Research Papers

Tag: Research Papers

Taking Care of Business OR Bad Company?

I was just going through some work on the economics of higher education, and I came across this remarkable piece of scholarship* estimating the effect of studying on grades.  What a concept!

Of course, one would expect (or would hope to expect) that more studying results in higher grades, but how much studying and how much better? Can studying really make up for a lack of high school preparation or a deficit of intellect? Can smart kids really skate through?

Using data from Berea College, Ralph and Todd Stinebrickner provide a very, very nice framing reference for the relationship between incremental study time and the endowment of “book smarts” (measured by ACT scores):

[H]uman capital accumulation may be far from predetermined at the time of college entrance. For example, using results from our full sample, an increase in study-effort of one hour per day…is estimated to have the same effect on grades as a 5.21 point increase in ACT scores.

So while on the one hand hitting the books is certainly a plus, danger lurks around every video console:

In addition, the reduced form effect of being assigned a roommate with a video game is estimated to have the same effect on grades as a 3.88 point decrease in ACT scores.


For those looking for good examples of empirical work, this is a very high-quality example.  This seems to have “Senior Experience” written all over it.


* Ralph Stinebrickner & Todd Stinebrickner, 2008. “The Causal Effect of Studying on Academic Performance,” Frontiers in Economic Analysis & Policy, Berkeley Electronic Press, vol. 8(1)

Political Scientists Eat Their Own

Here’s an interesting fact — a legislator with a degree in political science is more likely to vote to cut research funding for, wait for it, political science. Perhaps they know something?

Here’s from Uscinski and Klofstad.

In October 2009, political scientists learned of a Senate amendment sponsored by Tom Coburn (R-OK) that would eliminate political science funding from the National Science Foundation budget. The American Political Science Association condemned the proposed amendment, and concerned political scientists contacted their senators to urge the amendment’s defeat. On November 5, 2009, the amendment was defeated 36-62 after little debate. This article examines the vote on the Coburn Amendment to understand the role that senators’ personal, constituency, and institutional characteristics played in their votes. Logit analysis reveals that even after controlling for party, several factors significantly predict the vote, including the number of top-tier political science Ph.D. programs in the senator’s state and whether the senator graduated with a bachelor’s degree in political science.


Joseph Uscinski and Casey A. Klofstad. 2010. “Who Likes Political Science?: Determinants of Senators’ Votes on the Coburn Amendment”. PS: Political Science and Politics October: 701-706.

Interdependent Utility Functions

Does knowing what your peers make matter to how happy you are?  Certainly, the utility functions that I sketch in Econ 300 say no.  As Ray Fisman puts it in a recent piece at Slate, “Why do we care what those around us make? It doesn’t affect the real estate or furniture or sushi dinners we can afford.”

On the other hand, of course it matters. And Fisman continues:

[I]n recent years, economics has become both more social and behavioral, borrowing evidence and ideas from elsewhere in the social sciences. Economists now acknowledge that we constantly judge our own accomplishments in comparison to others, and salaries serve as one ready benchmark. People (and perhaps monkeys, too) are also averse to inequality—unequal pay for equal work just isn’t fair (especially if you’re the one who drew the short straw).

Monkeys? Wow.

Fisman talks about an ingenious study by group of economists, including David Card and MacArthur genius grant winner Emmanuel Saez, that investigated how differences in pay affect variables like job satisfaction.  If you are interested in how economists think about these things and how they evaluate them empirically, this paper is worth checking out.  The abstract is below the fold: Continue reading Interdependent Utility Functions

Late Summer Chocolate Fix

Craig Pirrong, the Streetwise Professor, believes cocoa prices are fixed.   Why does he believe this?  The data, of course.

Here’s the scoop:

The basic result is that the July, 2010 price rose about 6 percent more than one would have predicted, given the movements in the September, November, and July ICE prices…  This rise in the relative price of July cocoa is exactly what you would expect to observe during a corner, and given the typical co-movements of all these prices, are highly unlikely to have occurred by chance in a competitive market.

If you read his post, which I recommend you do, you can see he developed a fairly straightforward methodology for inferring some sort of market manipulation in an earlier paper on soybeans.

Of course, I learned about price fixing from the frozen orange juice pits in Trading Places.

Juice-y Empirical Analysis

Not terribly long ago we linked to an Art Devany article where he claimed that the steroid era had no statistically discernible effects on home run production. Eric Gould and Todd Kaplan look carefully at the numbers and determine that Jose Canseco had a big influence on his peers’ performance numbers.

From the abstract:

[W]e estimate whether Jose Canseco, one of the best baseball players in the last few decades, affected the performance of his teammates. In his autobiography, Canseco claims that he improved the productivity of his teammates by introducing them to steroids. Using panel data on baseball players, we show that a player’s performance increases significantly after they played with Jose Canseco. After checking 30 comparable players from the same era, we find that no other baseball player produced a similar effect.  Clearly, Jose Canseco had an unusual influence on the productivity of his peers.

