Tag Archives: Visiting lecture

A Brief Chat with Professor Andreas Ortmann

CERGE-EI discussed lab rats and experimental economics, among other things, with visiting senior lecturer Andreas Ortmann:

You are interested in experimental and behavioral economics. Why did you choose this field and who influenced your decision?

It’s a funny story. To earn my Ph.D., I went to Texas A&M University where one of the first and prominent experimentalists in the US was working. But I didn’t go there to study experimental economics, I went to study industrial organization and public finance. In fact, I never heard about experimental  economics. But …  I needed to earn money and so I started working for this professor called Ray Battalio – a brilliant guy and real mensch – who conducted experiments with animals (I was a rat-lab technician!) and humans. Even though I was very skeptical at first, experimental economics grew on me and I became interested in it as one way of understand economic problems.

But it’s only one way.  It’s not the only way. I also do theory, I do history of thought, and even empirical work if I have to.  I don’t believe in one method alone. You take what’s appropriate to understand and solve the problem .

Today a lot of people are doing these types of experiments. How do you see the field changing in the future?

There are lots of issues that experimental economists need to address. For example, there is always the question of external validity of experiments, i.e., the question to what extent laboratory results tell us anything about the real world.

There are also all kinds of issues of how to do the econometrics, and how to evaluate the evidence that is being produced in experiments. Experimental economists mostly talk about statistical significance, but this is really not that interesting if the effect size turns out to be miniscule. You want to talk about economic significance, which is a different concept. We may actually have the wrong tools for understanding these experiments, at least for some of the big issues which we need to address.

What are your current research interests?

Which of my 273 would you like me to talk about? (laughs) Well I’m working on, among other things, evidence production and evaluation. I’m working obviously on what I talked about in my seminar at CERGE-EI: social-impact bonds, which is a recent addition to  my  research agenda .  I’m also working on simple heuristics. Fast and frugal ways of making decisions which contradict some of the basic ideas that economists have on how we make decisions. We usually assume common and full knowledge and rationality when actors make decisions, and I think the evidence shows that under time-constraints and uncertainty we don’t have a lot of time to make decisions and we don’t have full information. We make decisions on incomplete information, and this is one of the big issues I am focusing on.

How do you get inspiration from your research?

It’s a difficult question because I think there is no algorithm for it. You just have to run through the world with open eyes. And sometimes you have to dive very deeply into a particular topic to understand what kind of open questions there are. Sometimes it just hits you—you say ‘why?’ and then you just go for it.

I think it is fair to say that it has to do, for the most part, with knowing a field well and reading thoroughly. Of course it helps if you read broadly and don’t just focus on one particular topic. And it always is useful to talk and work with different people with different experiences. There are various strategies to get inspirations and they can all be equally valuable.

Do you usually find unexpected results from your studies?

At my age, little surprises me (laughs). But of course, that’s why we do experiments. You do it because you have a theory and you do an experiment to understand if your theory predicts properly. And sometimes the evidence seems to reject the theory that you tested.

Much of laboratory research is being done precisely because theories didn’t predict properly, and then you try to understand what’s going on. You essentially give theorists more grist for the mill to come up with better theories to explain lab results. Of course there are often situations where a theory doesn’t predict well, and it’s a big surprise. Then you have to go on and try to do better. Write better theories, do new experiments. This is the cycle: theory, experiments, theory, evidence, theory, more evidence, more theory, and so on.

You have written many papers, so you may be the right person to ask the burning question of all young PhD students: where do you see the research gap?

You are asking for the low-hanging fruit, yes? (laughs). It’s an interesting question. It’s a little like the famous efficient market argument: there can’t be money on the street, because if there were, someone would already have picked it up. But that’s not true, because there is always new money being dropped, essentially.  There are always new research opportunities. The world is changing and there are always new ideas being generated. In order to understand what’s a new idea, typically it takes some experience and some feeling for what constitutes a good story.

But there are many situations where you come up with something new to the field because you are not caught in this paradigm. So you might see that something is interesting where mainstream economists would never see it. There are so many examples of this.

