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Location, Location, Location…..in Scandinavia and Taiwan June 4, 2010

Posted by David in Life in Taiwan, The Social Sciences.
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One of my preoccupations this year has been a survey of 19-year-olds in the Danish region of Zealand and in the Swedish region of Scania. At the same time, an MBA student at NSYSU – Baris Unal – has surveyed Taiwanese 19-year-olds, using exactly the same questionnaire as in Scandinavia.

One of the questions that the respondents were asked was the following one: “Which of the following options do you think you will consider important to have near your dwelling in about 15 years from now? Select the two most important options.” While the Danes and Swedes were relatively similar, young Taiwanese people seem much more attached to their parents. The following table gives rank-ordered long-term accessibility priorities when buying or renting a home:

Zealand (Denmark):

1 Good location for children 59%

2 Workplace/school 42%

3 Green areas/exercise facilities 30%

4 Entertainment/culture 14%

5 Parents 12%

6 Public transportation 11%

7 Shops 10%

8 Friends 9%

Scania (Sweden):

1 Good location for children 54%

2 Workplace/school 50%

3 Green area/exercise facilities 18%

4 Shops 14%

5 Public transportation 12%

6 Entertainment/culture 10%

7 Friends 10%

8 Parents 10%

Taiwan:

1 Parents 45%

2 Good location for children 36%

3 Public transportation 27%

4 Workplace/school 23%

5 Entertainment/culture 18%

6 Green area/exercise facilities 18%

7 Friends 16%

8 Shops 12%

Analyzing the results in more detail, we found that a substantially greater portion of the respondents in Denmark and Sweden with non-European ethnicity prioritized proximity to parents: only six percent of respondents with a Scandinavian ethnic background considered it important to live near their parents in the long run, while the share among non-European immigrants was more than four times greater at 27 percent. Note however that the share in Taiwan dwarfs even the share among non-European (mostly Middle Eastern) immigrants in the Oresund region.

Note also that Scandinavians seem to have a very clear long-term preference for a suburban lifestyle. Areas that are green, good for kids, and good for sports trump public transportation, shops or entertainment.  The young Taiwanese seem much more urban, especially if one considers that good neighborhoods for children are usually considered to be inner-city neighborhoods in Taiwan (i.e. the best schools) but suburban or rural neighborhoods in northern Europe (fresh air, sports, less crime etc.)

My Workplace (NSYSU) March 23, 2009

Posted by David in Life in Taiwan, Personal stuff.
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Lots of visitors remark that our campus is unusually attractive, being surrounded as it is by forested hills and the sea. We even have our own “university beach.” A picture of the beach:

untitled

Here is another picture that shows some NSYSU buildings in front:

viewnsysu

 

 

And finally, here is a view from within the campus:

nsysu

Hedonic Prices March 6, 2009

Posted by David in Economics.
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hsr-large-map

 

This is a map of Taiwan’s high-speed railroad (HSR). The colored areas correspond to those seven metropolitan areas that are served by HSR stations. The HSR was opened in 2007, and has reduced the travel time from Kaohsiung (Zuoying station) to Taipei from 4 to 1.5 hours.

In one of the research projects that I’m involved in, we’re attempting to estimate the effect of HSR station accessibility on residential property prices. We use hedonic price estimation, which is an econometric technique for decomposing real estate prices into several separate attribute effects, including both location attributes – such as HSR accessibility – and conventional structural attributes such as the characteristics of the house itself (e.g. lot size and floor area).

We have completed our estimations of the Tainan and Hsinchu metropolitan areas, and are now collecting data or estimating hedonic price functions for the Taoyuan, Taichung, Chiayi, and Kaohsiung metropolitan areas. So far, the results seem more conclusive – in the sense of effects that are both substantial and significant – for the regions between Taipei and Taichung.

The research group consists of myself and transportation specialist Oliver Shyr in the Department of Urban Planning, NCKU, as well as three master’s degree students.

Recently, we have extended our hedonic price studies to other effects of infrastructure-related accessibility. Among other things, we’re looking at the effects of a freeway tunnel in the northeastern county of Yilan, and at the effects of the new transit system in Kaohsiung. A graduate student at NSYSU, Zoltan Kettinger, has also joined our endeavor with the aim of comparing transit accessibility effects in Kaohsiung and Budapest.

