Documentary: Reaching the Market Price

This short documentary filmed in New Delhi, India, together with my friend Lorenza de Icaza (now an important World Banker) reflects the search for the market price in the tuk-tuk market. It was filmed in the Summer of 2009.

Please enjoy.

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The occupation is the duck!

(Originally published in Times of Israel, here)

“If it looks like a duck, if it walks like a duck, if it quacks like duck… what is it?”, said Prime Minister Netanyahu in his AIPAC speech last year referring to the Iranian nuclear program. Using the analogy with the report of the Levi Commission, I ask: if its not occupation, then what is it?

After my last article I received some comments that challenged both the existence of the occupation and the involvement of the international community (and international law) in the conflict.

I don’t believe is healthy for us as a society to debate the existence of the occupation, so I will not refer to it. I will only paraphrase Bibi himself in the same AIPAC speech I mention above: “it is time to start calling a duck, a duck.” It is impossible to miss the big elephant in the room.

I will, however, refer to some sectors of our society that question the legitimacy of the international community (and hence international law) in their involvement in the Israeli-Palestinian conflict. I believe this is a double standard. The Balfour Declaration, the UN Partition Plan, and other historic documents in which the international community supports (loudly and clearly) our right, as Jews to have a state are welcomed (and ironically used by the Levi commission to justify the occupation). However, when we talk about international treaties in which Israel is a signatory, they are often disregarded as irrelevant (take the Geneva Convention, for instance). As a modern state, either we like it or not, we are confined to obligations as members of the international community, and we are expected to fulfill them.  As we, for instance, expect from the new Egyptian government to comply with previous international obligations, such as our peace treaty, or the Iranians to comply with the IAEA regulation, we are also expected to comply with our own set of obligations.

The best way to deal with international movements that aim to condemn Israel, such as BDS, is to show to the world, with deeds, that we — in spite of what the accusations of the boycotters — are a responsible member of the international community and are committed to our obligations. Actions that seem to ignore international law are harmful to us, and contribute to further international condemnation of Israel.

The Levi commission and its findings are just an example of wrongdoing on our part. With it we are giving an impression to the international community that we are the ones to blame for the lack of progress in the peace process. Furthermore, it weakens the global support for the two states solution.

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In the land of the blind, the one-eyed man is king

(Originally published in Times of Israel, here)

Prime Minister Benjamin Netanyahu received this Monday the report prepared by Judge Edmond Levy on the illegal outposts and the status of the occupation. Not surprisingly (given the clear political affiliations of the committee members), the report suggests that there is no occupation in Judea and Samaria. Moreover, it argues, the illegal outposts should be legalized (which means they should also be getting more economic support from the already-in-deficit government).

The commission not only brought meat to the hungry lions in the Yesha council and in the Likud party, it also ignored all the precedents on this topic by the Israeli judicial system and international conventions.

The right sees this as a political victory. Bibi’s support base in his party is stronger. They’ve heard what they wanted to hear, even if it is a lie.

The settlements are illegal. Period. We might not like how that phrase sounds, or what accepting it pertains, but it is true. We can keep denying international law, because “they hate us” or any other cheap excuse, but the fact of the matter is that Israel is a signatory of the Fourth Geneva Convention, which states in its article 49:

The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies.

I would guess that those who disagree with me would say that Judea and Samaria are not occupied, and hence that international law does not hold. But what else can you call it when you’ve exerted military control over a territory outside your country, with millions of foreigners, for over 45 years? It is an occupation, as Ariel Sharon himself pointed out in a cabinet meeting when he served as prime minister. It is time to embrace the facts, and set feelings aside.

Denying the reality of the occupation? A view of the Tamar Hill in the settlement of Efrat (photo credit: Yossi Zamir/Flash90)

So why does the Israeli government need to create a commission to deny the facts? It is because when a lie is told one million times, you start believing it. Gravity cannot be defied, though, and similarly, the facts cannot be dismissed. The settlement enterprise has failed. And it is time for the Israeli right to admit it. Not only that, it is endangering the mere existence of what the founders of the Revisionist Zionist movement advocated for: a democratic homeland for the Jewish people.

As a country, we are turning blind. Our own denying of many of the facts of this conflict, and our obdurate refusal to listen to the world — and even to others among ourselves — is pushing us toward a one-state-solution dead-end zone.

If we remain blind, we will always have a one-eyed man as our king. As Time magazine nicknamed him: King Bibi.

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Price discrimination… closer than what you think!

Have you ever thought that you could be a victim of drastic price discrimination on your every day purchases? For big purchases – such as a TV, a computer or travel – we use the internet to find the best price (even though recent evidence shows that this is also not fully efficient).

