Archive for the ‘Research Paper’ Category

Lake Woebegone Goes to College

Tuesday, April 20th, 2010

Have you ever wondered why your grade point average is so high?   Is it because you close The Mudd every night? Your raw intelligence?  Your unusually good problem-solving skills?  Your avoidance of my classes?

Or maybe it’s because it’s 2010 and Lawrence is a private university.  It seems that the average college GPA has been going up at the rate of about 0.1 per year for the past 50 years, with private schools leading the charge.  Here’s Exhibit A:

That’s from the NYT‘s Economix column.  The green series is the GPA for private schools over time, which appears to have started at about 2.3 in 1930 and increased to right around 3.3 today.  That’s right, the average student at a private college has a 3.3. GPA.   The grey dots show the data points surrounding the series, so this is no selection bias problem.  In fact, the lowest average GPA in the sample (about 2.7) is higher than virtually every single recorded data point prior to 1950.

The big question, of course, is why?  The answer to that is probably not so simple.  We have seen one of the consequences, however — students really do work less these days.  Recent scholarship documents an inverse relationship between the expected average class grade and the amount that students work.  To wit: average study time would be about 50% lower in a class in which the average expected grade was an “A” than in the same course taught by the same instructor in which students expected a “C.” In other words, students are working less and getting higher grades.

One point of interest is that science classes have traditionally graded much more harshly than the humanities.

[S]cience departments today grade on average 0.4 points lower than humanities departments, and 0.2 points lower than social science departments. Such harsher grading for the sciences appears to have existed for at least 40 years, and perhaps much longer…  Relatively lower grades in the sciences discourage American students from studying such disciplines, the authors argue.

So does that account for the dearth of American-born scientists — the fear of getting a B?

How do you suppose a maximizing professor should think about these issues?  If I want to push my students, do I have to be a tough grader? Or do I just end up with fewer students grouching about how much work I give them?

Click on the “making the grade” tag for more on grade inflation.

The Long Ball

Sunday, April 18th, 2010

So, did Major League Baseball’s steroid craze lead to the decimation of the baseball record book?  The argument is straight forward enough, with the help of performance-enhancing drugs, hitters got bigger and stronger and started knocking the tater out of the park with alarming frequency.   The extra-ordinary seasons from the likes of Mark McGwire, Sammy Sosa, and Barry Bonds are the proof in the steroid pudding.

But Art De Vany at UC-Irvine says it just isn’t so, and he just published a paper in Economic Inquiry making his case. The paper is appropriately titled “Steroids and Home Runs,” and it has a very direct and confident abstract:

There has been no change in Major League Baseball home run hitting for 45 yr, in spite of the new records. Players hit with no more power now than before. Records are the result of chance variations in at bats, home runs per hit, and other factors. The clustering of records is implied by the intermittency of the law of home runs. Home runs follow a stable Paretian distribution with infinite variance. The shape and scale of the distribution have not changed over the years. The greatest home run hitters are as rare as great scientists, artists, or composers.

Ah, where would we be without the Paretian distribution?   If you don’t feel like plowing through the paper, you can hear him chat with Russ Roberts at EconTalk.

De Vany is quite a character.  In addition to his academic prowess, he is a former professional athlete and a bona fide fitness and diet guru.   He looks pretty good for a 50-year old… and he’s 70.

A Pigou and a Smile?

Thursday, April 1st, 2010

Would a tax on the sugary, em, I mean the corn syrupy sweet taste of soft drinks reduce consumption?  And would that in turn cause young people to drink less and possibly curb the tide of childhood obesity?  An article in Health Affairs suggests the tax would have to be pretty darn steep to do much good:

[T]here was no significant relationship between differential soda taxes and overall soda consumption for the whole population. This means that, within the limitations of our analysis, increasing the differential tax on soda doesn’t affect total soda consumption. We found a significant relationship between differential soda taxes and BMI change from third to fifth grades. But this finding does not hold up under different statistical analysis, and the effect may be attributable to children who are already at risk for being overweight.

The tax rates for the study ran up to $0.07 on the dollar, with an average of about $0.04.   The calculations suggest that it would take more than double the highest rate, about $0.18, to have substantial impacts. In other words, if you want to change people’s behavior in this case, a small tax isn’t going to do the trick.

What is the rationale for government intervention here? Is this a Pigouvian tax — that is, do soft drinks cause obesity and does obesity cause impose “external” costs on the rest of the population?   Or is it a “protect the children from their parents” rationale?

Let me know what you decide!

Paying for “Quality”, SAT Scores Version

Monday, March 29th, 2010

What accounts for the differences in prices of yogurt?  Well, there’s different size cups, different ingredients, different quality ingredients, some have nuts, brand name recognition, seems like a lot of things could drive price differences.

What accounts for differences in prices of female eggs on college campuses?  SAT scores.

“Holding all else equal, an increase of one hundred SAT points in the score of a typical incoming student increased the compensation offered to oocyte donors at that college or university by $2,350,” Levine reports. When the ad was placed for a specific couple, the premium was higher: $3,130 per 100 SAT points. And when an egg donor agency placed the ad on behalf of the couple, the bonus per 100 points rose to $5,780.

Here’s the report.

Checking Your Financial Plumbing

Thursday, February 25th, 2010

At the recent Lawrence Scholars in Business banking summit, alumnus Rob Bearman suggested that a young person interested in a career in banking would do well to learn all s/he could about the recent financial crisis.   He suggested Andrew Sorkin’s Too Big to Fail as a good start.   Another place for a more academic flavor is the recent Journal of Economic Perspectives Symposium on Financial Plumbing.

The list looks like a good place to start an independent study project.  I can’t speak for the quality of the articles, except to say that the JEP authors are generally recognized area experts, and the pieces tend to be very readable and heavily documented.

Enjoy!


Innovation & the World Economy

Thursday, February 25th, 2010

That’s the title of Robert Litan’s speech from the Foreign Policy Research Institute, and it is a crisp and interesting read.  Here’s a taste:

Entrepreneurs are vital to the economy not only because of the innovations they bring to the market, but also for the jobs they create. The Kauffman Foundation sponsored a study recently to look at the source of job growth in the United States since 1980. The conclusion is remarkable, or at least I believe it to be. Since 1980 until the recession, all net new jobs—net meaning gross jobs minus layoffs — have been created by firms under five years old. Think about that. That means all existing firms as of 1980 have not increased their employment since that year. In fact, if anything, the firms that existed in 1980, as a group, have lost employees. Using these data, we have made a rough estimate that at least 1/3 percent of our employment and a somewhat smaller fraction of our GDP since 1980 is due to young new firms that have since grown. These are amazing facts.

The piece contains some nice blurbs about the difference between state-guided capitalism, managerial capitalism, and entrepreneurial capitalism.   These concepts seem to follow the Schumpeterian notion of innovation, which is why it’s important to understand Schumpeter (!)