Hedonic price estimation was my first specialization. It was the topic of my Ph.D. dissertation, which compared monocentric and polycentric specifications of the condominium market in Singapore (the monocentric specification performed better). The interesting thing about hedonic price studies is that they also give indications of cultural differences between different parts of the world. For example, Europeans and North Americans tend to place a greater valuation on space and waterfront locations than Asians. Asians, meanwhile, seem to favor downtown locations to a much greater extent.

Conspicuous Consumption January 26, 2009

Posted by David in Economics, Life in Taiwan, The Social Sciences.
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I’m in Sweden now, and – as always – it’s interesting to observe people and consider their behavior patterns and compare them with what I usually observe in Taiwan and other Asian societies. One thing that strikes me as an interesting topic for empirical economic sociology or institutional economics is the relative weight given to conspicuous consumption in different societies. It seems to me that the notion of autonomous consumer preferences – while always of questionable validity – is not equally untrue everywhere. Swedish consumers seem to at least have a substantial domain of consumption that is genuinely personal or at least confined to the individual household. For example, people here like to spend money on things such as bedroom furniture, novels, and bathroom towels. The three consumption categories that seem particularly overrepresented in Sweden as compared with Taiwan are creature comforts (comfy sofas), in-house aesthetics (paintings), and literature (novels). Compare this with my experience of observing Taiwanese consumers:

  1. Most Taiwanese spend very little on furniture, and it’s not uncommon to see a living room with a motor scooter (!) under soothing fluorescent lights.
  2. A lot of Taiwanese, on the other hand, spend a substantial part of their income on automobiles. Those who can afford it tend to prefer the largest BMW and Mercedes models.
  3. Taiwanese consumers tend to buy air conditioners, but tend not to use them if there are no visitors in the house.
  4. Taiwanese tourists tend to stay in luxury hotels, whereas Swedish tourists (even elderly ones) often consider youth hostels an attractive option.
  5. Lots of regular Taiwanese like to invite their friends to luxurious banquets, but prefer cheap night markets when they are on their own (Swedes tend to avoid expensive restaurants unless they’re on expense accounts).
  6. Interesting observation of market segmentation: Northwestern sells XO-branded cognac on Asia-bound flights, but less expensive VSOP cognac on Europe-bound ones (I had never seen a bottle of XO cognac before moving to Taiwan).
  7. Taiwanese tourists most like to vacation in expensive Japan and Hong Kong, while Swedes prefer inexpensive Thailand and Bulgaria (in spite of per capita incomes that are three times greater in Sweden).

I could go on. My point is that Taiwanese consumption is much more expressive toward other people than Swedish consumers. Most Taiwanese can simply not see the point of a good meal in aesthetically pleasing surroundings, unless they have someone to observe them. By contrast,  many of my Swedish friends and acquaintances like nothing better than shield themselves from the world and enjoy their favorite things without being disturbed by the outside world. The Swedish ideal could be something like spending time alone or with their nuclear family in a lakeside cottage, while the Taiwanese ideal could be something like arranging a lavish banquet for the 500 closest relatives, friends, and colleagues.

Could this be related to differences in the score for individualism (see the preceding post)? Does this make standard economic theory (independent consumer preferences) more applicable to Sweden than to Taiwan, and Veblenian theories of interactive demand (even) more applicable to societies with more collectivist individual values? Is there a tendency for societies to become more individualist in their consumption patterns as an effect of economic development (assuming that Sweden is more postindustrial than Taiwan)? There are lots of interesting hypotheses dealing with consumption and cultural differences, but it seems to be an underresearched field, at least among empirical economists.

Railroads and Accessibility (THSR Edition) January 16, 2009

Posted by David in Economics, Life in Taiwan.
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Over the past year, I’ve been cooperating with Oliver Shyr of National Cheng-kung University on a study of the effects of Taiwan’s high-speed rail (HSR) on urban property prices. Our goal is to compare the effects of HSR accessibility in all seven affected metropolitan regions. So far, the effects have been contradictory: substantial impacts in the north, no or negligible impacts in the south.

 

I’ve become quite skeptical about the HSR - the world’s most expensive build-operate-transfer project. The investment cost was US$15 billion, or about 5 percent of Taiwan’s GDP. In relative terms, this would correspond to spending the entire US bailout package (US$700 billion) on railroads. True,  it’s better than bailing out bankrupt firms, but still.

 

What follows is a summary of a future paper of ours. It concerns two regions: Hsinchu in the north and Tainan in the south. The empirical observations for the other regions are still being collected, but preliminary estimations indicate that Hsinchu is as representative of the north as Tainan is of the south. Central Taiwan (Taichung) so far seems to be in an intermediate position.

 

 

High-Speed Rail Accessibility and House Prices: Different Cities, Different Effects

David Emanuel Andersson

Oliver F. Shyr

 

Summary

 

A high-speed railway line (HSR) that was opened in early 2007 connects seven metropolitan areas on the west coast of Taiwan. We estimate and compare implicit prices of HSR station accessibility using hedonic price functions for the residential property markets in the Hsinchu and Tainan metropolitan areas. Control variables include three additional accessibility attributes as well as structural and neighborhood attributes. Both analyses use  the same initial specifications and the same functional forms:  four pre-specified and two Box-Cox-transformed hedonic price functions.

 

The estimated functions show that HSR accessibility is regionally differentiated. HSR accessibility has a substantial impact in the Hsinchu region. The estimated effect testifies to the economic importance of the Taipei-Hsinchu link for the Hsinchu Science Park. It has a greater impact on house prices than either the distance to Hsinchu’s traditional downtown area or the distance to the science park itself. All three distance effects are however statistically significant and economically non-negligible. The empirical results lend support to the notion that Hsinchu’s downtown and high-tech nodes have been transformed into outlying sub-centers in an enlarged metropolitan region. HSR accessibility can then be seen as a proxy for accessibility to Taipei’s central business district. Since the new high-speed rail link has resulted in a substantial reduction of the time distance between Taipei and Hsinchu, it seems that high-speed rail investments may contribute to urban enlargement processes.

 

In the southern region of Tainan, HSR accessibility has at most a minor effect on residential property prices. Estimated HSR accessibility effects in the Tainan region imply low or negligible distance elasticities. The effects are also less robust then in Hsinchu, and not statistically significant for all functional specifications.

 

The difference between Hsinchu and Tainan regarding HSR accessibility reflects two mutually reinforcing factors in the Tainan region: low intra-regional accessibility of its HSR station and an economic structure where knowledge-intensive services carry much less total and relative weight than in Hsinchu. In Taiwan, only the northern corridor from Taipei to Hsinchu exhibits consistently high land prices and positive population growth. Given the high investment cost of Taiwan’s high-speed rail line, a policy implication is that the investment may have been too costly from a southern Taiwanese perspective. The limited impact probably reflects the absence of a complementary restructuring of the southern economy. So far, the southern economy has shown no signs of the spontaneous innovative processes that are necessary for a self-generated economic transformation, nor is the region important as a center of scientific research or for the production of other knowledge services.

 

Table 1 presents the results for the Hsinchu and Tainan region of the best-performing functional forms; the log-linear and simple both-hand side Box-Cox models, after exclusion of one (Hsinchu) or two (Tainan) insignificant variables. The symbol λ refers to the Box-Cox transformation parameter, implying that it is very close to a log-linear function in the case of Hsinchu. The other estimated functions do not perform as well in terms of log likelihood or R squared as the ones shown in the table. However, almost all of the effects are quite robust across specifications, with the exceptions of HSR accessibility in Tainan, building height, and freeway accessibility (the latter is excluded from both the Hsinchu and Tainan equations that correspond to Table 1).

 

Table 1: Hedonic price functions for the Hsinchu and Tainan metropolitan areas (t-values in parentheses)

Variable

Hsinchu:

log-linear

Hsinchu:

BS Box-Cox

Tainan:

log-linear

Tainan:

BS Box-Cox

Constant

.76

.76

1.56

2.13

Floor area

.53**

(19.6)

.53**

(14.3)

.55**

(26.9)

.65**

(21.5)

Lot size

.44**

(21.2)

.45**

(13.5)

.47**

(19.4)

.63**

(14.3)

Age

-.04**

(-5.7)

-.04**

(-5.4)

-.12**

(-19.7)

-.18**

(-12.9)

Height

.59

(1.4)

.12**

(3.5)

 

 

Shop/dwelling use

.13**

(2.9)

.14**

(2.9)

.14**

(6.5)

.20**

(6.6)

Street frontage

.11**

(6.7)

.11**

(6.3)

.19**

(11.7)

.25**

(10.6)

Road width

.05**

(3.0)

.05**

(3.0)

.10**

(6.3)

.12**

(6.5)

Commercial zone

.61**

(13.5)

.61**

(9.4)

.33**

(6.5)

.40**

(6.1)

Residential zone

.28**

(16.3)

.28**

(11.7)

.23**

(5.9)

.25**

(4.9)

Education

.16**

(3.9)

.16**

(3.9)

.45**

(10.4)

.739**

(7.7)

Distance to CBD

-.06**

(-4.1)

-.06**

(-4.0)

-.11**

(-7.0)

-.17**

(-6.7)

Distance to HSR

-.18**

(-9.0)

-.18**

(-6.9)

-.04*

(-2.0)

-.05*

(-1.9)

Distance to science park

-.09**

(-5.5)

-.09**

(-5.2)

-.08**

(-3.6)

-.06**

(-3.0)

λ

 

.001

 

.168

Adjusted R2 

.85

 

.80

 

 

Log likelihood

 

-1375.7

 

-2453.7

 

N

846

846

1550

1550

 

 

Nationalism January 14, 2009

Posted by David in Life in Taiwan, Politics.
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If there is one aspect of politics that serves as a motivating force of all political parties and movements in Taiwan it is nationalism, or rather competing nationalisms. The current governing party, the KMT (Guomindang in Hanyu Pinyin), is usually translated as the Nationalist Party, although the National People’s Party would be closer to its meaning in Chinese. The KMT is historically based on the ideology of Sun Yat-sen, the “Three Principles of the People” which are nationalism, democracy, and social welfare. The nationalism of Sun Yat-sen was a form of  ”civic nationalism;” a territorial and political rather than ethnic nationalism. Its original domain comprises the present de facto jurisdictions of the People’s Republic of China, Taiwan (the “Republic of China”), and Mongolia.

The main opposition party and the governing party from 2000 to 2008 is the DPP, or Democratic Progressive Party. In spite of its name, this is also a nationalist party, but the nationalism of the DPP is Taiwanese rather than Chinese nationalism. While it is officially committed to civic rather than ethnic nationalism, its opponents claim that it in fact represents the values of one of Taiwan’s ethnic groups (or sub-ethnic groups, depending on your point of view). The ethnic group in question is called Minnan in Mandarin, Hoklo in Taiwan, and Hokkien in Singapore and Malaysia. Minnan make up about 70 percent of Taiwan’s population, are the descendants of pre-1949 migrants from the southern part of China’s Fujian province, and speak a distinctly Taiwanese version of Minnanhua, which is also spoken around Xiamen in the PRC and on the Malay peninsula. The main distinguishing feature of the Taiwanese variant is that it  incorporates a fair number of borrowed words from Japanese. Although the KMT draws support from all four major ethnic groups, the DPP is almost exclusively supported by members of the Minnan majority.

The only ideological difference in Western terms between Taiwan’s political parties is between the Chinese nationalism of the KMT (and other “blue” parties) and the Taiwanese (or Taiwanese Minnan) nationalism of the DPP (and other “green” parties). In all other ideological respects they are indistinguishable: they are both culturally conservative parties that favor a mixed economy of small private and large government-subsidized firms. They like to exhort people to come together in the pursuit of economic growth as expressed in the national GDP figure. The government, whether KMT or DPP, formulates national development plans that focuses on the role of high-tech export-oriented businesses in three science parks (Hsinchu, Taichung, and Tainan/Luzhu). As part of these plans, the firms in the three science parks benefit from subsidized land rents, targeted infrastructure investments and tax exemptions. Both parties also like to express national achievement in supposedly impressive national monuments from the Chiang Kai-shek Memorial to Taipei 101.

While the official ideologies of the two main parties are non-ethnic, an ethnic bias has always been present. Until the 1990s, naturalization was limited to “overseas Chinese” and immigrant wives of citizens (traditional Chinese society is patrilineal). According to the “civic nationalism” of the KMT, ethnic diversity is limited to Han Chinese and “recognized” national minorities such as Tibetans, Mongols, Taiwanese aboriginal tribes and so forth (it is noteworthy that the PRC adopted the same approach when bestowing Chinese citizenship on Hong Kong residents in 1997). In the late 1990s, the policy was liberalized somewhat to also allow the naturalization of male spouses, although the naturalization of PRC spouses was becoming gradually more difficult. This was perhaps a result of the rise in Taiwanese nationalism during that period.

