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And finally, the paper we all have been waiting for: “Death by Pokémon GO“.

November 22, 2017

Mara Faccio (Purdue University, NBER, ABFER, ECGI) and John J. McConnell (Purdue University) released a working paper this month which will definitely cause some stir with the general public. One thing is sure already: it made it onto our list of the most entertaining economics papers released this year. Titled “Death by Pokémon GO” it uses an event-study design to estimate the total incremental cost of playing Pokémon GO while driving in Tippecanoe County, Indiana.

Though the paper may seem funny at first, it does touch on some serious issues. It links the widespread use of smartphones and increases in app usage to increased car crashes and fatalities. The authors state that: “[…] [T]he possible connection between smartphone usage and vehicular crashes has been cited by the Insurance Information Institute as one explanation for the 16% increase in insurance premiums between 2011 and 2016.“ Faccio and McConnell also note that: “Attributing any increase in crashes and fatalities to smartphone usage and app availability is, of course, extraordinarily difficult given that many other factors also changed over the years in which both increased.”

Although not being the first to investigate the connection between the rise of the smartphones and vehicular crashes, Faccio and McConnell provide some novel insights by making use of an ingenious idea and providing robust results. By employing a difference-in-difference analysis that controls for a variety of confounding factors, Faccio and McConnell can show that crashes near PokéStops significantly increased from before to after July 6th, 2016 (when the game was released). The authors find that the costs associated with this increase in vehicular crashes range from $5.2 million to $25.5 million1 over the first 148 days following the release of the game. Extrapolation of these estimates to nation-wide levels yields a total cost ranging from $2.0 to $7.3 billion for the same period.

The paper is available from the SSRN website:

1. With the variability in the range being largely attributable to the sad loss of two lives.


BGSE Data Talks: Professor Piotr Zwiernik

November 15, 2017

The Barcelona GSE Data Science student blog has a new post featuring an interview with Piotr Zwiernik (UPF and BGSE), Data Science researcher and professor in the BGSE Data Science Master’s Program:

Hello and welcome to the second edition of the „Data Talks“ segment of the Data Science student blog. Today we have the honor to interview Piotr Zwiernik, who is assistant professor at Universitat Pompeu Fabra. Professor Zwiernik was recently awarded the Beatriu de Pinós grant from the Catalan Agency for Management of University and Research Grants. In the Data Science Master’s Program he teaches the maths brush-up and the convex optimization part of the first term class „Deterministic Models and Optimization“. Furthermore, he is one of the leading researchers in the field of Gaussian Graphical Models and algebraic statistics. We discuss his personal path, the fascination for algebraic statistic as well as the epistemological question of low-dimensional structures in nature…

Read the full interview on the Barcelona GSE Data Scientists blog

Five lessons from a one-week meeting with 18 Nobel Laureates

October 25, 2017

Photo credit: Lindau Nobel Laureate Meeting

By Fernando Fernández (Economics ’13, GPEFM) [1]

“Just when we thought we had all the answers, all the questions changed.” Mario Benedetti

That was my reaction when the 6th Lindau Meeting in Economic Sciences concluded. This meeting occurs every two years and gathers several Nobel Laureates and young economists (graduate students and assistant professors) from around the world. This meeting is certainly the most inspiring academic event I have ever attended.

The meeting took place in the beautiful town of Lindau, next to Lake Constance, in southern Germany between August 22nd and August 27th. During these days, we attended lectures from 18 Nobel laureates in Economics on a wide range of topics: bounded rationality, investment management, pension design, monetary policy, labor markets, morality and markets, political systems, innovation, and econometrics. I will not attempt to summarize these great lectures but all of them were recorded and are available on this link.


I would rather focus these lines on the interactions that occurred outside the “classroom”. Every day the program included lectures, lunch, seminar presentation panel discussions, and dinner.

The first lecture was given by Daniel McFadden [2], and besides the content, something really caught my attention. In the first row of the room (it was actually a theater) you could see the other Nobel Laureates. All were carefully listening to the speaker! They seemed like young students paying attention to an important professor. So the first lesson from this meeting was that we, as researchers, should actively embrace our academic curiosity.

Over lunch, I had the first opportunity to talk to a Nobel Laureate. I was sitting with some friends I just met and were talking about each others’ research. At some point, Bengt Holmstrom asked: “Would you mind if I join you?” We welcomed him, and seconds later he started asking us about our research interests. He soon realized that all of us were doing empirical work and said: “I am the only theorist in this table!”

He listened to all of us, asked some questions (some of them were hard to answer) and even gave us some advice. I was able to confirm that these brilliant economists have a special talent to listen to others, even if they are PhD students struggling with their papers. He was very generous with his time and recommended us to work hard but only on topics that we really cared about. He also advised us not to focus on publishing papers but instead on gaining respect from our peers through our work.

Hours later, I had the chance to sit on the table with Eric Maskin for dinner. He told us about the day he received the call from Stockholm and found out he won the Nobel prize. Then, we talked about US politics, big data, increasing co-authorship in economic journals, and other current issues in academia. As you can imagine, when you are sitting next to a Nobel Laureate you get the feeling that you can ask him any question. Well, these questions (some of them unrelated to economics) arrived and Maskin, very modestly, said : “I know very little about this particular topic, so I cannot have an informed opinion. In fact, you should know that one wins the Nobel prize, not because you know everything, but because you specialize in certain specific topics”. His reaction really impressed me but he was right. He could not be an expert in every topic and he acknowledged it. How many times do we feel the need to have an opinion on everything? The second lesson from this meeting is that we must always acknowledge our limitations and be humble enough to don’t give uninformed opinions.

One of the big questions most PhD students have is the following: where do great ideas come from? Tirole, Hart and Holmstrom provided some light on this issue and their advice was the third lesson. Tirole said two great sources of ideas were talking to people around you (his office was next to Hart’s) and to people outside the academia (practitioners, policy makers and business men). He encouraged us to talk to practitioners because they are facing the real problems we must address, that they have many important questions that remained unanswered and deserve our attention. Holmstrom said that the idea of his well-known model of career concerns (one of the reasons he was awarded with the Nobel prize) came when he has working in a plant in Finland, and had some problems with his manager. He then went to do his PhD and wrote a model to explain the behavior of this manager. In addition, he recommended us to become experts in the literature of our field of interest, not to follow it but to depart from it. After this, Hart said that working with Holmstrom and Tirole was a great way to find ideas. He also suggested us that when doing theoretical work, we should keep models as simple as possible.

James Heckman’s lecture was about the identification problem in econometrics. He was the most enthusiastic person I have ever seen giving an econometrics lecture. And this enthusiasm was quite contagious. Even though he was talking about highly technical and complex conditions for a new interpretation of Instrumental Variable (IV) estimates, I was surprisingly able to follow his lecture and understand the contribution he was making. Or, at least that’s the impression I had. That same day, we had a Bavarian dinner at night, with traditional music, food, and of course, beer. This was the last night of the event and the time to say good-bye to other fellow economists.

The coolest table at the Bavarian dinner

After some drinks, I decided to walk back to my hotel, located around 50-minutes away from the place we had dinner. On my way, I ran into Heckman, who seemed a bit confused. He had been walking with other young economists and then he was not sure where to go. I approached him and we realized we had to walk in the same direction. This was quite a unique and unexpected opportunity to talk about his lecture. So I started with my questions and he replied to all of them with great patience and enthusiasm. I could confirmed I had actually understood his lecture. Then, we started talking about the rapid increase in data availability and how big data should influence econometrics. He also told me good stories about his last trip to Barcelona and Peru. Eventually, we arrived at the hotel and said good-bye. This great conversation was the fourth lesson: we should remain enthusiastic even after years of dealing (doing research or teaching) with the same subject.

The fifth lesson is that these people seem very happy doing their jobs. Yes, I know, they are Nobel Laureates, they have already accomplished important professional goals. But it is still surprising how much they enjoy doing research. During lunch time or dinner, when we were able to talk to them more informally, people would usually ask: Which are the questions we should tackle? What fields are relevant now? Most Nobel Laureates seemed to share the view that the relevant questions are the ones you really care about. And if they actually work according to this view, it is not that hard to understand why they look like if they were having fun all the time.

When I was heading to this meeting, I had a lot of questions in my mind and thought the meeting would be an ideal place to get answers. During the meeting, some of my questions were being answered but later I realized that getting answers was not so important. Once the meeting was over, I realized all the lessons I took from it were unexpected. I had misunderstood the purpose of this meeting. I should have not come to the meeting looking for answers. I should have come looking for questions. These highly talented economists are Nobel Laureates precisely because they are extremely good at raising questions. Questions that open new streams of work. Questions that people had overlooked but that deserve careful thinking and attention. Now, two months after the meeting, I realize that all the questions raised by these Nobel Laureates are the reason why this event was so inspiring. Because in research that’s what keeps us working: Questions!

[1] I am thankful to the Marie Sklodowska-Curie Fellowship (through the PODER network) for sponsoring my participation in the meeting.

[2] Before McFadden’s lecture, there was a keynote address by Mario Draghi, president of the European Central Bank.

BGSE represented by “Just Peanuts” at Data Science Game finals in Paris

October 24, 2017

Class of 2017 Data Science graduates Roger Garriga, Javier Mas, Saurav Poudel, and Jonas Paul Westermann qualified for the final round of the Data Science Game in Paris this fall. Here is their account of the event.

Data Science Game is an annual competition organized by an association of volunteers from France. After competing in a tough online classificatory phase during the master we classified to the finals in Paris where we would be presented with a new problem to solve in a 2 days hackathon.

The hackathon was held in a palace property of Capgemini called Les Fontaines. It was an amazing building that made the experience even better.

The problem presented was to estimate the demand of 1.500 different products on 4 different countries using historic orders from 100.000 customers during the past 5 years by forecasting the three subsequent months. This was a well defined challenge that could be tackled with a large variety of solutions and for us specially the time constrain was one of the main challenges, since at the end we could be only 3 instead of 4.

We started by exploring the data and we realised that there were a lot of missing values due to a cross of databases done by the company who provided the data. So we spent some time by cleaning up the data and filling some of the missing values, to later on apply our models. After all the cleaning the key element to solve the challenge was later on to engineer good features that would represent well the data and then apply a simple model to predict the 3 months ahead.

The hackathon can be summed up in a day and a half coding, modeling and discussing without sleeping surrounded by 76 other participants from all across the world that were basically doing exactly the same, with short pauses to eat pizza, hamburgers and Indian food. So, a pretty good way to spend a weekend.

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Why more educated individuals are not always healthier

October 19, 2017

BGSE Voice

Caleb Hia ’18 wrote the following article on health economics from his research for his undergraduate dissertation at the University of Edinburgh.

From 2006 to 2007, almost half of the UK’s National Health Service’s (NHS) costs were attributed to behavioural risk factors: diet-related sickness, sedentary lifestyles, smoking, alcohol and obesity cost more than £15 billion (Scarborough et al., 2011). This mammoth sum, deemed an economic burden on public resources, attracted the government’s attention. In the recent Budget, the Chancellor introduced a tax on the sugar content of soft drinks from 2018 to tackle childhood obesity aimed at compelling individuals to consider external costs associated with its consumption which they do not bear such as the publicly-funded health costs of treating diet-related diseases. The effectiveness of this or any further government intervention in an attempt to correct this “externality” will influence the way the NHS allocates its limited resources in healthcare provision.

Beyond this political issue runs an underlying discussion of the social determinants of health which have long been studied (Wilkinson and Marmot, 2003; Adams et al., 2003). In particular, the effects of education on health has been of interest since the inception of Grossman’s (1972) health model. Grossman’s model suggests health can be maintained by health investments, depending on goods and activity consumption, which affect health although health depreciates as individuals age. As better health gives an individual more time to work and enjoy consumption, more educated individuals are expected to demand more health and invest more in their health. This implies more educated individuals are also more efficient health producers.

A possible causal link between education and health exists possibly because higher productivity from more education directly translates to a higher level of health production through allocative efficiency (Kenkel, 1991; Rosenzweig, 1995) and productive efficiency (Grossman, 1972). For example, low literacy is associated with a poor understanding of hospitals’ discharge instructions (Spandorfer et al., 1995) while higher educated individuals are more likely to follow medical treatments (Goldman and Smith, 2002). Relatedly, higher educated people spend more time on health-related activities because they are better at allocating inputs (Grossman, 1972). Additionally, higher educated individuals use their higher earnings to purchase healthier lifestyles (Glied and Lleras-Muney, 2003) which entail more expensive medical treatments, healthier food consumption and living in healthier areas.

