Election campaign climaxes
with rallies by two parties


The election campaign entered its final week Sunday with rallies by two major political parties.

Sunday was the last day for public campaigning, and Thursday is the last day for ads.

Channel 6 hosts a debate among some presidential candidates tonight. It is the last of the campaign.

Partido Liberación Nacional held its rally in San José. The Partido Acción Ciudadana held its rally in Heredia.

Meanwhile, Frente Amplio supporters were walking the streets with the party's yellow flags. Some even were on bicycles Sunday.


Montes de Oca will be dry
next Sunday, election day


Drinkers in San Pedro will have to stock up early if they wish to toast the Sunday elections.

The municipal mayor, Fernando Trejos B., said that the  Municipalidad de Montes de Oca will be dry over election day. Under the current liquor law, cantons have the right to determine how they will handle alcohol, something that used to be reserved for the central government.

But those drinkers who forget to stock up, can simply take the bus to San José, which is not ordering a dry weekend.

Banning alcohol on election day stems from the old custom of politicians buying votes with drinks.


About 400 detained in Palmares


The final score for arrests during the Fiesta de Palamares is about 400, said the Fuerza Pública. 352 of these arrests were for drug violations, they said. Officers confiscated marijuana and cocaine, including crack cocaine, they said.


There are plenty of pitfalls
in structuring tax policy

Dear A.M. Costa Rica:

Your article on the drivers of future taxes was compelling. Reducing the deficit can be achieved by a mixture of: restricting automatic pay rises, high pensions, the number employees in the public sector; tax increases and stricter tax enforcement. You can draw your own conclusions as to where the emphasis will be here.

A value added tax, VAT, like sales tax, falls on those spending money. It therefore tends to reduce expenditure, employment and economic activity. If it is high, it causes a growth in the black or cash economy which is already large in this country. It also hits the poor the most, as it is the same percentage for all. The rich do pay more because they spend more.

In some countries VAT is an instrument of social policy. There are higher rates for luxury goods and lower taxes on food and children's clothing.

There are other possible tax moves which you might worry about. In Greece and Cyprus they simply confiscated a percentage of bank deposits above a certain threshold. There could be reductions in the thresholds for luxury tax. The U.S. is almost unique in taxing worldwide income. Costa Rica could choose to do the same. There could be higher road tolls and more of them. London has a road tax on entry to the city. San José could have the same. Car taxes could rise.

Keeping the currency at a stable but artificial rate is not smart. If rates are too high against the dollar, they will cause a reduction in exports and employment.  The list is endless.

From casual observation, the reform that would dominate all others would come from reducing endemic tax evasion. That is easier said than done and would require elimination of corrupt officials and a radical change in trust of the system and local culture. Skepticism on the likelihood of such reforms and changes is justified.

We expats are deeply interested in such things for obvious reasons, but we are a minority and the politicians will decide without considering our views. We must either see tax as part of the price of living here or leave.

Study casts some doubt on value
of paid search engine advertising


Businesses spend billions to reach customers through online advertising but just how effective are paid search ads? Using data from eBay, economist Steven Tadelis at the University of California at Berkeley’s Haas School of Business compared whether consumers are more likely to click on paid ads than on free, generic search results and found that advertisers may not be getting their money’s worth.

“We found that when you turn off the paid advertising, almost all of the traffic that came through the paid search is just substituted by the other free channels,” says Tadelis, associate professor in the Haas Business and Public Policy Group.

Tadelis conducted the study, “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment,” at eBay. The study was co-authored by Thomas Blake, an economist in the economics research team that Tadelis started at eBay, and former eBay economist Chris Nosko of the University of Chicago.

To measure the effectiveness of paid search, the researchers turned off eBay’s paid search in 68 direct marketing areas in the U.S. In other words, if a consumer typed in the search term white blouse while online in these markets, he or she would only see the generic search results at the top of the list, not the paid ad that typically appears in a shaded box at the top of the search. The consumer would not see any retail ads by eBay for “white blouse” but only from other advertisers who bid on the “white blouse” keywords.

At the end of 60 days, Tadelis and his colleagues compared sales of two groups: one group that received no paid search results and another group in which paid search remained untouched. Again, consumer sales as a result of the paid search showed no measurable increase off those who made purchases via unpaid channels, such as organic searches, or directly visiting ebay.com.

In order to ensure the robustness of their results, in a second experiment, the researchers also eliminated eBay’s paid keyword searches throughout the country and then compared sales for that period to an equivalent period with paid search on.

“If advertising is indeed a strong driver of sales, we should have seen sales plummet," says Tadelis. "But the impact on sales was indistinguishable and not significantly different than zero.”

Furthermore, for brand keywords such as eBay or other company name keywords, paid ads sit just above the generic search results. For example, a search for Macy’s results in a Macy’s free search below the Macys paid ad.  Consequently, Tadelis says the paid search result adds no additional benefit to the advertiser. “It’s not that clicking on the result caused engagement, it’s that the intent to engage caused people to click on it,” says Tadelis.