Month: October 2003

Bickering with Alex over vouchers

by  Tyler Cowen in

Oh, yes, it is time for that again.

Alex thought that Brad DeLong and I should be cheerier over the prospects for vouchers. My previous post had cited a study of vouchers in Chile, showing no real educational improvement over twenty years.

Like Alex, I am willing to give vouchers a try, but I think he is overselling the idea. Why I am not convinced by Alex’s pep talk?

First, Alex cites a study of Colombian vouchers, which showed improvement from a voucher program. Point granted, but I think that correct conclusion is simply that sometimes vouchers improve schooling, sometimes they don’t. The most convincing Chilean evidence, not cited by Alex, is simply that overall educational performance, on the international scale, did not improve after twenty years of vouchers.

Second, Alex argues that Chile did not have a pure vouchers scheme. Again, point granted, but no implementable vouchers scheme will be pure, let us take this for granted. Have you read about the Washington D.C. voucher proposals, which would force private schools to admit a certain percentage of “voucher students” by lot? Not surprisingly, the good private schools don’t want to participate in the program, if it passes.

Alex overestimates how far the Chilean system deviates from a pure voucher model. True, the Chilean system makes the payment to the private school, rather than to the family. But according to most theories of tax incidence, this should not matter. The private school will lower tuition accordingly, hoping to capture more students, and thus a greater payment from the government.

Overall, what is going on? Education is not just another commodity. Some of it is signaling, in which case subsidizing it doesn’t bring great gains. Another big part of education is selecting peers for our child. A school filled with bad kids is a bad school, whether it is private or public. It is not obvious how much a private school can make bad kids good. As experience in Eastern Europe and around the world shows, certain kinds of education may be a prerequisite for well-functioning markets, the right values don’t follow from markets automatically.

Most generally, educational performance varies with many factors, not all of them depending on the scope of the market. There are, in fact, very many good public schools, whether in the U.S. or abroad. Now Chile is a relatively homogeneous and urbanized country, with 13 million plus inhabitants. The country also has a reputation for discipline, order, and strong family structure. Is it plausible to think that such a region can have reasonably good public schools, so good that vouchers won’t elevate their youth to another level? Yes.

Vouchers would give U.S. urban youths another educational chance, but let us not expect too much from this reform.

Don’t forget to say please

by  Tyler Cowen in

The Italian Bishops Conference has recently agonised about how to address the devil during exorcisms following a Vatican decision to translate into Italian the venerable Latin formula, Vade retro Satanas.

Bishops were unsure which form of “you” to use – the familiar “tu” or formal “lei”.

The full story is about Cardinal Dionigi Tettamanzi, 66, the archbishop of Genoa, and a leading candidate to be the next Pope. Here are his controversial Ten Rules on Resisting Satan.

The betting market has Tettamanzi as a 5 to 4 favorite to win the Papal election.

Addendum: One reader wrote and asked why I found the rules for resisting the devil so controversial. As I understand the controversy, it has provoked controversy among Catholics, many of whom feel that the devil should not be so prominent in theology.

Facts about books

by  Tyler Cowen in

From 1450 to 1500, between 10,00 to 15,000 titles were published, with an average print run of 500 copies.

By 1962, 250,000 titles were being published each year; this implies a growth rate five times more rapid than that of population.

Since the development of television (defined as 1950), world population has grown 1.6 percent a year. The number of book titles has grown by an average of 2.8 percent a year.

The human race publishes a book every thirty seconds.

From Gabriel Zaid’s fun, new So Many Books: Reading and Publishing in an Age of Abundance.

By the way, the first book to sell a million copies was Margaret Mitchell’s Gone With the Wind.

More on sales

by  Tyler Cowen in

I sell bonsai by the roadside. The best sign I have discovered so far is “One day only”

Some good signs I display before the motorist gets to my truck include:”50% off”, “$15-500”, “bonsai for Mom”, “bonsai” (written in chinese). “See the 300 year old bonsai”
What other signs would your [Industrial Organizaton] class suggest?