I use a natural experiment in England, the increase in compulsory schooling laws from fifteen to sixteen years old following the Raising of School Leaving Age Order in 1972, and an instrumental variable (IV) regression model to examine the relationship between education and health in greater detail. My sample incorporates additional years of data from Health Survey England between 1991 and 1993 which were not analysed before. I measure various health-related measures and behaviours including Body Mass Index (BMI) which has not been considered before. I run Ordinary Least Squares (OLS) and two-stage least squares (2SLS) regressions in a sample containing all individuals and a discontinuity sample comprising individuals born only in January and February using February-born individuals as my instrument. I show education has no causal effect on various health-related measures and behaviours.

A possible explanation for this lies in time inconsistent preferences supported by behavioural economics. Quasi-hyperbolic discounting (Phelps and Pollak, 1968; Laibson, 1997) induces dynamically inconsistent preferences contrary to geometric discounting. The following payoff matrices models a hypothetical situation where an individual fails to quit smoking due to quasi-hyperbolic discounting:

Under geometric discounting where ∝ ≈ 1 and β ≈ 0.8,

he makes time consistent choices regardless of when benefits to those choices are delayed. Since he gets more utility from quitting in both periods, he quits immediately.

However, under Quasi-hyperbolic discounting where ∝ ≈ 1 and β ≈ 0.8,

he changes his choices based on his distance in the future. Unlike geometric discounting, he gets more utility from quitting only in future and not at present and hence do not quit.

The empirical evidence from Gruber and Köszegi’s (2001) addictive behaviour model which incorporates time-inconsistent preferences to the standard “rational addiction” model (Becker et al., 1994) suggests smokers exhibit forward-looking behaviour with time inconsistent preferences concerning smoking. Thus, individuals start smoking often as adolescents when they are most present biased (Hammond, 2005) and do not anticipate the difficulty of quitting.

Therefore, lifestyle habits may not be correlated with education. In the case of smoking, individuals who quit smoking successfully may have used commitment devices (Ashraf et al., 2006; Kaur et al., 2010; Beshears et al., 2011) like quitting with friends to constrain their own future choices by deciding ahead of time to make future deviations costly. Increasing the education budget may be a sound way to promote public health but understanding behaviours and exploring policies to incentivise individuals to adopt healthy habits may be more effective in the long-run.

Download the full paper:

The causal relationship between education and health-related measures and behaviours: Evidence from England

Advice for new master’s students from Marc de la Barrera ’17

October 6, 2017

At the welcome event for new students on September 26, alum Marc de la Barrera ’17 shared some advice from his recent experience as a student in the Barcelona GSE Economics Program.

alumni speech

Marc de la Barrera (Economics ’17, GPEFM)

Here is the text of his speech (see if you can spot all the references to a certain television series…)

Dear BGSE students, staff, professors and friends, 

I am very happy to be here giving this speech, remembering myself just one year ago sitting in your place. By that time I was an engineer starting an Economics Master, both amused but nervous for digging in a new field. “You know nothing, Marc Barrera”, I keept saying to myself. One year later, at least I can say I know something.

In the Economics Master, I learnt to play with macroeconomic models, how to gather valuable information from data, and to understand how we take decisions. Also that asking the right question is almost as important as finding the answer. I remember me having troubles understanding the “risk free rate” concept. How is it possible that you get a return on your money for sure? Then someone told me that America always pays its debts. Well, they assume they do, I don’t know if now they are so confident with its new administration. Those in data science will learn that information is power, while these of you taking political economy classes will argue that power is power. For competition ones… well, competition is lack of power. And no matter which master you are enrolled in, you are going to meet, John Maynard Keynes, 1st Baron Keynes, Companion of the Order of the Bath, Fellow of the British Academy and father of modern economics.

I hope you are enjoying your time here, nice weather, meeting new people every day, no pressure… But summer will not last forever. Soon you will realize that winter is coming, and with them, exams. And remember that when exams come and problem sets appear, the lone student dies but the pack survives. Everyone has its studying style, but I deeply encourage you form teams and work altogether. You are here, hence you are all very intelligent, I have no doubt about that, but there is a problem… Your professors more. You will need to merge several minds to solve one problem. You have different backgrounds, someone will be very strong in formal math, others might excel at economic intuition, and others will know coding. These three aspects, and many others, are needed to succed all the masters at BGSE.

