III. International students’ conference „Welt und Wissenschaft“ 2017

Tempted by the opportunity to present your research in German? If so you might pay attention to our upcoming event at Higher School of Economics:

III. International students’ conference “Welt und Wissenschaft” 2017

Higher School of Economics, Moscow, Russian Federation

19th of April 2017

For the third time we will organize this one-day scientific event at one of the top Russian universities.

Working language is German.

The event will be divided into seven sessions, each devoted to a particular topic, including Philosophy, Legal studies, Economics, Sociology and of course, Public Administration and Politics (I will chair this session).

The Call-for-papers including a detailed description of all thematic sessions, in German and in Russian, can be found at this blog (previous posts) and on the official conference website at https://lang.hse.ru/weltundwissenschaft/

Looking forward to your application!


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).


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research had shown that innovation involves risks – (and I add) which comes as no surprise since riskless choice is an outdated concept from the 1960ies – and about 3 out of 4 so-called innovations fail.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!


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).


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.