Random thoughts of an economist

My dear books, good bye.

Posted in Economics, Life, Uncategorized by kafuwong on July 21, 2016

As I prepared my departure from HKU, I started to sort out things that I wanted to take home, and what to discard.

As I did not have to pay for the usage of my office space, I had kept a lot things that I had rarely touched.

Now, leaving HKU means that the usage of space at home to keep these stuff will become costly.  Like most people living in Hong Kong, I cannot afford to keep everything I have accumulated during my 14 years at HKU.  

I asked myself repeatedly, “Is there anything I cannot live without?”  “Is there anything I will likely use in the near future?”   Most of the stuff in my office do not pass these tests.

Mostly books, I decided to give away.  There are a lot of books that have sat on my shelf for a long long time and had rarely been referred to.  Time to say good bye to them.

Now, in retrospect, I should give them out long long time ago.

Should I bring canned food in my next trip to Shanghai?

Posted in Environment, Statistics/Econometrics, teaching, Uncategorized by kafuwong on May 8, 2013

Friends have cautioned me on food safety on my next trip to Shanghai.  Indeed, there are several reports of unsafe food in Shanghai lately.  Dead pigs flowed in the river; rat meats were made into fake muttons.  It is even widely reported by US media, e.g., NPR.

I know some of us do not like the talk of probability.  However, if we are talking about getting contaminated food or fake meat, it  makes sense to talk about conditional probability, conditional on where you  obtain the food.  We need to know that the probability of getting contaminated
food form a 5-star restaurant is much lower than from a street vendor in Shanghai.  I am not
saying that eating at 5-star restaurants is 100 percent safe but is definitely safer.

 

 

Stone wigs of Ancient Mesopotamia

Posted in Economics, History, teaching, Uncategorized by kafuwong on May 5, 2013

Went to the exhibition “The Wonders of Ancient Mesopotamia” at the Hong Kong Museum of History.   Amazed to see a stone wig (see a picture of it here). 

Why would anyone want to wear it?   The answer is the same as wearing some kind of rare ornaments, I guess.  By wearing something that is rare, we show that we are rich and powerful enough of obtaining such ornaments.  That is, only those higher up in the upper class will be able to do so.  Mesopotamia was rich in soil, not other resources like gold or stones.  Stones were rare.   A stone sculpture in the form of a wig was definitely rare.  Thus, they are used as a demonstration of status.

There is a big downside risk in the property market, you know?

Posted in Economics, Forecasting, Hong Kong, Uncategorized by kafuwong on January 25, 2013

There is a big downside risk in the property market, you know?

Everyone seems to see buying properties a good investment.  Yes.  At the current interest rate.

The problem is that interest rate will unlikely stay at this low level for very long.  The US Federal Reserve will likely keep its stimulative policies until the unemployment rate falls to 6.5%. Looking at the trend of unemployment rate, it looks likely that the unemployment rate will reach 6.5%  around 2015.  See http://research.stlouisfed.org/fred2/series/UNRATE.  So, we would expect the Fed to start to raise interest rate in 2015.  Looking at historical data of the Fed Funds rate (http://research.stlouisfed.org/fred2/series/FEDFUNDS), I would not be surprised to see the rate to rise above 2.5 percent in 2016.  How would an increase in interest rate affect our investment in property?

A simple present value formula should give us a ballpark estimate.  The present value formula says, the value of an asset (say, P) is a discounted sum of the future income stream.  Suppose we have the annual rental income R and the annual interest rate r. Assume that we can collect the same rental income indefinitely.  Using a geometric sum formula, we can verify that P=R/r.  For example, when annual rental income R is 100,000 (or 0.1 million) and annual interest rate r is 0.01 (i.e., 1%), the property value should be around 10,000,000 (or 10 million).  We can explore with different R and r.

The important point is that the property price is inversely related to r.  When r drops by 50%, P will rise by 100%.  When r rises by 100%, P will fall by 50%.

Do you still want to buy?

How much of your money do I need to waste to get your attention?

Posted in Uncategorized by kafuwong on March 14, 2012

I want your attention!  I want your attention NOW!  I wasted 10 dollars of public money (your money!).  No one pays attention.  I wasted 100 dollars of public money.  No one pays attention.  …. OK.  How about 0.3 millions HK dollars? I get your attention now?  Yes.  I am talking about the ad placed in eight local news papers by HKUSU. 

“HKUSU placed advertisements in 8 newspapers questioning chief executive candidate Mr Leung Chung-ying’s role in “black gold politics”. In the ads, the Union urged Mr Leung to clarify what happened at the now notorious February 10 dinner attended by members of his campaign staff. Union President Mr Dan Chan Koon-hong said approval to place the ads had been obtained from the Union’s committees, and the money came from its $10 million reserves. He emphasised the Union was not biased towards any one of the chief executive candidates, and it did not obtain any external funds. The advertisements are believed to have cost around $300,000.” (http://www3.hku.hk/cpaomedia/media_highlights/showParagraphs.php?date=20120313, accessed on March 14, 2012)

There are many different alternative ways to seeking attention.  Writing blogs will be an obvious example.   Protesting on the street would be another.  Hosting a press conference would yet be another.  It is revealed from the decision of the HKUSU that to achieve the same level of attention, all the other alternatives result in a higher “private” cost.  Putting ads in local newspapers does cost a lot, but it is a cost to the public, not to me. 