Now I have an admission to make: I’m a lifelong opponent of nationalism in all its forms – civic or territorial, ethnic or linguistic, religious or cultural. A caveat is that given the existence of nationalism, I prefer the civic nationalism of the United States over the ethnic nationalisms of, say, Germany, Ireland or Japan. Why should one attach any moral or ideological significance to something (location of birth, ethnicity etc.) that is not an object of individual choice? Open-minded people sometimes concur, but add that interjurisdictional migrants do indeed choose an institutionally laden location. Supposedly, this implies that they can be viewed as voluntary citizens, should they be naturalized by the government of their destination. But this overlooks the hostility to new entrants among earlier established nation states: the United Nations is in effect an oligopolistic club that raises the costs of potential entrepreneurs in the nation-building business. It sorts of reminds me of OPEC in its attitute to competing suppliers.

The DPP may protest and state that it does indeed want to add to the number of offerings (although only in a legalistic sense, not in an economic de facto sense). But would the DPP allow spatial agglomerations of non-supporters to secede and establish new independent nations within Taiwan?  I think everyone already knows the answer to that question.

I believe nationalism  is incompatible with both the laissez faire and egalitarian versions of  liberalism. The free-market liberal question is this: does nationalism contribute to individual autonomy? The corresponding egalitarian (or Rawlsian) question would be whether we should care more about the worst-off “compatriots” rather than the worst-off human beings? (Do individuals behind the veil of ignorance know nothing except for their nationality?)

For the run-of-the-mill utilitarian economist the attractions of nationalism should also be non-existent. It would imply that a governmentally imposed addition to the spatial friction of transportation and communication networks would be a desirable additional constraint on individual utility maximization (perhaps it would be desirable if the cost of border-crossings were more than offset by reductions in spatial frictions that are only possible with nation states – but surely infrastructural investments do not depend on nationalist sentiments).

For me, however, the decisive question is this: Is an overrepresentation of  ”compatriots” within the interpersonal networks of individuals conducive to their personal growth of knowledge? If knowledge is understood in its widest sense – ranging from theories of natural and social processes to more elusive aspects such as moral intuition, aesthetic appreciation, and personal skills -  nationalism would seem to be the enemy of such growth. My hope is that we (as fellow inhabitants of the earth) will reject all the trappings of nationalism: flag-waving as well as national languages, national development plans and national curricula, and - most important – any special treatment of individuals on the basis of their citizenship or – even worse – ethnicity.

New Header December 13, 2008

Posted by David in Life in Taiwan.
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The new image header shows a typical Taiwanese cityscape from above.  The photo is from Kaohsiung, and was not taken by me.

Taiwan December 6, 2008

Posted by David in Life in Taiwan.
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Taiwan is an unknown entity to a lot of people outside of Asia. History buffs might know that KMT forces escaped to the island after being defeated by the Communists in 1949. Economists might know it as a former source of cheap plastic toys and a current source of computer hardware — as well as being one of the four original Asian tigers, along with Hong Kong, Singapore, and South Korea. But Taiwan becomes a more multi-dimensional place if you live here. These are my 10 favorite Taiwan facts:

10 Taiwan is the second most densely populated country in the world if one excludes city states (after Bangladesh).

9 Taiwan’s highest mountain peak is higher than Austria’s or New Zealand’s highest.

8 Taiwan has the world’s highest per capita ownership of motor scooters.

7 There are more 7-Elevens per person in Taiwan than anywhere else.

6 There are more 7-Elevens in Taiwan than anywhere else.

5 Taiwan is a multilingual country in both senses of the word: 12 different mother tongues are spoken by the native population and almost everyone speaks two or three languages (mostly Mandarin, Hokkien, and sometimes English).

4 The favorite legal drug among farmers, truck drivers and construction workers is betel nuts, which are wrapped in leaves and chewed. Red teeth and red stains on roads are therefore common in rural areas.

3 Taiwan may have a high-speed rail line and two subway systems, but in most cities sidewalks are either useless or non-existent. Scooters park anywhere, which in effect means that pedestrians have to walk in the middle of streets (Taipei City is an exception).

2 Most Taiwanese like to boast about how much they have paid for cars, paintings, wine etc. (apparently it’s attractive to pay as much as possible!).

1 Taiwanese couples with children prefer to live in cities. I’ve heard people say that they prefer to live in downtown areas even if they work in a suburb or in the countryside because it’s better for the kids!

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