Sharpe Ratio is a well-known measure. The expected return, EX, is divided by standard deviation of returns (square-root of Var(X)): S(X) = EX / Var(X)^0.5. A basic assumption is that future returns are known. The Sharpe Ratio is famous because it is easy to understand, and good for practice. But it has disadvantages: not monotone, symmetric, and not flexible. And it is just one measure. Mikhail pointed out that we want to have a family of performance measures, not just one. Mikhail contributes to the literature by defining a simple monotonic profit-to-uncertainty ratio. This approach builds on Theory of coherent risk Measures, the concept of a worst scenario expectation (what is the profit in the worst case), and the logic of Average Value at Risk, among others.

Svetlana Makarova from University College London and co-authors proposed a new test for evaluating economic policy effects. The traditional approach to evaluation is to include some variables representing policy action into the equations. Svetlana and co-authors start from two assumptions which contradict the traditional logic: The time lag between policy action and impact on the economic process is not known well enough. And past decisions might not affect the mean value of the process but its stochastic, unpredictable part. An example is targeting inflation. Svetlana use ARMA-GARCH models to inform an alternative testing strategy.

Kirill Furmanov from Higher School of Economics and his co-author presented results from research on a model for mortgage survival. The response variables are timing of default (3 months without payment), pre-termination (both are modeled separately). They exploit a data set with some 280,000 observations, so large sample trap is an issue. Covariates include debtors and mortgage characteristics. The focus of the paper is on the methodology of comparing survival or life time models. However, they find no satisfactory measure of predictive accuracy of survival model.

And a last snapshot, because this is the kind of topic everybody is interested in: Evgenii Gilenko from St. Petersburg State University and Elena Mironova from University of Amsterdam investigated whether items like gender, driving experience, and even car color should be reflected in future tariff formulation of Russian Motor Own Damage insurances (pictured). So far, mostly driver’s age, car brand and car age and prior claim are reflected in tariff calculation. The Russian car insurance market is a very competitive one, due to recent Rouble deprecation prices for foreign car parts have skyrocketed, while profitability of insurance products has sharply decreased accordingly. Exploiting a dataset of some 3,000 contracts they found no significant effects of driver’s gender on damage claim frequency. Nonetheless the insurance company where the data come from introduced a discount for female clients. The reasoning was that women tend to cheat less, and the claim severity is lower compared to male peers. (Footnote: In the European Union unisex nowadays triumphs over such reasonable nuances. It is not allowed anymore to (positively) discriminate insurance customers based on gender characteristics).

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What’s new in econometrics?

The 2nd International Conference on Modern Econometric Tools and Applications (EC2015) is currently taking place at the Higher School of Economic Campus in Nizhny Novgorod (pictured), some 500km east of Moscow.

Svetlana Bryzgalova from Stanford University presented a quite impressive and sophisticated approach to estimate the consumption risks both of bonds and stocks. Dean Fantazzini from Moscow State University had a closer look on the reasons for the recent sharp decline in oil prices. 3 Factors are usually held to account: First of all, there was too much oil in the market. Shale oil production in US is at a peak level, although the oil companies are making losses and accumulating a lot of debt (indicating that shale oil production is just not efficient, but anyways). A short break in the civil war in Libya resulted in an unexpected additional inflow of oil on the market. And Saudi Arabia decided not to cut supply. Secondly, demand for oil turned out to be lower than expected. This was mainly due to economic slow-down in Europe and Asia. On top of that there was a strong dollar, which further put pressure on the oil price. But beyond these commonly stated factors, Dean showed that there is some variation left. He proposed a bubble detection strategy; including a decomposition of a variable into its components. He finds evidence on bubble behavior; apart from basic economics this bubble behavior puts additional pressure on the oil market.

In the spatial econometrics sessions Olga Demidova, from Higher School of Economics, and her co-authors investigated unemployment clubs in Russian Regions. This is relevant because the Federal concept of Regional Development until 2020 asks for a balanced socio-economic regional development and a reduction of interregional disparities. In the same session I present a paper on Performance Gaps, Peer Effects and Innovative Behavior in Public Sector Organizations. I develop a model in which managerial actions result from spillover due to pure learning or strategic mimicry and a cost-benefit calculus of instrumental benefits vs. reputational costs of innovation adoption. Propositions are tested against participation data in a Swedish benchmarking exercise.

Also interesting from a policy-perspective was that – using time series analysis – Rajarshi Mitra and co-authors find that foreign aid has a significantly negative effect on personal income in Bangladesh in the 1971-2001 period. Seemingly overseas development assistants (ODA) was not very effective has rather harmed than benefited Bangladesh. A “bad policy-environment” is considered to be an explanation for this finding.

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Metro 2020

Today I took note of the plan for Moscow Metro in 2020 (external link: m24.ru/infographics/3428; M24 is for москва24, a broadcaster). In Russian words my response was: вот ето да, maybe something like OMG, or so. 64 new metro stations will be constructed in the 2015-2020 period; and 14 additional new ones have been finished between 2011 and 2015. Most interesting to me was that they intend to build an additional circle line which parallels the Moscow Automobile Ring Road (МКАД). MKAD once used to coincide with the administrative boundaries of the capital, but Moscow grew beyond in recent years (mainly due to an acquisition of municipalities in the South West in 2012). Anyways, it will take you about 100 kilometers to circle Moscow on the ten-lane MKAD. And the new circle line will probably have a similar radius of some 16km.

The existing circle line (each line has its color; the circle line is the brown one) is rather important within the capital’s transportation infrastructure, because all other lines together are organized like a spider web. Everything is concentrated towards the center. It is easy to get from the outer parts to the inner city. But travelling from one tail, e.g. in the South-West, to another in the South is not. The existing circle line fills this gap below the ground. Above the surface, the spider-web is complemented by public buses and trams. The existing circle line has another major advantage compared to most other lines: Air-conditioned railcars. And this is something you will adore both in summer and winter times.

Most of the newly planned metro stations will be located outside of MKAD. Note that the first metro station beyond MKAD was opened only in 2002. Beside the new circle line the already existing yellow line will be heavily extended towards the west and south-west of Moscow. The light green line will also see nine new stations in the north.

Two major questions arise, the first being how to manage the underlying procurement process, and the second being what spatial economic spillover effects will result from this investment in public transportation infrastructure.

Thirdly I am looking forward to new inspiring public architecture. One of my pet stations is still Vorobyovy Gory (pictured, while the train halts, you can enjoy a beautiful view over Moscow river), but this means almost nothing in a city where each metro station is a marvelous location.