How quickly can IO students come up with the three main reasons why “for Mom” works better than “for Dad”, even though any bonsai club is predominantly male?

From BonsaiDave, an avid reader, responding to my earlier post on Persian carpet sales.

More on student evaluations

by  Tyler Cowen in

Yes, the beautiful do get better student evaluations, the research of Daniel Hamermesh confirms this, the link is through Instapundit.

And get this bit, taken from the link within the link:

According to their data, the effect of beauty (or lack thereof) on teaching evaluations for men was three times as great as it was for women.

How about this?:

A glance at Web sites such as ProfessorPerformance.com and RateMyProfessors.com — where students rate their instructors on criteria such as coolness, clarity, easiness, helpfulness, and hotness (on RateMyProfessors.com, hot professors get chili peppers beside their names) — leaves little doubt about the viciousness of some students. Petty comments abound: “Someone fire this fat bastard” and “Looks like a hobbit, is not a nice person!”

Harold Glasser has been a victim of such comments. One of his students posted the following remarks on ProfessorPerformance.com: “Glasser where’s (sic) the same blue fleece sweatercoat thing, and this awful matching blue fleece hat that looks like the one Elmer Fudd wore. If this wasn’t enough, he has some of the same mannerisms as Dr. Evil,” from the Austin Powers movies.

There is no chili pepper next to my name, but given all this, my opinion of my looks has gone up.

Addendum: Here is link to the paper, thanks to John Charles for the pointer.

Hypotheses about envy

by  Tyler Cowen in

1. We envy those close to us, who get paid just a bit more, not Bill Gates.

2. Men find it hardest to forgive other men for their success with women.

3. Men do not much envy women because they view women as “one of life’s prizes”.

4. The philosophers who wrote most insightfully about envy were all bachelors (Kant, Kierkegaard, Schopenhauer, Nietzsche).

I found these claims in Joseph Epstein’s recent, and entertaining, book Envy. Here is an interview with Epstein. Here is an essay by Epstein on envy. Here is a whole host of Epstein-related links.

My take: I envy how well he writes, but was comforted to read that tenured academics typically earn more than he does.

Do parents prefer sons?

by  Tyler Cowen in

Here is Steve Landsburg’s follow-up column, from Slate.com, it includes an excellent summary of the original debate as to whether daughters cause divorces.

The bottom line: Landsburg argues convincingly that divorce really is more common when parents have a daughter, rather than a son. Now here is Steve’s new explanation for this fact:

Suppose parents believe that inherited wealth is more important to a boy than to a girl–either because wealth gives boys a bigger advantage in the mating competition or because boys are more likely to do something entrepreneurial. Then parents of boys will try harder than parents of girls to preserve their wealth. In particular: 1) Parents of boys will avoid divorce, because divorce is costly; and 2) parents of boys will have fewer children, because extra children dilute the inheritance.

My take: I still think that most parents, especially fathers, simply prefer boys, whether they admit it or not. But like Steve, I consider myself an exception to this principle!

More telemarketing facts

by  Tyler Cowen in

It costs up to $3 per name to get a list of the nation’s top executives, including title and address.

On average, for every $1000 you make, your name is sold once a year.

The number of junk phone calls surpassed 87 billion last year. At least 2 billion junk faxes were spit out last year. And the average consumer will get 572 pieces of junk mail this year.

For the full story, read here.

Scary, yes, but to me this suggests possible technological solutions to the problems (email spam is harder to solve, since it costs less to send). This year marketers will spend $193 billion on soliciting you, ideally this is money they would like to save.

I doubt if legislation is the sole or main answer. Since 2002, 1500 privacy bills in fifteen states have been introduced. A California consumer group filed $2.2 trillion of class action suits against a single junk faxer. When you see signs of the problem abating, send me a junk fax and let me know.

