Institutions and Funding

The papers today reported on how NUS and NTU both managed to pull in large sums of money from their alumni (NUS drew $112 million, NTU drew $72 million). Now, I'm just wondering whether it is possible to do an economic analysis of institutional funding?

If we were to analyse, I would expect university alumni funding to be correlated to

a) Prestige of the university (I think you can use the year that the university was founded as an IV for that)
b) Alumni base (should be possible to calculate the number of graduates a year and possibly the number of living alumni or how big the alumni is)
c) Differences in culture (Western vs Asian societies)
d) Any others?

Well, I guess it might be an interesting study as we could then identify what are some of the key factors influencing alumni donations back to their alma mater.

Actually, I'm not sure about whether anyone has written anything on this before. It should be interesting, since almost every modern university today is trying their best to convince their alumni to "contribute back" so as to build up a huge endowment for research and education purposes. It would be interesting to see why American universities seem to be so much more successful than other universities in getting large sums of money every year.

Housing markets

The housing market is a fascinating one - it is consistently filled with booms and bubbles. Be it Japan, UK, USA, Singapore, Thailand, etc. , there's numerous examples in which the housing market experienced an amazing boom before suffering an equally amazing collapse.

Just looking at recent house prices in Singapore, I'm starting to wonder whether we are in the midst of a bubble. Prices are amazingly ridiculously high (especially given today's economic climate). This is pretty interesting since house prices in US and UK have definitely gone down significantly over the past 6 months, and yet the Singaporean housing market looks no sign of abating. In fact, HDB announced that it will be building more flats in the upcoming year, and I definitely do see more condo projects coming up all over Singapore as well.

And so, are we in a bubble now? I'm thinking of trying to model the determinants of housing bubbles, and see whether there might be any common trends to those that we have observed in the past. And also, possibly attempt to predict whether we might be in a bubble (a probit model?). I'm not sure whether this will work (I have been kind of lazy and have no searched around for any literature on the topic), but it might be viable and feasible.

Hmmm, on a sidenote, I think Singaporeans are definitely not feeling the pinch of a slowdown in the economy. The travel fair this year looks significantly bigger than the past, and the attractions seem to be way more exotic as well. Many Singaporeans are definitely going to the cinemas - I went to watch a 1045 show today, reached GV Tampines at 1030 and started queuing, got my tickets at around 1100 (that's how long the queue was), and when I collected my tickets the queue was as long as before, and equally long when I left the cinema. Gosh, I can imagine how packed the cinemas will be in Orchard.

Stagflation

Yes, it is true. The once 'much-feared' word in Economics might be making a reappearance around the world. And yes, I'm not sure whether Economics has much to offer as to how we could go about remedying the situation.

Comparing today and the 1970s, the stagflation that we might be looking at now is of a different nature from the past. Unions and wage demands are no longer the key driving reasons behind today's economy, so what could it be? Higher consumer demands? The affluent societies leading to market bubbles?

To be honest, economists never really got round to understanding stagflation well. The only episode that we ever saw was back in the 1970s, and that's the only available dataset that we have. With the recent economic turmoil, and the possibility that stagflation might make a reappearance, economists might now be able to seize the moment and study stagflation better, as well as understanding it better.

The above is purely looking at things from an academic perspective. There's also the other key question of "what can we do about stagflation?". Interestingly, there might be a renewed need for governments to play a more active role (as opposed to letting the free-market system run rampant) in trying to keep inflationary pressures under control. In terms of public policy, we might be on the verge of experiencing another revolution in terms of what governments should and can do to ensure that the economy functions smoothly.

The last period of stagflation led to the death of Keynesian economics, and the birth of monetarists as well as the importance of central banking in ensuring that the economy runs smoothly. Will today's world lead to another paradigm shift, in which another institution is necessary for the economy to avoid the woes of stagflation? I do not know, and I guess only time will tell as to what today's world will bring forth for Economics as a discipline.

Research Funding

I've briefly talked about how talent is being drawn away from Research, as well as how researchers are underpaid when compared to investment bankers. There's also another area involving research which I think is interesting - the allocation of research funds.

How does research funding gets divided among the various researchers? If I'm not wrong, researchers have to write up a proposal on their project, before they pitch for it. In a sense, it is similar to how building contractors bid for projects. However, I think the biggest question now is how can anyone judge which type of research is value for money and will yield the greatest return?

Understandably, there's a lot of commercial interests at stake when it comes to getting funds from private firms. But is this an efficient way of allocating monetary resources? Could we actually generate another more efficient manner, especially since there's an absence of prices as an allocative mechanism.

Hmmm, I guess it is interesting as this might be a case of how resources can be allocated without using prices. Possibly, it might shed some light on how we can overcome the difficulties of splitting the pie. Is this similar to an ultimatium game in which researchers just fight over a fixed sum of money? What happens when the game is an infinitely repeated game? It would be really interesting to test out some aspects of game theory, and compare with real world empirics of how such games are done.