But it is not only what I learnt that made last year special, it was the experiences I lived and more importantly, the people I meet. I want to make use of this privilaged attention I have, to encourage BGSE to do more activities outside the academic environment, at the same time that I congratulate them for the ones they are currently performing. Butifarrada, football tournamen, sky trip, fideuà… Go to as many events as you can, if not all. Defying all economic laws, this events provide one thing that economists belief do not exist: “free lunch” (just ignore the tuition fees).

Then the people. You will get in touch with many people from many nationalities, such opportunity must be taken. But is not only the cultural exchange what matters. Feelings, frienship will arise. Some cuples will form with probability one. Networking to get opportunities, information or new jobs is fine, but spending time with people you like and appreciate, is better.

>And finally the faculty. Their level is extraordinary, make the most of them. Not only during the class, they are here to help and guide you. I might have abused of their kindness last year, but every professor and staff member I asked to see, whether for a technical doubt regarding the notes, to more fundamental and vital questions like “should I do a PhD”, received me and helped me as much as they could. Luckily you don’t have to send a raven, although we have more pidgeons here, an e-mail should work. The objective of the faculty is to make the most of you, so let them help.

Whether you stay in Bellaterra at UAB or in the Citadel Campus at UPF, it is time to go beyond the wall. After the master the research frontier will be near, and some of you, like me, will opt to go further, to the unexplored. Those who opt for a professional career, maybe we will make it to the World Economic Forum in Davos.

Congratulations for being admitted to your program. This year will be a great year: you will learn economics, meet people, and discover cultures. I hope that the first weeks have been pleasant, and get ready to work hard, because as bodybuilders say, “no pain, no gain”.

Original post and more from Marc de la Barrera on his personal blog. Connect with Marc on Twitter and LinkedIn

Videos from welcome events for the Class of 2018:

A Study on the Measurement of the Compensating Wage Differentials in European Countries

September 29, 2017

Yusuf Aguş (Economics student ’18) shares a summary of his bachelor’s thesis on the measurement of the compensating wage differentials in European countries.

According to the economic theory, the differences of working conditions are compensated
by wage differentials at the equilibrium in a perfect competition setting. In other words, if a worker
is working in a job with undesirable characteristics, he or she needs to have a higher wage then his
or her counterparts.

Earlier studies failed to find significant results for the effect of most of the working
conditions on wages, which could be possibly caused by several different biases, and focused on the
effect of the risk of fatal or non-fatal accident. These biases can be summarized as the effect of
unobserved characteristics, survey errors, heterogeneity of individual preferences on job
characteristics and endogeneity of job riskiness. In this direction, the effect of risk perception on
wages has been tried to be estimated by using 2010 and 2015 waves of the data set of European
Working Conditions Survey (EWCS) which includes a wide set of data from 25 countries. As it is a
very wide set of data, it allows us to control for a lot of heterogeneities across the individuals. A
three-staged estimation strategy has been used in order to show the cross-national differences
clearly. Firstly, the estimation is done for all the countries. Secondly, the models are estimated only
for Turkey. In the third and the last stage the estimation is done separately for two different
country groups, which are constructed according to their GDP levels. For the sake of simplicity,
countries with higher GDPs are addressed as the developed countries and the rest as less developed
countries. The lists of country groups can be found in the following table:


The estimation gave insignificant results for most of the cases. However, the most salient
result has appeared in the estimation for the less developed countries. A negative and significant
effect of risk perception on wages has been received for the group of less developed countries,
which can be the sign of a segmented labor market across European countries in terms of
compensation of working conditions.

For the case of Turkey, It can be observed that Turkish workers receive a positive wage premium for being informed about risk, but they do not think that their wage is compensated for risk. Pooled results are quite confusing as well. Risk perception did not bring a significant wage premium, but workers who think that their wages are compensated for risk have higher wages than their counterparts. According to these somewhat controversial results, we might say that European workers are not perceiving the risk correctly.

The full article can be read here.