Vouchers in Chile and Colombia

by  Alex Tabarrok in

Tyler mentioned, following a depressed Brad DeLong, a new paper on education vouchers in Chile that does not find large achievement gains. I have some criticisms of the paper (see below) but I was surprised that neither mentioned the most important recent paper on vouchers, Vouchers for Private Schooling in Colombia by Angrist, Bettinger, Bloom, King and Kremer in the Dec. 2002 AER.

Using data from a randomized experiment, Angrist et al. estimate that attending private school increased the probability of finishing eighth grade by 13-15 percentage points or 25 percent. Test scores increased by .29 standard deviations which is equivalent to about an extra year’s worth of schooling which has been estimated to increase yearly wages by 10 percent. Other markers such as teen cohabitation also improved.

Is this just a case of dueling papers? No, first, unlike Hsieh and Urquiola (HU), the Angrist et al. results are consistent with results found elsewhere. See in particular those found for Catholic schooling in the United States . Second, Hsieh and Urquiola (HU) are good researchers, judging by their paper, but Angrist et al. have a much more convincing research design – results from a randomized trial beat econometric identification any day. Cheer up Brad!

I shouldn’t give the impression that the results are directly comparable, however, as HU are trying to get at the general equilibrium effect of a voucher experiment and Angrist et al. are after the partial equilibrium effect of private schooling. Given the large gains found in the partial equilibrium literature, however, the GE results from HU are not plausible in my view.

Now regarding the HU paper some information is in order. First, there were no vouchers in Chile. Instead, there was public funding of some private schools on a per-student basis. Parents could not apply their voucher to the tuition at a private school of their choice.

Second, HU do not test whether students who transferred to private schools did better than other students – they tested whether aggregate scores (public and private) increased over time as more students attended private schools. Their evidence seems consistent with a nationwide decline in public school quality over time. More generally, I would have liked to have seen some information in their paper on the power of their tests. Given the size of the private sector what sort of gains could would we have expected to see in the aggregate scores and is their technique powerful enough to pick up such gains?

Third, HU claim that “cream skimming” was extensive but I find this difficult to believe because there is no price difference between public and private (voucher-accepting) schools since each was paid the same per-student amount. There are some non-pecuniary barriers but no limits on entry that HU mention.

Fourth, why did private enrollment increase if parents did not perceive a quality improvement? HU mention “freshly painted walls” which I thought was a bit flip – we ought to take revealed preference more seriously.

I do think that the HU study of Chile provides useful information about designing a good voucher program and my priors would have been that the program instituted in Chile, even though not a true voucher program, would have produced a larger effect – thus I learned something from the paper.

Carpets for sale

by  Tyler Cowen in

Have you ever wondered why Persian carpets always seem to be for sale? Why the stores are always having “liquidations”? Why the stores are always “going out of business”?

I presented this conundrum to my Industrial Organization class, they came up with two possible explanations.

First, most consumers have little or no idea what the pieces are worth. So you can tell them you are having a sale when you really are not. A few people might be fooled, and you don’t lose anything with the more knowledgeable customers, or with the more skeptical customers. One student called a relative who was a carpet dealer, he appeared to confirm this hypothesis. Note, by the way, that some localities limit how often stores can claim to have sales.

Second, most customers demand only a small number of such carpets. Repeat business may not be so common. Plus the stores buy large quantities of carpets at a time, receiving discounts in the process. The stores end up holding almost all of their capital in the form of inventory, and very little in the form of reputation. The stores then seek to play the Ronald Coase “durable goods monopoly” game, whereby you start with high prices, hope to sell some, and then keep lowering the price repeatedly, until the stock is gone (then you can buy more and start the process over again). Almost all of the time prices will be falling, which is precisely what we observe.

The highest quality textile dealers, as you might find on Madison Avenue, do not pursue this strategy, and they do not have perpetual sales. They sell to better informed buyers, and they have a greater need to maintain their reputational capital. They are certifying higher valued pieces, and pieces which are bought as investments, not just mere decorations. They will keep price steadier, and build a reputation for reliability, rather than always preparing for the next liquidation.

As always, your thoughts on this matter are welcome.