If you are a baseball fan, this is a nice research paper to take a look at.  The problem identification is clear, the statistical analysis is straightforward, and the interpretation of the coefficients is central to the analysis. In other words, it isn’t enough to be statistically significant, it also must be “economically” meaningful.


Here, the evidence shows that power hitters substantially boosted their home run production after playing with Canseco, to the tune of almost three dingers per yer.  That’s both statistically significant and has “baseball” meaning. (Similar results did not hold for fielding prowess). The more convincing piece is that there are no other sluggers where this result holds.  That is, if the Canseco result was some statistical fluke, you would expect a similar result in at least one other player.

Still, I am going to talk to Prof. Finkler, because I don’t think the numbers are quite consistent.

Here’s a nice summary at Slate.

And here’s Mr. Canseco’s tell-all, Juiced.  When this came out, it was scandalous and the denials were ubiquitous.  But, as time marches on, several allegations have come to pass, and few have been discarded.  By the way, that’s the famous “ball bouncing off Canseco’s head and over the fence for a home run” picture, run ad nauseum on sports bloopers back in the day.

The Long Ball

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?

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

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.

Kicking Off I&E Week

Here’s a question from the recent economics 450 test that you might want to consider part or all of:

Discuss what people mean by entrepreneurship and explain how it fits into the theory of the firm. Things you might discuss:

  • What is an entrepreneur?  How is it different than being a manager?
  • Do entrepreneurs usually work for themselves?  What does that mean?
  • Is asset ownership necessary? Is that part of working for themselves?

Part of the inspiration from that question comes from an interesting piece by Foss and Klein from a few years back.

Not coincidentally, the economics department generally is pondering these very questions as we try to figure out our curriculum offerings.

Stay tuned.

Happiness is a Scarce Resource

You new majors have probably been wondering why you have been a little more cheerful, had a bit more bounce in your step, a little extra rational exuberance, so to speak.

The answer, my friend, is that economics students are generally a happy bunch.

At least in Germany:

Justus Haucap, of Heinrich Heine University of Düsseldorf, and Ulrich Heimeshoff, of the University of Bochum, surveyed 918 students of economics and other social sciences in 2005, then estimated how studying each of the different fields affected individual life satisfaction…. The news is good — for economics students, anyhow… [T]he researchers identified a positive relationship between the study of economics and individual well-being.

Read all about it

For those of you looking for a boost of good cheer, look no further than right here.

Management Consulting Summit

Twelve students and four professors just finished lunch with five Lawrentians who have become successful consultants. During the three hours before lunch, we learned a lot about consulting, about careers in the consulting world, and about how Lawrence students can get their foot in the door. Students who came got invaluable advice and made connections with Lawrence alumni. If you weren’t there, you missed out–make sure you come to the next event on the banking industry on February 13th (Saturday of reading period). And you might want to take a look at the Pyramid Principle by Barbara Minto.

Making the Grade

College kids these days seem to have it easy. When I was that age, I had to walk twelve miles uphill through a blizzard to get to class, and then make a similarly brutal trip uphill to get back home. Not to mention that back then the median grade was somewhere around a C-. And this was during the easy courses in summer session.

Well, perhaps that isn’t all completely accurate, but according to a forthcoming paper by Philip Babcock in Economic Inquiry, it seems likely that we did study more back then. The key result is that students spend more time studying in classes where the expected grade is lower. So, if grade inflation leads to higher expected grades, I read that to mean that on average students will study less.

Abstract: College grade point averages in the United States rose substantially between the 1960s and the 2000s. Over the same period, study time declined by almost a half. This paper uses a 12-quarter panel of course evaluations from the University of California, San Diego to discern whether a link between grades and effort investment holds up in a micro setting. Results indicate that 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.Findings do not appear to be driven primarily by the individual student’s expected grade, but by the average expected grade of others in the class. Class-specific characteristics that generate low expected grades appear to produce higher effort choices — evidence that nominal changes in grades may lead to real changes in effort investment.

The emphasis is mine.

If we here in economics announced that the average course grade is a half point lower than the average campus grade, would we get harder-working students? Or just fewer students?

Making America More Innovative through, wait for it…

There are lots and lots of Lawrence folks out there interested in how to improve US innovation. How, indeed? One answer comes from a recent article at, where Economist Ray Fisman discusses how, surprise!, giving scientists greater incentives can foment higher levels and more novel types of medical innovation.

His source is a new paper from Azouly, Zivan, and Manzo that looks at the relative successes of different groups of medical researchers with similar academic pedigrees: Here’s a key excerpt from the abstract:

[W]e study the careers of investigators of the Howard Hughes Medical Institute (HHMI), which tolerates early failure, rewards long-term success, and gives its appointees great freedom to experiment; and grantees from the National Institute of Health, which are subject to short review cycles, pre-dened deliverables, and renewal policies unforgiving of failure… We find that HHMI investigators produce high-impact papers at a much higher rate than two control groups of similarly-accomplished NIH-funded scientists. Moreover, the direction of their research changes in ways that suggest the program induces them to explore novel lines of inquiry.

You can find the research paper here.

Much more on the topic of innovation and entrepreneurship as the term progresses.