What is the competitive advantage of CERGE-EI students in choosing a research topic? Since most of the student body is from post-socialist regions, is this the area where they should focus their research?

There shouldn’t be a ‘should’ here. In the first place you must try to become a good economist. After that, if you want to go back to your country, I’m sure you will have plenty of questions and problems to deal with. Just become the best economist you can be, and there will be plenty of opportunities to apply your knowledge.

I can say that good economists are badly needed in the region. Many of the policy decisions are not informed properly by good economics, and that’s a real problem.

How do you perceive the evolution of CERGE-EI?

I think it’s a major success story. It has shown in the region that economics today is very different than the economics practiced here in the past. The way we do and apply economics, and in terms of our ambition, we set a very good example at CERGE-EI. If you look at the rankings of institutions in the Czech Republic, you find CERGE-EI always in the top. I think CERGE-EI has done a lot of good, in the Czech Republic and beyond. You need only look at the career paths of the graduates to see just how successful CERGE-EI has been.

Andreas Ortmann is a professor of experimental and behavioural economics at the Australian Business School at UNSW, Sydney, Australia. He was a professor and senior researcher at CERGE-EI until summer 2009, and he remains affiliated with the Economics Institute of the Academy of Sciences as a visiting senior researcher.

Interviewer: Sophio Khozrevanidz

9 November 2012



Do Women Receive Lighter Prison Sentences?: An Interview with Professor Ronald Oaxaca

Let’s start in your early years. You finished your BA at California State University. How did you come to study economics?

That’s a good question. I originally planned to major in history and I made an appointment with the chairmen of the Department of History to talk about it, but he happened to be out of town. And I never rescheduled. In the meantime I had a friend who said, “I took a really interesting course called Principles of Economics. You might want to take it.’ And so I took it the next semester and I loved it. It was a discipline that had mathematics and business. It had everything. After that I was captivated.

What motivated you to focus on the gender gap?

I took graduate labor economics and I had an interest in racial discrimination. And I knew a lot of people had done work in that field. But I thought that there had not been a lot of work done on gender discrimination—at least not by economists—and I was right.

So I started thinking about how to apply a model by Gary Becker, that he originally intended to be used to look at racial differences in labor market outcomes, and I decided that that could be applied to research on gender.

So after you graduated, it took you two years to publish your most famous papers, and you got famous for this ‘Oaxaca-Blinder decomposition.’  The decomposition has become so famous that there is now even a Stata command. How did you feel that someone had made this ?

I found out from one of my graduate students. He rushed to my office and said ‘There is a Stata command with your name on it!’. So he downloaded it on my computer, and I was amazed. In fact, it really made doing the work easier!

Beyond the gender gap, what are your other research interests? I see you are going towards crime economics?

There is still a story about decompositions in the paper I presented at CERGE-EI, but instead of looking at labor market outcomes between men and women, this paper looks at differences in prison sentences between men and women. It tries to understand how much of the gap we observe can be explained by circumstances such as women committing less serious crimes, and how much of it is unexplained, and thus may be the contribution of judges’ preferences.

So what are the conclusions from this research?

 We show that, unlike in the labor market, in prison sentences women are in fact favored. There is an unexplained gap. If we look at the majority group, white males and white females, we find that male prison sentences are on average 20 months longer. When you control for the nature of crimes committed, then we can explain 14 months of that gap. But there are still six months that you cannot explain by anything other than judges having a preference in favor of women.

It is very interesting, and one can conjecture as to why that is the case. Some have said, ‘what if judges believe that women learn their lesson faster than men, so then it would be socially inefficient to put them in prison as long as men?’ There are two problems with that idea: one is that we already control for their past criminal history. If they learn their lesson quicker, they wouldn’t have a criminal history as severe as men, so we already controlled for that. The other problem is that even if we really believe that’s true, there is no way you can implement that as part of the legal system. Because where does that end?

Continue reading Do Women Receive Lighter Prison Sentences?: An Interview with Professor Ronald Oaxaca


“Ruka Juu” with Dr. Bertil Tungodden — Does Media Appeal to the Entrepreneur in Us?