On how many newspapers should we put the ad?  It is public money. Private marginal cost is zero!  So, let’s put it on as many as the budget allows, and until the marginal benefit of doing so equals zero.  “Eight” sounds optimal. 

You may not agree with my Economic analysis. OK, change the scenario to the following and tell me what you would expect: If the HKUSU decision-makers had to pay for the ads out of their own pocket or just 10 percent of the expenses (private cost is now nonzero), would they put any ad on newspapers?  Would it have been eight newspapers?

Many thanks to John and HKEAA for catching the cheaters!

Posted in Uncategorized by kafuwong on February 27, 2012

Shocked to hear the report that three mainlanders were hired to come over to Hong Kong to sit for TOEFL (The Test of English as a Foreign Language) exam using false identity.  They were caught by a staff named John at the Examination Centre (the test is operated by the Hong Kong Examinations and Assessment Authority, HKEAA in short). 

Cheating in mainland China is well-known.  For instance, Tom Melcher gave a very good account of the situation of cheating by Chinese students on their undergraduate applications to American schools (http://www.washcouncil.org/documents/pdf/WIEC2011_Fraud-in-China.pdf).  Personally, I have heard stories that mainland students studying in the US PhD programmes could barely speak English despite of their full score in their TOEFL.  Back then, I was so proud to tell my friends that I was from Hong Kong, a city in which cheating was uncommon.

But, since when have people started to believe that they can easily cheat in Hong Kong’s examination centers?  

I sincerely would like to thank John and other staff at the HKEAA for catching the cheaters.  I sincerely hope that the cheaters (the hired guns and those who hired them) will serve jail terms.

Someone deserves an applaud!

Posted in Hong Kong, Information, Taxi industry, Uncategorized by kafuwong on August 23, 2011

When I returned to HK after my summer trip, I took taxi home from the airport.  I was directed to a taxi among the line of taxi by a helper.  I was also handed a flyer and a card.  The flyer (in English, traditional Chinese and simplified Chinese) contains information of the taxi fare structure and approximate fare from the airport to various locations in the Territory.  The card contains several important phone numbers, such as that of the Transport Complaints Unit and that of the Road Co-op Lost and Found.  The taxi’s license plate  number is also included in the card. 

This information helps discipline the taxi drivers from overcharging the passengers and honestly returning the lost items for the passengers. 

I can imagine the following three parties might have been behind the introduction of such good deed: the Transport Department, the Hong Kong International Airport, and the Tourist Association. 

Although I live in Hong Kong, I find the information useful.  I am sure tourists will find it very useful.

Thank you!

[The taxi fare structure and approximate fare from the airport to various locations in the Territory]

Useful R resources

Posted in Uncategorized by kafuwong on May 23, 2011

R is a free statistical computing software (http://www.r-project.org/).  I like the idea of sharing free stuff.  If each of us share a little of free stuff for everybody else, we will all gain from each other.  There are a lot of good starting points if you are also interested in using R.  Below is a list of links I found useful. 

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We need more of this kind of scholarship. Agree?

Posted in Uncategorized by kafuwong on June 29, 2010

David Letterman (a top host of late night show in America) is sponsoring a scholarship.  He explicitly stated that “Grades are not a criterion or condition for eligibility or consideration.” (http://cms.bsu.edu/Academics/CollegesandDepartments/Telecommunications/ScholarshipsandFinancialAid/Scholarships.aspx)  I cannot tell you how much I like that. 

We want our students to have a balance development in academics and extra-curricular.  However, when scholarship is awarded based on GPA only, obviously students will tend to work hard to get good GPA.  Note, furthermore, good GPAs need not mean good learning.  Some students are so strategic in choosing courses that have overlap content so that they will be getting good GPA without much learning. 

Do I want to ignore GPA in awarding scholarship?  No.  Do I want to include additional consideration of other achievements?  A definitely YES.

Does it worry me?

Posted in Uncategorized by kafuwong on June 29, 2010

It is reported that  “Chicago is a dangerous place to live. Two weekends ago, 52 people were shot, eight fatally. Local politicians frequently ponder calling out the National Guard to patrol Chicago’s streets.” (http://www.npr.org/templates/story/story.php?storyId=128186209)  Does it worry me who is visiting Chicago right now?

Not a bit.  It depends on which neighborhood you are in.  As in everywehre else in the world, there are safe neighborhoods in a city and there are unsafe ones.  Walking along Michigan Avenue of Chicago (akin to Nathan Road of Hong Kong) should be safe.  You  just have to know what to avoid. 

I was told by some students from mainland that they worried about their safety in Hong Kong when they first arrived Hong Kong.  As a Hong Konger, I was surprised to hear that — I thought Hong Kong was one of the safest city in the world.  I guess the reason for the worry was really about our ignorance of the city. 

Again, once we know the city, we will know what to avoid.  With this kind of awareness, we will be safe.   Common sense helps too.