However, we might be victims of big companies or small retailers in price discrimination issues in our day to day purchases, such as a cold drink!

I happened to visit Atlanta’s World of Coca-Cola attraction a few days ago, and I want to share with you a strong case of discrimination in this tasty drink. It was a very hot day in Atlanta and a Coca-Cola stand selling bottled drinks was just outside the line to get into the museum. The list of their prices is in the next picture:


As you can see, there is a very clear price discrimination only within that list! You can pay $1 for an 8 ounces bottle of Coke (12.5 cents per ounce), or $2 for a 12 ounces bottle (17 cents per ounce). First question is why would somebody get the 12 ounces bottle if you could get 16 ounces for the same price? Unclear. According to the seller, to whom I ask this question, the 12 ounces bottles were made in Mexico. Im not an expert in International Trade, but why would that be more expensive per ounce than the ones made in USA?

Across the street, we saw a Coke vendors machine. The price? $1.5 for a 20 oz bottle or 7.5 cents per ounce!!! This is roughly 50% off the price across the street!

I kept exploring this issue across the city of Atlanta. As you can see in the next picture, a gas station advertises a price of 89 cents for 12 oz of Coca-Cola, or 7.4 cents an ounce.

However, the next picture belongs to an ice cream store that sells these 8.5 oz Coke bottles for $2.75, or roughly 32 cents an ounce!

In one single city, I saw at least four different prices for the same product, with difference in prices that go even beyond 400%!!!

Why does this happen? Clearly there are many factors that could drive differences in prices – some bottles are made of glass, others of plastic or aluminum. But this cannot account for those vast differences in prices!

Why would someone pay $2 for 12 ounces if you can pay $1.5 for 20 ounces? My hypothesis is information asymmetry. People just did not know that they could get it cheaper by walking 1 minute in the other direction. But, on top of that, the price of Coke, is not something people have in their mind very clearly, given that it is an inexpensive good. In fact, we tend to pursue a more aggressive price search when we want a very expensive good, such as a computer or a TV. But when it comes to Coke, or something in that category, we are less willing to spend our precious time in looking for the cheapest option, and often we don’t know that we can get it cheaper without any more effort.

In short, while many retail stores have to be more competitive with expensive goods, they have a higher space to vary prices in cheaper goods!

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Immigrants Per Capita (2000)

I’ve been working lately with migration data, in the field of International Knowledge Diffusion. Below is an inflated map of the world which is shaped according to the immigrants per capita at the country level. Most of the mass is taken by middle east countries, such as UAE, Qatar, and others, which have turned out to be immigrants hubs. More maps to come!

Cartogram of Immigrants Per Capita (2000)


May 31, 2012 · 3:44 pm

A new era!

Hi everybody! Long time no see!!!

I have been out of the blogesphere for a while now, and it is time to come back! It has been a mix of technical problems and being busy with other stuff.

I’m glad to be back!

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Filed under About Nothing

GUEST BLOGGER: How to Get an A in a Macroeconomics Exam?

My good friend and colleague Rene Pineda wrote his unique methodology to get an A in a Macro Exam. Here is the transcript of his methodology:

How I’m going to get an A in Macro

  1. I will study really hard. Of course, I won´t understand much and I will inmediately forget everything I learned.
  2. Then, I´ll use Rene´s patented method to get an A in the exam:
    • The correct answer is the one that completely defies common sense and contradicts all the evidence in the real world. e.g. if oil prices increase, will that create inflation? of course not, it doesn’t matter if oil prices skyrocket, that WILL NOT increase prices. Will Obama´s plan help the economy to recover? No, people will receive their $1,000 checks from the government and will inmediately run to Citibank to deposit the money in their savings accounts because that´s the optimal behavior. Does your Christmas bonus make you spend more? No, you bought the presents for your friends and family from February to August because you wanted to smooth consumption.
    • Try to use the words “optimal”,”constant consumption” and “anticipated”, as much as possible, and use verbs that describe actions: “jump”, “random walk”, “sudden stop” and “funny dance”. Mystical concepts like “animal spirits” and “warm glow” are also useful.
    • Randomly write dots on the top of variables and use as many letters from the greek alphabet as possible. Put a * in the last three equations you write. (For the readers, a dot in a top of a variable it represents an “equation of motion”, used widely in macroeconomics).
    • Mentioning Keynes and Friedman in the same paragraph will give you extra credit.
    • If some question involves evaluating a policy recommendation, here is a simple rule of thumb: if it comes from the World Bank, it is always wrong; if it comes from a dictator with a silly name, it is always right.
    • Finally, go to the supermarket and buy lots of intuition. They ask for it in every question.

Rene Pineda


Filed under About Nothing