We usually speak about television in negative terms. But can television inspire development? On Monday, the CERGE-EI community went on an intellectual journey to Tanzania through the illustrative seminar presented by Professor Bertil Tungodden (Norwegian School of Economics, Bergen, Norway).  Seminar participants were treated to an in-depth analysis of a randomized field experiment designed to see if entrepreneurial skills and attitudes can be communicated through television programming.

The experiment was based on an ‘edutainment’ show called Ruka Juu (Swahili for “jump-up”), a televised reality-based entrepreneurship competition. It aired on national television in Tanzania in the spring of 2011. The overall aim of Ruka Juu was to educate, inform and motivate Tanzanian youth (aged 15-30) on issues related to entrepreneurship, business skills and financial literacy.

Professor Tungodden and his co-authors wanted to see if the program was making real impacts in educating and inspiring the Tanzanian people. They decided to document how the show was influencing key ‘entrepreneurial variables’ in the population, such as ambitions, knowledge, risk-taking, patience, and willingness to compete.

The engaged seminar participants learned how the authors faced the daunting task of designing a field experiment able to identify the impact of a nationally broadcasted program; particularly the challenge of establishing a proper “control group.” The trick was to randomly select some schools and incentivize this “treatment group” to watch the edutainment show; meanwhile they incentivized a control group to watch a classic soap opera instead. Frequent power outages and lack of television sets were some of the obstacles they faced. However they eventually arrived at notable results, finding strong evidence that ‘edutainment’ both inspired the viewers to learn more about entrepreneurship and motivated them to start their own business.

The experiment also leads the authors to conclude that the impact of edutainment on business knowledge is much weaker. In sum, their results suggest that the media may be a very powerful tool to foster entrepreneurship among young people, but also points to limitations of edutainment as a tool to communicate business knowledge.

Edutainment needs to be supplemented with other efforts to increase business knowledge and skills. But overall, Dr. Tungodden’s lecture at CERGE-EI made a convincing argument: media encouragement and educational television programming can be used to inspire young Tanzanians to realize their potential. Finally something good on TV!

Author: Liyousew G. Borga, 2nd Year PhD Student


‘Going Global’ with Professor Vega-Redondo

On October 18th, Professor Fernando Vega-Redondo visited CERGE-EI to present his paper ‘Social Networks and the Process of Globalization.’ Professor Vega-Redondo specializes in Game Theory, Evolutionary Theory, and Social Networks. A graduate from University of Minnesota, he is currently on faculty at the European University Institute in Florence.

In the beautiful interior of CERGE-EI, Dr. Vega-Redondo gave an interesting and thought-provoking lecture on his most recent research on globalization (which he did in collaboration with Georg Duernecker). In the paper, the authors propose a dynamic model to understand the role of social networks in the process of globalization. They define globalization as the process when distant agents interact, and they use this ‘spatial’ theoretical framework to understand the relationship between globalization and economic growth. Their model allows for the existence of social networks – the only channel through which geographically-distant agents can cooperate in economic activity. Without the phenomenon of ‘global social networks,’ economic activity will stagnate.

To shed light on the main objective of the paper, the lecturer started by answering two important questions related to the paper – ‘What is globalization?’, and ‘Why is globalization important?’  He then continued on to the main focus of the paper – the dynamic model itself.  The model incorporates the idea that ‘connections breed connections’ by providing linking opportunities and building trust between agents.

Presentation of the model was divided in two parts: the first part covered the setup of the model with social networks included; the second part described the evolution of the social network itself. He explained how ‘going global’ can in fact be an abrupt occurrence in a social network, and how the right level of a local economy’s ‘geographical cohesion’ is crucial in this process.

Dr. Vega-Redondo’s visit to CERGE-EI provided for stimulating discussion about the global changes happening in the world economy. His research provides a much-needed theoretical contribution to the predominantly empirically-based literature on globalization processes. CERGE-EI would like to sincerely thank him for his visit!