Month: February 2018

I was in Helsinki last week for the UNU-WIDER workshop on the Vietnam Access to Resources Household Survey (VARHS) data, presenting work that my coauthors and I have been doing using these data.

One thing that I saw a few instances of during the workshop was the following. A researcher wants to a variable x in a regression, but that variables needs to be logged. Because there are many zero-valued observations of x, and because log(0) is undefined, the author simply uses log(x +1), or log(x + 0.001), or log(x + 0.00001), and so on.

This post is about what to do in such cases. There are many instances in development where you’d like to include a financial variable–say, the value of chemical fertilizer used on a given plot, for example–where many observations will have a zero-valued observation–in the chemical fertilizer example, not everyone in the data will use chemical instead of organic fertilizer, and so they will report a zero when you ask them what was the value of chemical fertilizer used on any of their plots.

When you want to log a variable x but that x has many zero-valued observations, there are three things you can do in principle:

(Update: Thanks to my colleague Jason Kerwin for writing, late in the day, that there was no link to the paper. The post now includes a link.)

That is the title of a new working paper I have with Stacie Bosley, from Hamline University here in St. Paul, and two undergraduate coauthors, who are also from Hamline.

Here is the abstract:

Consumer financial fraud is costly to individuals and communities yet academic research on the subject is scarce, in part due to how difficult it is to find reliable data. Using a lab-in-the-field artefactual experiment, we study judgment and decision-making as well as the correlates of victimization in a prototypical pyramid scheme fraud. We record demographic, psychological, cognitive, and behavioral characteristics for 452 subjects at the 2017 Minnesota State Fair, and we estimate the impact of an information treatment—specifically, a reminder to pay attention to the odds of winning or losing—on our subjects’ behavior in relation to pyramid scheme fraud. Our results indicate that this straightforward, simple treatment reduces fraud uptake, but only for subjects with a post-secondary education. Our findings show correlates of victimization beyond cognitive ability, including impulsivity, risk preferences, religiosity, and prior exposure to pyramid scheme fraud. Subject reliance on probabilities in decision-making and the accuracy of subjective expectations are the most statistically significant predictors of the decision to invest in a fraudulent pyramid scheme. Our results can help inform the targeting of consumer protection interventions as well as the potential content of those interventions.

My interest in the topic comes from my interest in behavior in the face of risk and uncertainty as well as in lab-in-the-field experiments, which I have previously run in Peru to study the behavior of farmers in the face of output price risk. And given that we got access to the University of Minnesota’s Driven to Discover building at the Minnesota State Fair, it was nice to run experiments by recruiting from a pool of subjects that is more representative than that of the usual lab experiment, which typically consists of college students.

(Update: As far as I can tell from the link below, the course is now full. It remains possible, however, to put your name on the waiting list if you are interested. I suspect some people will be moved from the waiting list to the course eventually.)

I will be co-teaching a course titled Advanced Econometrics: Causal Inference with Observational Data at the University of Copenhagen from May 14-18, 2018 with my colleague Arne Henningsen. Though the link lists Arne as the instructor, I will be teaching the lecture part of the course, and Arne, who will be teaching the lab part of the course, writes:

[T]he website states that I am the “lecturer” of this course. I asked our administration to change it to you or to both of us. However, they cannot change this, because only staff at our University can be responsible for our courses and, thus, can be mentioned as lecturers of our courses. A complete list of lecturers (including you) is given further down of the course website.

If you are interested in taking the course, enrollment is open to students outside of the University of Copenhagen, and as of writing, registration is about $165, which is a bargain (though if you register, you are obviously responsible for your travel and accommodation costs, but I hear Copenhagen is lovely in May).

Here is the course description: